The News
Chinese investments in Europe have dipped to their lowest level since 2010, according to a new report by the Rhodium Group and MERICS think tanks, underscoring how the growing geopolitical tension has bled into business.
China invested about $7.4 billion into European firms in 2023 — down from $7.7 billion in 2022, the analysis found. But key sectors, most notably electric vehicles and healthcare, remained key targets for Chinese investors.
SIGNALS
Hungary leads Chinese investment Europe
Hungary was the top destination for Chinese business investment in 2023, according to the report, accounting for 44% of all Chinese investment in Europe. Breaking with wider EU convention, Hungarian Prime Minister Viktor Orbán has been vocal about keeping strong economic and security ties with Beijing, and Hungary has emerged as the EU’s production hub for Chinese EVs, as Semafor previously reported. This could allow Chinese EV makers to circumvent expected EU tariffs, so long as Chinese EVs and EV parts made in Hungary use local labor, material, and capital, according to the South China Morning Post.
European pharmaceuticals are in trouble
Chinese investment into Europe’s healthcare remains strong, but the money is going more into medical devices than to pharmaceuticals, according to the think tanks’ report. The shift could ultimately devastate Europe’s pharmaceutical industry, which has historically been the bloc’s largest contributor to a trade surplus, accounting for more than $250 billion worth of exports in 2021, according to Reuters. Part of the reason for the decline is a proposed EU framework that would reduce the length of a drug’s patent, which EU lawmakers said would make drugs cheaper but trade groups argue could reduce investment by a third by 2040, Reuters reported.
Meloni’s China pragmatism could shape EU policy on investment
Italian Prime Minister Giorgia Meloni is a rising-star in European right-wing politics, and other right-wing factions in Europe are fighting for her support to form a governing coalition after the EU elections, according to TL;DR news. Meloni likely will have a “pivotal role” in balancing EU power and policy after the election, particularly on China, according to Bloomberg. While she pulled Italy out of China’s Belt and Road Initiative infrastructure investment plan last year, she has remained pragmatic about China’s role in Italy’s economy: Chinese shipping giant COSCO, for instance, bought Italian logistics firm Trasgo earlier this year. “Rome may have left the BRI, but China continues to pursue BRI objectives through investments in Italy,” Quartz wrote.
