Chinese investment in Europe surged to its highest level since 2018, driven by a 67% increase in foreign direct investment (FDI) in 2025, according to a report by Rhodium Group and MERICS. This rebound was primarily fueled by a 89% rise in mergers and acquisitions (M&A) activity, reaching EUR 7.9 billion. However, greenfield investment remained the main channel, increasing by 51% to EUR 8.9 billion. Europe accounted for nearly a quarter of global Chinese FDI, up from 17% in 2024.
Hungary dominated Chinese FDI in Europe, attracting EUR 3.9 billion in 2025, up from EUR 3.2 billion in 2024. Germany and France followed with EUR 2.5 billion and EUR 1.9 billion, respectively, marking a significant rise in their shares of total Chinese FDI in Europe. The automotive sector led Chinese FDI, totaling EUR 7.6 billion, with 93% focused on the EV supply chain. The entertainment sector ranked second, pulling in EUR 2.3 billion, followed by consumer products and services at EUR 2 billion.
Despite the surge in investment, the report highlights a slowdown in greenfield investment momentum. In 2025, only EUR 5.2 billion in new Chinese investments in plants and equipment were announced, down from EUR 5.7 billion in 2024. This decline is attributed to a focus on exports, with Chinese goods exports rising by 9% in 2025, particularly in sectors previously targeted by FDI. Battery exports increased by 43%, auto exports by 15% (and 29% in volume), and wind equipment exports by 65%.
The report discusses the geopolitical and macroeconomic factors influencing Chinese investment. Geopolitical uncertainty and a weaker Chinese currency made exports more attractive, while domestic production capacity and competition among Chinese exporters reduced incentives for European investment. The report also mentions regulatory pushback against EVs and scrutiny of Chinese investments in Europe, including potential delays or abandonment of projects. The outlook suggests that Chinese firms will continue to prioritize domestic industrial capacity and exports, making it challenging for Europe to attract greenfield investment.
