China channelled around $161bn [€138bn] into EU economies between 2000 and 2023 to secure long-term commercial and geostrategic advantage, according to a new report by US research lab AidData published on Tuesday (18 November).
Among the top deal-making countries are Germany (€28.7bn), France (€18.3bn), Italy (€15.0 bn), Portugal (€10.1bn), and the Netherlands (€10bn), with acquisitions in sensitive assets proving “remarkably successful,” the report found, citing an 80-percent success rate.
Once mainly regarded as a creditor to developing countries through its Belt and Road initiative, AidData "debunks this myth" and shows Beijing now directs most of its lending to wealthy countries, a share that rose from 12 percent in 2000 to 76 percent in 2023.
Lead author Brad Parks said these loans often target "critical infrastructure, critical minerals and the acquisition of high-tech assets like semiconductor companies."
Cross-border deals involving sensitive technology jumped from less than half before 2015 to nearly 90 percent in 2023, with acquisitions increasingly concentrated in countries with weak investment screening — such as Hungary.
The report draws on a newly-assembled dataset of more than 33,000 projects and activities across 217 countries and 1,193 Chinese lenders who together financed grants and loans worth $2.2 trillion [€19t] over a 24-year period.
China’s overseas lending and grant giving has long been "shrouded in secrecy," the report titled Chasing China notes, not least because Beijing does not report its foreign aid through international systems.
To piece the picture together, 16 full-time researchers and 126 part-time researchers spent three years triangulating data to trace financial flows, leading to new insights into Beijing's priorities.
The EU numbers are only a small part of the total portfolio, but the report shows Europe has become one of Beijing’s preferred destinations for acquisition in strategic sectors such as batteries, grids and chips.
By comparison, the US received the most official sector credit from China, at $200bn [€172bn], funding major firms including Amazon, General Motors, Boeing, and Disney.
But these US investments are largely profit-driven, with few sensitive-sector deals succeeding since security was tightened by the first Trump administration.
'While academics remain divided on whether Chinese investments should be viewed as a threat, for European policymakers this debate is mostly settled.'
As a result, Chinese companies have focused more on European countries, especially the UK, the Netherlands and Germany, which have deep pools of advanced firms and critical infrastructure assets.
AidData identifies two main strategies of Chinese acquisitions in Europe.
The "buy it, strip it, sell it" model involves acquiring firms and transferring key technology to China, as in the 2017 purchase of UK chip designer Imagination Technologies, where Chinese owners trained local engineers, laid off British staff, and later sold the company after stripping it of its intellectual property.
The "buy it, hold it, build upon it" model uses acquisitions as beachheads to expand control in particular sectors. One notable such case is Nexperia, the Chinese chip manufacturer, headquartered in the Netherlands.
Since 2017, Chinese firms, with the help of an €800m syndicated loan from a Chinese state bank, have gradually acquired the Dutch semiconductor company and its UK wafer plant, turning it into a springboard to expand in Europe’s chip industry.
The report notes that China’s overseas lending and grant-giving is becoming "increasingly opaque," slipping under the radar of international regulators.
Tracking shows that between 2010 and 2023, the visibility of Chinese loans and grants fell by 62 percent.
Lenders increasingly channelled funds through offshore branches, shell companies, and exotic credit instruments, often insisting on strict confidentiality, non-disclosure agreements and heavily redacted transactional documents.
"Our ability to access unredacted loan contracts between Chinese state-owned creditors and foreign borrowers increased between 2010 and 2022, but then sharply declined between 2022 and 2023," said Katherine Walsh, a co-author of the report.
While the study covers data only up to 2023, recent events suggest Western powers are now increasingly treating Chinese acquisitions as a clear risk.
Dutch minister Vincent Karremans cited "acute signals" that Nexperia’s Chinese owner "was shifting intellectual property, firing staff, and planning to move production from [Hamburg] to China" as the reason for taking control of the company.
The European Commission has warned it will tighten screening of Chinese investments, including the potential to block companies backed by foreign governments. Member states such as the Netherlands and Germany have already gradually strengthened and expanded their screening processes.
While academics remain divided on whether Chinese investments should be viewed as a threat, for European policymakers this debate is mostly settled.
"It is now conventional wisdom in Western capitals that Beijing’s official sector financial flows to the developed and developing world threaten Western interests," the report notes.
Every month, hundreds of thousands of people read the journalism and opinion published by EUobserver. With your support, millions of others will as well.
If you're not already, become a supporting member today.
Wester is a journalist from the Netherlands with a focus on the green economy. He joined EUobserver in September 2021. Previously he was editor-in-chief of Vice, Motherboard, a science-based website, and climate economy journalist for The Correspondent.
Wester is a journalist from the Netherlands with a focus on the green economy. He joined EUobserver in September 2021. Previously he was editor-in-chief of Vice, Motherboard, a science-based website, and climate economy journalist for The Correspondent.