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EU investment in China hits record $3.9 billion in three months

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Despite calls from European Union leaders to “de-risk” economic ties with China, greenfield investment by EU companies in the country surged to record levels in the second quarter of this year, largely driven by German carmakers.

According to consultancy firm Rhodium Group, greenfield investment—referring to the creation of new companies or the construction of new facilities—reached €3.6 billion ($3.9 billion) in the April to June period.

This marks the highest quarterly level on record, significantly exceeding the average quarterly EU investment of €1.8 billion since 2022. German companies accounted for 57% of total EU greenfield investment in China in the first half of the year.

The top five EU corporate investors were Germany’s Volkswagen, BMW, and chemical giant BASF; Sweden’s Ingka Group, owner of furniture retailer IKEA; and Dutch technology company STMicroelectronics.

Rhodium Group’s analysis indicates that automakers are likely to represent around half of all EU investment in China from 2022 onwards. Investment in greenfield plants appears motivated by companies’ desires to localize production, with a growing trend of producing “in China, for China” to safeguard supply chains from geopolitical tensions.

This increase in investment has occurred despite escalating trade tensions between the EU and China, especially in the automotive sector.

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EU states hold talks with Taliban in Brussels on Afghan returns

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Representatives from 15 European Union member states met with the Taliban in Brussels on June 23 to discuss the return of Afghan nationals to Afghanistan.

A European Commission spokesperson said on Tuesday that the meeting was co-chaired with Sweden. Belgium and the Netherlands also took part.

The Commission stressed that the discussions primarily focused on the return of Afghan citizens with criminal records or those considered security threats.

Talks covered a wide range of issues, including the identification of returnees, the issuance of travel documents and procedures related to their repatriation.

However, Johannes Luchner, a senior European Commission official who travelled to Kabul in January, had previously indicated that the scope could extend beyond convicted individuals.

Addressing European lawmakers at the end of January, he said: “Our primary concern is the return of criminals, but the number of non-criminal Afghans who have received return orders is also increasing.”

Another EU source has now expressed a similar view. Speaking to EUobserver on Tuesday ahead of the meeting, the source said the discussions would also cover the return of asylum seekers whose applications had been rejected.

Earlier in the day, the Commission declined to provide details about the meeting.

As a result, questions remained unanswered regarding who covered the Taliban delegation’s travel expenses, where the meeting would take place, whether women would participate and what the Taliban expected in return for assisting the EU with deportations of Afghan nationals.

The EU and its member states have not recognised the Taliban government since it returned to power five years ago.

Brussels defended its decision to maintain limited contacts with Afghanistan’s “de facto authorities,” arguing that such engagement is necessary to facilitate the deportation of rejected asylum seekers who have committed crimes or are considered dangerous.

A European Commission spokesperson said officials from the Commission and 15 EU member states attended the Brussels meeting, which followed a previous gathering held in Kabul in January.

“The Commission services and Sweden today co-chaired a technical-level meeting in Brussels together with technical-level representatives of Afghanistan’s de facto authorities responsible for return and readmission matters,” the spokesperson said.

A spokesperson for Afghanistan’s Foreign Ministry said the agenda was broader and included the possibility of a future consular presence in the EU, the resumption of consular services for Afghans living there and “the need for confidence-building measures.”

Spokesperson Abdul Qahar Balkhi added that the meeting raised hopes of creating “positive momentum to safeguard the consular rights of Afghans residing abroad.”

According to a European Commission letter addressed to Balkhi and reviewed by Reuters, the discussions would focus on “the return and readmission of Afghan nationals without a right to reside in the EU.”

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EU defence chief calls for integration of Ukraine’s military into European defence architecture

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The European Union’s Defence Commissioner, Andrius Kubilius, said the bloc should integrate Ukraine into a future European defence union, speaking at the European Defence and Security Summit in Brussels.

According to remarks reported by Reuters, Kubilius said: “It would be difficult to make sense of things if we did not regard the integration of Ukraine’s armed forces into our defence architecture in Europe as a vital issue.”

Kubilius stressed that Ukraine currently holds a dominant position on the battlefield thanks to the transformation of its military doctrine.

Calling for the integration of Europe’s defence industry and Ukraine’s manufacturing facilities into a single military structure, Kubilius said Ukraine should be fully integrated into the EU’s military market.

He added that the European Commission could present a detailed analysis of the defence market and initial proposals for next steps as early as next week.

At a later stage, the commissioner said, the Commission would propose changes to defence procurement rules and other market regulations.

Kubilius also outlined a strategic objective for the European Union.

He argued that EU member states should spend around €7 trillion on arms production over the next decade in order to surpass Russia in military strength and weapons stockpiles. According to Kubilius, such spending would be consistent with commitments under NATO to raise defence budgets to 5% of gross domestic product.

Urging Europeans to be prepared to bear the cost, Kubilius described it as “the price of peace.”

At the same time, he suggested moving away from the production of highly sophisticated weapons that are difficult to manufacture in large quantities. Instead, citing the example of drones used in Ukraine, he called for a focus on producing “enormous quantities of satisfactory weapons.”

The EU Defence Commissioner also underscored the need to integrate Ukraine’s innovative defence industry into Europe’s broader defence and technological base.

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Hungary blocks joint EU letter backing Ukraine and Moldova accession process

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Hungary has refused to endorse a joint letter intended to be sent on behalf of all 27 European Union member states to the European Council and the European Commission in support of Ukraine’s and Moldova’s accession to the bloc.

According to Politico, citing sources familiar with the matter, the letter is required for Kyiv’s and Chisinau’s membership applications to advance to the next stage of the accession process.

The sources said Hungary was the only member state that declined to back the document. Because approval requires the consent of all 27 member states, the issue is expected to be revisited next week.

Hungary, which previously blocked Ukraine’s accession negotiations for an extended period, was led at the time by Prime Minister Viktor Orban. His successor, Prime Minister Peter Magyar, has not opposed the launch of the negotiation process but has insisted on removing the phrase “as soon as possible” from the draft letter’s reference to Ukraine’s accession.

Magyar said Hungary does not support opening all negotiating chapters simultaneously in an effort to accelerate Ukraine’s membership bid.

Explaining the government’s position, he said: “Partly because the ink on the documents relating to the first chapter has barely dried, and partly because this would send the wrong message to Western Balkan countries such as Serbia, Albania, Montenegro and North Macedonia, which have been working for years to become members of the European Union.”

The European Union formally opened the first chapter of accession negotiations with Ukraine and Moldova in June. The process was launched during a ceremony in Luxembourg attended by the foreign ministers of member states and is divided into six thematic clusters covering different areas of legislation and policy.

The opening of the first cluster, which covers core issues including the rule of law, the functioning of democratic institutions and public administration, marks the transition from the preparatory phase to practical work on meeting accession requirements.

The EU’s ambassador to Ukraine, Katarina Mathernova, has said Kyiv could join the bloc by 2030, although the final timeline will depend on how quickly the Ukrainian authorities complete the required legal and institutional reforms.

Mathernova also said she hoped all 33 negotiating chapters could be opened by the end of the summer.

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