Inside the China-EU FDI bond

For some 20 years, the rate of investment by EU enterprises into China has been rising, reaching an annual average of some US$5bn over the 10 years to 2009. Conversely, the EU has not been a focus for Chinese investments, nor has Chinese investment been important to the EU despite the wide attention given to recent landmark cross-border acquisitions. Therefore, the overall impact of Chinese investment on the European economy is small. However, this situation might now be changing following institutional changes in the EU. In light of the potential for Chinese foreign direct investment to the EU, in this paper we outline the motives for, and patterns of, Chinese outward investments to the EU, and the impacts that these investments might exert on the recipient.