Upcoming event: Chinese FDI in Europe’s energy sector – Blessing or threat?

At the 16th EU-China Summit held in November 2013 both sides announced the launch of negotiations of a comprehensive EU-China Investment Agreement, which has the goal of providing for progressive liberalisation of investment, the elimination of restrictions and a level playing field for investors in each other’s market. This initiative comes at a time of economic challenges for both sides. The first round of negotiations took place in Beijing on 21-23 January 2014, and recently the EU and China reaffirmed their commitment to finalise negotiations as early as possible. Both sides stressed the crucial importance of their trade and investment relationship.

Investment from China in the EU remains relatively small, but the energy sector accounts for a significant share. Chinese companies have invested in infrastructure, generation, manufacturing and R&D. International direct investments by the People’s Republic of China in Europe have increased markedly since 2000, yet until 2010 the total stock of Chinese direct investment in the EU did not exceed €6.1bn – that is less than what was held by India, Iceland or Nigeria. When investors fled Europe in the worst days of its sovereign debt crisis, Chinese companies were also cautious about investment in the EU. But later Chinese companies raised their investments, with cash flowing from China into some of the hardest-hit countries of the Eurozone periphery. By the end of 2012, China’s investment stock thus had quadrupled to nearly €27bn.

M&A has been the dominant type of Chinese investment into the EU: Between 2008 and mid-2014, China sealed more than 200 cross-border M&A deals or joint ventures in the EU. The energy sector is of particular importance in this regard, as almost one third of Chinese investments in Europe went to this sector. Yet according to Eurostat data, in 2012 FDI from China in the EU still accounted for only 2.6 per cent of total investment flows into the EU. By contrast, the share of EU flows of FDI into China makes the 28 EU Member States together one of the top five FDI providers to China along with Taiwan, Hong Kong, the USA and Japan.

Total annual Chinese investment in Europe has dropped somewhat from the peak years of 2011 and 2012, but analysts see new deals in the making and signs that investment will increase significantly this decade. In the past state-owned enterprises, which at home dominate industries such as transport, energy and finance, were the vanguard for China’s outward investment. Investments into these three sectors amount to about 50 per cent of Chinese investments in Europe, although these increasingly come from non-state enterprises. With about one third of Chinese investments in Europe, the energy sector is particularly important, and according to available data will maintain its central role. This investment has occurred across the energy sector, including Chinese companies in electricity grids, wind and solar PV manufacturing and R&D, wind and solar farms and also potentially nuclear power.

This raises both hopes and concerns: Hopes that growing investments in Europe will help to leave the economic crisis behind and bring economic growth back to countries such as Italy, Portugal and Spain, where Chinese FDI tend to cluster together. But rising shares of Chinese investors in strategically important economic sectors such as electricity generation, transmission infrastructure and R&D, also raise fears that this could lead to a development that deprives Europe of its capability to steer its economic development according to its own goals such as increasing the amount of renewables or decarbonisation.

With this policy forum we thus want to raise a number of questions about the future of Chinese investments in Europe:

  • How have Chinese investment activities in Europe developed?
  • What drives these investments, and what are their prospects?
  • Which countries and sectors do they go to?
  • What role does the energy sector play?
  • Do Chinese investments in Europe’s energy sector affect Europe’s sustainability agenda?

The expert panel will consist of the following speakers:

Alexandra Koutoglidou, European, Investment negotiator, European Commission, DG Trade, Investment Unit

Duncan Freeman, Research Fellow at the Brussels Institute of Contemporary China Studies

Chair: Prof. Dr. Stefanie Weil, Head of China relations Vesalius College, Academic Director Antwerp Management School

Registration & Venue
The policy forum will take place from 12:00 – 14:00 at the premises of the Institute for European Studies. Participation is free of charge, but registration is required. If you wish to attend the Policy Forum, please register by filling in the online form.

Venue:
Karel Van Miert Building
Conference Room Rome
Pleinlaan 5
1050 Brussels
[Map and Directions]

Contact
Thomas Sattich (Academic Coordinator)
Associate Researcher Environment and Sustainable Development
thomas.sattich@gmx.net

Anamaria Bacsin (Logistics)
Communications & Internal Events
+32 2 614 80 40
Institute for European Studies
anamaria.bacsin@vub.ac.be