CHINA’S presence in Europe, both politically and commercially, is growing. In 2016 Chinese investment in the European Union jumped to nearly €36bn ($40bn), up from €20bn the previous year, according to Rhodium Group, an American research firm. Much of this is state-backed and speaks of the Communist Party’s ambitions to keep Europe from helping America to contain China’s rise. Until that boom year, Europe’s leaders—most notably in Germany—had largely welcomed Chinese investment without thinking too hard about it. But the huge influx of money prompted leaders in Berlin, Brussels and elsewhere to worry about the power and influence China was gaining in the process, especially in the EU’s smaller countries. They have since tightened the screening of Chinese investment and are trying to create a more united European response. Still, those efforts are barely keeping up with the rate at which the cash is flowing in. Inward investment dropped to €30bn last year, reflecting a global slowdown in China’s foreign direct investment (FDI). Yet Europe increased its share from a fifth to a quarter.
The investment is marked by regional trends. In eastern Europe, the focus is on infrastructure that can solidify links between the old continent and Belt and Road Initiative projects farther east. In southern Europe Chinese buyers participated in the wave of privatisations during and after the euro-zone crisis. But the largest sums of Chinese cash have flowed into western Europe. In Britain it accelerated after a push by George Osborne, then chancellor of the exchequer, to make his country China’s “best partner in the West”. The focus in Germany is on high-tech firms with the specialised knowledge needed to make China more industrially and technologically self-sufficient. Even France, long sceptical of foreign investment, has seen Chinese buyers hoover up Bordeaux vineyards.
What does China want, ultimately? The supreme goal, of which its leadership never loses sight, is for China to become an advanced, modern superpower that others dare not gainsay. Its idea of Europe is as a wealthy, innovative region that could help it reach that goal.
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