Political Impact Of Chinese Foreign Direct Investments In The European Union

This paper explores the political challenges posed by the recent influx of Chinese Outward Foreign Direct Investment (OFDI) into the European Union (EU). Chinese OFDI has increased substantially in recent years. Chinese direct investment is still minute in the EU, but it is growing fast and the strong upward path is likely to continue in the years to come. This surge represents challenges and opportunities for the EU countries. In the current context of economic and debt crisis in Europe, whether China is seen as a saviour or a predator, the question of a Faustian bargain made by the European countries by courting and hosting Chinese investment needs to be asked. The benefits of Foreign Direct Investment( FDI) for the host economy are well known, but Chinese OFDI may come with implicit strings attached and could potentially act as a Trojan Horse, affecting European norms and policies. The influx of Chinese OFDI can create an unhealthy transatlantic competition with security ramifications, which should therefore be addressed. It’s interesting to find the right balance between ensuring the benefits from Chinese FDI, from job creation to productivity gains, while protecting from its harmful effects.