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.
