Introduction

In 2024, China's direct investment in Europe experienced a turning point that most observers underestimated. According to joint tracking research by Rhodium Group and MERICS, China's total investment in the EU and the UK reached €10 billion, a year-on-year recovery of 47%, ending the continuous downward cycle since 2016. On the surface, this was merely a cyclical rebound; but through the details of the data, what this round of growth reveals is a deep coupling among Chinese enterprises' globalization strategies, adjustments in European industrial policy, and the restructuring of global supply chains.

I. A Turning Point in Global Capital Flows: China's Outbound Investment Returns to an Expansion Track

The rebound in China's investment in Europe is not an isolated event, but a mirror of the shift in global capital flows. In 2024, China's total outbound direct investment rebounded to €52 billion, the first increase in seven years. Emerging markets still accounted for the majority (64%), but among high-income economies, Europe absorbed 53.2% of China's investment, continuing to play a key role as a destination.

Notably, the United States is visibly fading from the investment map of Chinese enterprises. In 2024, Chinese investment flowing into the US was less than €2 billion, accounting for only 4% of the global total. This contrast highlights the distinctly different treatment of Chinese capital by the two high-income economies: the US maintains a high-wall review regime, while Europe—despite ongoing frictions—still leaves operational space for certain industries.

Chinese investors are not simply "returning to Europe"; rather, they are re-selecting the paths and logic by which they enter Europe. Against the backdrop of global supply chains shifting from a pure pursuit of efficiency to a "rebalancing of efficiency and security," Europe, due to its market size and industrial base, remains a strategic node that Chinese enterprises find difficult to bypass.

II. From M&A to Greenfield: The Changing Pattern of Chinese Investment in Europe

Over the past decade, the primary means by which Chinese capital entered Europe was cross-border M&A—acquiring brands, technology, and market channels to quickly gain market share. But the 2024 data reveal a profound structural change: greenfield investment has surpassed M&A to become the dominant form of Chinese investment in Europe.

Greenfield investment reached €5.9 billion, a record high, up 21% year-on-year, accounting for 59% of total investment; although M&A investment also rebounded to €4.1 billion, doubling from the previous year, it remained at historic lows. This shift in models is not accidental; it reflects a strategic intention among Chinese enterprises to move from "acquiring assets" to "building production capacity."

Particularly noteworthy is that the electric vehicle industry chain has become the core engine of greenfield investment. In 2024, EV-related projects accounted for 83% of China's greenfield investment in Europe, with investment reaching €4.9 billion. From battery factories to complete vehicle assembly, Chinese enterprises are embedding deeply into European industry. On the one hand, this is a defensive response to EU trade barriers and tariff pressures—by producing onshore to circumvent import restrictions; on the other hand, it also reflects the enterprising posture of China's advanced manufacturing sector in exporting technology and production capacity overseas.

III. The Hungary Phenomenon: How Central and Eastern Europe Became a New Corridor for EV Investment## III. The Hungary Phenomenon: How Central and Eastern Europe Is Becoming a New Corridor for Electric Vehicle Investment

The most striking change on this investment map is that Hungary has become the largest recipient of Chinese capital in Europe for the second consecutive year. In 2024, Hungary absorbed €3.1 billion in Chinese investment, a year-on-year increase of 73%, accounting for 31% of China's total investment in Europe. Meanwhile, the "Big Three" — the UK, Germany, and France — which averaged 52% of Chinese investment in Europe between 2019 and 2023, saw their combined share plummet to 20% in 2024, reflecting a dramatic reshaping of the investment geography.

The Hungary phenomenon is not simply cost arbitrage, but the product of multiple converging factors:

  • Hungary has a long history in the automotive industry and a skilled workforce, having already accumulated a considerable foundation, particularly in the field of power batteries;
  • The government has adopted proactive investment promotion policies, offering tax breaks and infrastructure support to foreign direct investors;
  • Compared with Western Europe, Hungary is subject to fewer constraints from EU industrial policy, and its review of sensitive sectors is more flexible.

For Chinese investors, Hungary offers a "gateway" with lower political risk and higher administrative efficiency, particularly suited to building battery and vehicle manufacturing plants that require large capital investment. Of China's ten largest projects under construction or newly built in Europe in 2024, four are located in Hungary, including three battery plants and one vehicle plant — enough to show that the country is becoming a hub node in the Sino-European electric vehicle supply chain.

From the perspective of the evolution of the global automotive industry, the Hungary boom fits the trend of "regionalized clustering" — building nearshore production networks near major consumer markets to shorten supply chain distances, circumvent tariff barriers, and meet localization regulatory requirements. Chinese companies are exploiting economic disparities within Europe and choosing entry points with friendly institutional environments and clear policy incentives, which will profoundly reshape the locational distribution of Europe's automotive industry in the coming years.

IV. The Investment Stock Remains Small, but Its Strategic Significance Should Not Be Underestimated

It should be clearly noted that although Chinese investment in Europe rebounded markedly in 2024, its absolute scale remains negligible compared with Europe's overall foreign direct investment stock. China's cumulative investment stock in Europe is far smaller than Europe's investment stock in China, and far smaller than the volume of Sino-European trade. Even in Hungary, the leading position of Chinese investors exists only in terms of new flows; EU, US, and South Korean companies still hold much larger accumulated capital.

However, strategic importance cannot be measured by stock alone. China's new investment is highly concentrated in electric vehicles and power batteries — precisely the two areas that are the core battlegrounds for Europe's future industrial competitiveness. Even with limited flows, Chinese companies are establishing a say in key supply chain segments by building large-scale production facilities. Moreover, Chinese capital is often accompanied by technology transfer and the introduction of a supply chain ecosystem — the establishment of a battery gigafactory attracts upstream and downstream suppliers to follow suit, thereby creating cluster effects.

Therefore, even if the share of stock is not high, the direction and density of Chinese investment are sowing the seeds for future influence. European policymakers' concerns about this "leverage effect" are not unfounded.

V. Two-Way Game under the Normalization of FrictionThe flip side of the investment rebound is the continued escalation of regulatory friction. The EU and its member states are expanding the scope of foreign investment reviews, in particular subjecting transactions in key technologies, infrastructure, and sensitive data to more rigorous screening. Some countries have even begun discussing the imposition of informal obstacles to Chinese greenfield projects on grounds of “economic security.” At the same time, domestic concerns in China about technology outflow are also rising, and with capital controls remaining strict, the overseas investment activities of Chinese enterprises are subject to dual constraints.

This “two-way friction” has not stopped investment; rather, it has reshaped the form and direction of Chinese investment. Since M&A more easily triggers national security reviews, Chinese enterprises are increasingly inclined to use greenfield projects as the primary approach, because building new factories can more explicitly demonstrate their contribution to employment and industrial development in the host country while reducing concerns about technology transfer. The rebound in M&A transactions in 2024—such as Tencent’s acquisition of Polish game developer Techland (EUR 1.5 billion) and Haier’s acquisition of Carrier’s commercial refrigeration business (EUR 716 million)—though considerable in scale, did not target Europe’s core industries, reflecting Chinese investors’ diversified attempts beyond sensitive areas.

This friction is not a zero-sum game. Europe needs Chinese capital to advance its green transition and decarbonization process, while Chinese enterprises need the European market to sustain global competitiveness. The real challenge lies in finding a dynamic balance between openness and security.

6. 2025 Outlook: Is the Rebound Sustainable?

In the short term, Chinese investment in Europe may remain active in 2025. The report confirms that two electric vehicle battery plants will break ground in 2025, while several large M&A deals are also in the pipeline; all of these will provide support for the total investment volume.

But the deeper question is: can the growth momentum be sustained? Looking at the data on newly announced projects, the investment amount of new European EV projects announced by Chinese enterprises in 2024 declined significantly, and three major battery projects were cancelled. This suggests that Chinese investors’ confidence in the European market is not rising monotonically, but is accompanied by repeated evaluations and strategic adjustments.

Europe’s regulatory uncertainty, the EU’s countervailing duties on Chinese electric vehicles, and China’s domestic efforts to address overcapacity may all alter corporate decisions. What worries observers even more is that currently no other industry can fill the gap left once electric vehicle investment slows down. Although transactions occur from time to time in areas such as artificial intelligence, renewable energy, and consumer electronics, their scale is not yet sufficient to constitute a growth engine.

Therefore, the rebound in 2024 may mark that Chinese investment in Europe has entered a new phase of “high-level consolidation” rather than “one-sided rise.” Whether a true second growth curve can be initiated depends on the stability of European industrial policy, the trajectory of China-EU economic and trade relations, and the strategic flexibility of Chinese enterprises in coping with geopolitical uncertainty.

ConclusionThe rebound in China's investment in Europe in 2024 is far more than a statistical bounce. It reflects the grand process of global capital flows shifting from "globalization" to "regionalization," and also embodies the extension of China's industrial upgrading in overseas markets. The rise of Hungary and other Central and Eastern European countries is redrawing the landscape of European industrial investment; and the shift in investment models—from M&A to greenfield—announces the new behavioral logic of Chinese multinational corporations.

For policymakers and investors, interpreting these structural changes is more important than chasing short-term flows. The China-Europe investment relationship has entered a new normal that is more complex, more multi-dimensional, and more marked by strategic game-playing. Adapting to this new normal may be a common topic for both sides.