The EU is set to review its foreign investment framework, with discussions under way over introducing stricter rules to ensure that Chinese companies investing in the bloc generate tangible benefits for local workers and contribute to technology transfer, reported Financial Times (FT).
The proposed changes are part of a wider set of initiatives expected from the European Commission (EC) next month, intended to support the region’s industrial sector and address economic challenges.
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Industries, especially chemicals and steel, are said to be facing mounting pressure from an influx of lower-priced Chinese goods, a trend intensified by US tariff policies.
High energy costs and complex environmental regulations have added to the strain.
Concerns are also growing over the increasing presence of Chinese industrial projects, which some see as deepening Europe’s reliance on advanced manufacturing from China and increasing Beijing’s influence.
There is concern that these projects could help Chinese companies avoid future EU tariffs on their goods.
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By GlobalDataEC internal market commissioner Stéphane Séjourné told the FT that new investment criteria should “ensure that foreign investments don’t just go into components that are assembled abroad” but support “the functioning of the whole European value chain”.
Séjourné, who has advocated for more local content requirements and “made in Europe” clauses, indicated that the revised rules may require foreign investors to hire local employees and, in sectors such as batteries, share technological knowledge.
While the draft legislation will not explicitly mention China, an EU official noted that the focus is clear given the scale of Chinese investment.
According to EC data, Chinese foreign direct investment (FDI) into the EU rose by 80% to €9.4bn ($10.85bn) in 2024 compared to 2023.
According to the FT, Chinese battery manufacturer CATL has attracted significant attention due to its advanced technology.
After opening an electric vehicle (EV) battery plant in Germany, the company is building a €7bn (57.4bn yuan) plant in Hungary and a facility in Spain with an investment of €4bn.
For the Spanish plant, a joint venture with Stellantis, CATL plans to bring 2,000 workers from China to the Zaragoza region.
A Spanish Government official expressed support for the EU’s move, noting that the initiative is expected to “advance Europe’s economic security and resilience, and also ensure that FDI creates strong value added, technology and domestic employment in European nations”.
Chinese companies are also said to have invested in hydrogen projects in Spain, Germany and the Nordic countries.
Central European Institute of Asian Studies chief economist Martin Šebeňa said that stricter rules should “largely reduce the race to the bottom between European countries, especially those in southern, central and eastern Europe, which have been keen to attract FDI into certain sectors by implicitly promising low regulatory intervention”.
Šebeňa added that the changes would also impact companies in the EV sector in Japan and South Korea, although an EU official indicated that these operators are more likely to meet Brussels’ requirements.
The proposals are scheduled for presentation on 10 December and may be amended. The Chinese Ministry of Foreign Affairs did not respond to a request for comment, according to the FT.
