Indeed, compared to German companies’ capital stock in China and Hong Kong (around 64 billion euros), at 2.4 billion euros the capital stock of Chinese investors in Germany is relatively low. Chinese firms in Germany are concentrating particularly on mechanical engineering and the automotive industry (including component suppliers). Investment is mostly in the form of takeovers, as this is the best way to secure know-how and simplify entry into a new market. Overall, the benefits of Chinese direct investment in Germany, which consist mainly in the safeguarding of jobs and the opening up of new markets, currently outweigh the drawbacks. However, the danger that the Chinese government will in future be able to exert influence through its state-owned holdings is a real one.
Findings Based on the IW Future Panel
The Network of Production and Supply Links between British Industries, the EU and Germany
The Activities of Chinese Investors in Germany
Since 2014, China has been investing more abroad than foreign companies have been investing in China. The Chinese government is encouraging foreign direct investment not only to modernize the economy, but also to acquire influence and secure essential resources. In Germany, the activities of Chinese investors have come under increasing criticism, though only a small proportion of Chinese direct investment is directed towards Germany.
- Christian Rusche ·
- IW-Trends No. 2 ·
- 6 Jun 2017