China is increasing its investment in Europe, constructing factories at an unprecedented rate. According to a new study conducted by the think tank Merics and the Rhodium Group, and reported by Handelsblatt, pure Greenfield investments-where companies build new production sites rather than acquiring existing ones-reached a high point in 2025. This figure amounted to nearly nine billion euros, marking a substantial increase of 51 percent compared to 2024.
From the European Commission’s perspective, this surge is attributed not to random market forces, but to a stricter Chinese policy framework, particularly the imposition of protective tariffs on imported Chinese electric vehicles. These measures are making production within Europe significantly more appealing. Industry Commissioner Stéphane Séjourné stated to Handelsblatt that, “Europe is no longer a free buffet”. He added, “We are open to investments, but we must safeguard our interests”. The automotive sector, in particular, is seeing Chinese firms establishing new factories across Europe. Last year, investments in this specific area totaled 7.6 billion euros, with over 90 percent of this concentration focused on the electric vehicle supply chain.
Despite this increased investment activity, the flow of Chinese exports into the EU continues to grow rapidly. The sheer volume of incoming goods has caused economists to warn of a new “China shock”. To counteract this, the EU Commission plans to legally mandate technology transfers in specific strategic sectors, mirroring a move previously implemented by China. According to Vice President Séjourné, “Stricter requirements for foreign investments lead to more jobs and more added value within Europe”.