Money Moves: An Analysis of Chinese Foreign Direct Investment in Europe

In recent years, China has begun engaging in outward foreign direct investment (FDI). There is a significant amount of literature dedicated to understanding China’s FDI in developing nations. However, very little research has been conducted over Chinese FDI in advanced economies. As a result of this gap in existing literature, the question arises, what explains Chinese FDI in Europe? As FDI is a transaction to which both the donor and recipient countries must agree, this thesis has a dual focus. One chapter of the thesis analyzes the effects of and motivations for Chinese FDI on European nations. In this chapter, Portugal and Germany are used as case studies to achieve a more in depth understanding of Chinese FDI in Europe. Another chapter of the thesis is dedicated to analyzing the effects of China’s outward European FDI on China. For this section, two case studies are conducted on the European FDI of Chinese companies- Huawei and Geely. These case studies reveal financial and political benefits of Chinese FDI in Europe for China. This chapter also contains analysis of speeches made by People’s Republic of China leaders regarding the relationship between Chinese FDI and China’s international influence. Through this analysis, this thesis argues that the initial rise of Chinese FDI in Europe can be attributed to the 2008 financial crisis when European countries needed external investment to rebuild their economies. At this time, China needed to further develop its economy and wanted to expand its international influence. As a result, China and many European nations entered into a mutually beneficial partnership. However, in recent years, as China’s international influence has grown, some European countries are pushing back on China’s involvement in and influence over their economies