Despite highs in the past, investment in Europe is on the decline. Credit: Flickr
Chinese companies invested 2.4 billion dollars (2.1 billion euro) in Europe in the first half of 2019, 84% less than in January-June 2018, according to a study by the EY economic consultancy.
In the first semester of 2019, Chinese firms bought out or bought into 81 European businesses, a 28% drop, but these transactions were generally lower-volume ones. As a result, investments shrank by 15.3 billion dollars compared to the first half of 2018, amounting to just 2.4 billion dollars.
The drop is due primarily to the trade war between China and the United States. Moreover, a number of Chinese businesses usually very active in Europe are digesting their acquisitions or even selling them off.
Chinese investors are also said to be facing increasing mistrust in Europe, as evidenced by the German Government’s decision to veto the arrival of the Chinese state conglomerate SGCC.
The end result is that large buyouts by Chinese companies are becoming increasingly rare, and the Chinese are becoming more selective.
In 2016, Chinese investments in Europe had topped 85 billion dollars.
However, EY feels Chinese investments have bottomed out and could bounce back once the trade war between the U.S. and China is resolved and economic growth is relaunched.