China's engagements in Europe 2024

Introduction

China’s role in the European economy has grown rapidly, transforming its engagement from primarily trade-based relations to substantial investments across multiple high-impact sectors. The Chinese-European economic relationship now spans advanced manufacturing, green energy, infrastructure development, digital transformation, and more. As of 2024, China continues to play an increasingly integral role in Europe’s industries, fueling growth, innovation, and job creation, while navigating the evolving geopolitical landscape.

This analysis expands further into China’s presence in Europe, covering the most recent 2024 metrics across industries, investments, and trade relationships. The exploration delves into the detailed impacts of China’s business activities, including the strategic importance of Chinese investments, how they are reshaping various sectors, and the overall positive economic impacts in Europe.

1. China-Europe Economic Relations: Expanded Analysis for 2024

China and Europe maintain a robust trading and investment partnership that forms a critical pillar of the global economy. Both entities benefit from mutual trade synergies: China relies on Europe for high-value products such as industrial machinery, automotive parts, and chemicals, while Europe benefits from China’s large-scale production of electronics, textiles, and rapidly growing green technologies.

The EU remains China's second-largest trading partner globally, while China is the EU's largest supplier of goods.

Key Expanded Economic Metrics (2024)

• Total Trade Volume: Trade between China and the EU reached a record-breaking USD 920 billion in 2023, up from USD 875 billion in 2022, representing a 6.2% year-on-year increase. This continued growth was driven by China’s supply of high-tech products like electric vehicles (EVs) and machinery, as well as Europe’s exports of luxury goods, pharmaceuticals, industrial equipment, and cars.
• China’s Exports to Europe: China’s exports to Europe totaled USD 550 billion in 2023, reflecting growing European demand for electronics, textiles, EVs, telecommunications equipment, and green technologies such as solar panels and wind turbines.A notable increase was seen in Chinese electric vehicle exports, which rose by 40% year-on-year as Chinese EV manufacturers capitalized on Europe’s shift to electric mobility.
• Europe’s Exports to China: Europe’s exports to China amounted to USD 370 billion in 2023, with machinery, automotive products, aerospace components, pharmaceuticals, and chemicals being key contributors. German cars and French luxury goods continued to drive Europe’s exports, along with high-end manufacturing equipment and advanced medical technologies.
• Chinese Foreign Direct Investment (FDI): By 2024, China’s cumulative FDI in Europe surged to USD 140 billion, up from USD 130 billion in 2023. This 7.7% increase reflects China’s growing interest in Europe’s high-tech manufacturing, automotive, energy, and digital sectors. Key recipient countries include Germany, the UK, France, the Netherlands, and Poland.
• Belt and Road Initiative (BRI) Investments: China’s BRI in Europe focuses heavily on infrastructure and logistics development. By the end of 2023, total Chinese investments in European BRI-related projects reached USD 35 billion, expanding into sectors like port modernization, rail development, and digital infrastructure, particularly in Eastern Europe and Southern Europe.

2. China’s Strategic Engagement in Europe: Expanding Sectoral Influence

China’s involvement in Europe now extends beyond traditional manufacturing and trade. The Chinese government and private companies are increasingly making strategic investments in cutting-edge technologies, renewable energy, infrastructure, and digital transformation. Europe offers a combination of advanced industries, highly skilled labor, and progressive climate policies that align with China’s goals of technological advancement and global leadership in green technologies.

Advanced Manufacturing and Industrial Investments

Chinese companies have integrated deeply into Europe’s advanced manufacturing sector, particularly in the production of electric vehicles (EVs), battery technology, and industrial machinery. Europe’s high-tech manufacturing base aligns well with China’s ambition to move up the value chain and become a leader in high-end industrial technologies. Chinese firms are investing heavily in Europe’s automotive and electronics sectors, establishing both joint ventures and independent manufacturing facilities.

• Key Expanded Metrics (2024):
• Expanded Job Creation Impact:

Technology and Digital Infrastructure Expansion

China’s growing presence in Europe’s technology and digital infrastructure sectors reflects the global importance of data, artificial intelligence (AI), 5G, and telecommunications in the modern economy. Chinese technology giants like Huawei, Alibaba, and Tencent are becoming pivotal players in Europe’s digital transformation, supporting the growth of telecommunications, cloud computing, and AI applications.

• Key Expanded Metrics (2024):
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Infrastructure Development and Belt and Road Initiative (BRI) Projects

The Belt and Road Initiative (BRI) continues to play a critical role in shaping China’s infrastructure engagement in Europe. Through the BRI, China has focused on modernizing Europe’s transportation, logistics, and energy infrastructure, with a particular emphasis on Southern and Eastern Europe.

• Key Expanded Metrics (2024):
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Renewable Energy and Green Investments

As Europe moves toward its ambitious 2050 net-zero carbon emissions goal, China has emerged as a significant partner in the continent’s green energy transition. Chinese companies are heavily investing in renewable energy infrastructure across Europe, including solar, wind, and battery storage projects. China is a global leader in green technologies, and its expertise is helping Europe accelerate its shift toward sustainable energy.

• Key Expanded Metrics (2024):
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3. China’s Strategic Investments in Key European Markets

While China’s economic influence extends across the entire European continent, certain countries have emerged as particularly important hubs for Chinese business activities due to their industrial capabilities, consumer markets, and strategic locations.

Germany: Europe’s Industrial and Automotive Hub

Germany continues to be the cornerstone of China’s European business strategy, with its strong automotive industry, advanced manufacturing capabilities, and green energy policies. Chinese companies have deepened their investments in Germany’s automotive, battery, and renewable energy sectors.

• Key Expanded Metrics (2024):Bilateral Trade: Trade between China and Germany reached USD 270 billion in 2023, with China exporting electronics, machinery, and automotive components to Germany, while Germany exported automobiles, machinery, and chemicals to China.Chinese Investments: By 2023, Chinese investments in Germany exceeded USD 20 billion, up from USD 18 billion in 2022, with a focus on electric vehicle production, battery technology, and green energy projects.

France: A Growing Destination for Renewable Energy and Technology

France has increasingly become a key destination for Chinese investments in renewable energy and high-tech sectors. French companies and infrastructure projects have attracted significant Chinese capital, particularly in the wind and solar energy sectors, as well as in telecommunications.

• Key Expanded Metrics (2024):Bilateral Trade: China-France trade reached USD 115 billion in 2023, with French exports dominated by luxury goods, pharmaceuticals, and aerospace components, while China exported electronics, consumer goods, and machinery to France.Chinese Investments: Chinese firms invested USD 9 billion in France in 2023, focusing on green energy, AI research, and telecommunications infrastructure.

United Kingdom: A Key Hub for Fintech and Green Energy

Despite its exit from the European Union, the UK remains a critical partner for China, especially in the areas of financial services, technology, and energy. The UK’s fintech sector and AI research capacity continue to attract Chinese investment, as do its renewable energy projects.

• Key Expanded Metrics (2024):Bilateral Trade: Trade between China and the UK reached USD 100 billion in 2023, with China exporting electronics, textiles, and machinery, while the UK exported financial services, pharmaceuticals, and high-tech products to China.Chinese Investments: By 2023, Chinese investments in the UK exceeded USD 13 billion, with a focus on fintech, AI, and renewable energy projects.

Eastern Europe: China’s Gateway for Infrastructure and Manufacturing

Eastern European countries, particularly Poland, Hungary, and the Czech Republic, have become key hubs for China’s Belt and Road Initiative and its broader European manufacturing strategy. These countries provide strategic access to Western Europe while benefiting from strong infrastructure links to China.

• Key Expanded Metrics (2024):Belt and Road Projects: By 2023, China had invested more than USD 22.5 billion in Eastern Europe’s infrastructure, with projects such as the Hungary-Serbia Railway and logistics hubs in Poland and Hungary playing a crucial role in improving China-Europe trade connectivity.Manufacturing Investments: Chinese firms have established manufacturing plants in Eastern Europe, creating over 28,000 jobs in the automotive and electronics sectors. Hungary and Poland have become key destinations for Chinese investments in EV battery production and automotive components.

4. Expanded Job Creation and Economic Impact of China’s Investments in Europe

China’s investments in Europe have had far-reaching positive impacts on employment, technological advancement, and industrial growth across the continent. The jobs created by Chinese investments span various sectors, from manufacturing and infrastructure to technology and renewable energy.

Expanded Job Creation Impact (2024)

• Total Jobs Created by Chinese Investments: By 2024, Chinese investments had created over 450,000 jobs across Europe, reflecting China’s growing footprint in key sectors like automotive, technology, and renewable energy.
• Sector-Specific Job Creation:Automotive and Battery Manufacturing: Chinese investments in Europe’s automotive and EV battery manufacturing sectors have generated 75,000 jobs, particularly in Germany, Hungary, and Poland. These jobs support Europe’s transition to electric mobility and help secure its supply chains for battery technology.5G and Telecommunications: The expansion of 5G networks and digital infrastructure, led by Chinese companies, has created 30,000 jobs in network engineering, telecommunications infrastructure, and IT services across Europe.Renewable Energy: Chinese investments in Europe’s renewable energy sector have now created over 50,000 jobs in solar, wind, and battery storage development, supporting Europe’s clean energy transition.Logistics and Infrastructure: Infrastructure projects under the Belt and Road Initiative have created 35,000 jobs in construction, logistics, and port operations, improving Europe’s connectivity with China.

Economic Empowerment and Technological Innovation

• Technological Transfer and Innovation: China’s investments in Europe have facilitated the transfer of advanced technologies, particularly in electric vehicles, artificial intelligence, and telecommunications. Collaborations between Chinese and European firms have enhanced Europe’s capacity to develop cutting-edge technologies in areas like automotive electrification, AI applications, and smart manufacturing.
• Sustainability and Green Growth: China’s investments in Europe’s green energy sector have played a crucial role in helping Europe meet its climate goals. By 2024, Chinese companies were responsible for a significant share of Europe’s newly installed renewable energy capacity, contributing to the EU’s objective of reducing carbon emissions by 55% by 2030.

5. Future Outlook for China’s Economic Engagement in Europe

The economic partnership between China and Europe is expected to deepen in the coming years, driven by increasing trade volumes, strategic investments, and enhanced technological collaboration. Europe’s focus on sustainability, industrial modernization, and digital transformation aligns with China’s long-term objectives, making the region a key partner for China’s global economic strategy.

Projections for 2030

• Trade Growth: By 2030, trade between China and Europe is projected to exceed USD 1.15 trillion, with strong growth in sectors such as electric vehicles, renewable energy, and digital technologies.
• Foreign Direct Investment (FDI): China’s cumulative FDI in Europe is expected to surpass USD 250 billion by 2030, driven by increased investments in high-tech manufacturing, renewable energy, and AI research.
• Job Creation: Chinese investments are expected to create an additional 600,000 jobs across Europe by 2030, particularly in automotive, renewable energy, and digital infrastructure.

Key Trends for the Future

• Green Energy Leadership: China’s investments in Europe’s renewable energy sector will accelerate, with a focus on expanding solar, wind, and battery storage projects. By 2030, Chinese companies are expected to invest more than USD 70 billion in Europe’s green energy transition, creating thousands of new jobs and supporting Europe’s sustainability goals.
• Digital Transformation and AI: China’s role in Europe’s digital transformation will continue to grow, with increased investments in 5G, artificial intelligence, and cloud computing. This will create new opportunities for collaboration between Chinese and European firms, fostering innovation and job creation in the tech sector.

Conclusion

China’s economic engagement with Europe has transformed industries, created hundreds of thousands of jobs, and fostered technological collaboration across the continent. Through significant investments in manufacturing, technology, infrastructure, and renewable energy, Chinese companies have become key players in Europe’s economic landscape. These investments are driving Europe’s green energy transition, supporting its digital transformation, and contributing to its industrial modernization. As China continues to deepen its ties with Europe, the region will play an increasingly important role in China’s global economic strategy, with job creation, sustainability, and innovation at the forefront of this partnership.

Kjeld Friis Munkholm Associate Parter at Vejle - China Business Center

www.munkholmconsulting.com

? 2024 Kjeld Friis Munkholm. All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means without the prior written permission of the author. transmitted in any form or by any means without the prior written permission of the author.