The EU FDI Screening Regulation and its Impacts on Chinese OFDI

Mengjun Shi (2020) The EU FDI Screening Regulation and its Impacts on Chinese OFDI. Külkereskedelmi Kar.

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Absztrakt (kivonat)

Executive SummaryOver the past few years, despite the faltering global economic recovery, China’s foreign direct investment has maintained steady growth with the accelerated implementation of the Chinese government’s “going global” strategy. Chinese enterprises have been increasingly driven into economic globalization. In 2012, China’s outward foreign direct investment reached 87.8 billion USD, making China as the third largest outbound investment country in the world (Ministry of Commerce, 2013). According to a report issued by Le Figaro on May 4, 2014, China has accelerated the pace of overseas mergers and acquisitions since Chinese “going global” strategy. Focused on the best brand and companies with professional knowledge in developed countries, and Europe has become the largest market for overseas mergers and acquisitions of Chinese enterprises (Le, 2014). As China’s largest trading partner, the EU is the largest source of investment and technology exporter. In the 43-year history of the establishment of diplomatic ties between China and the EU, economic and trade exchanges have been the major driving factors for the development of mutually beneficial and win-win relations between the two sides. Although the growth rate of bilateral trade declined after the European debt crisis (2010-2012), China’s investment in the EU showed a steady increase. The EU has become the region with the highest growth rate of China’s overseas investment. Since 2010, China’s investment in the EU has surpassed that of the EU in China. In 2016, the stock of China’s FDI in the EU accounted for 41.9% of that in major developed economies, making it the largest destination for China’s outbound investment. The EU integration process, the long-term sluggish economic development and the Brexit have created favorable conditions for the bilateral trade and investment cooperation between China and the EU, because of these problems, China invested more to the EU, and the EU was welcome the investment from China. China’s direct investment in the EU surged to 35.1 billion EUR, while EU spending on mergers and acquisitions in China continued to decline to 7.7 billion EUR over the same period, accounting for only-quarter of China’s investment in Europe. On August 2, 2019, Ernst & Young released an overview of China’s overseas investment in the first half of 2019. The report pointed out that China’s industry wide OFDI reached $57.412 billion, down 8% year on year, while non-financial OFDI reached $53.8 billion, down 5.9% year on year. But the investment structure was more diversified, with outbound investment in manufacturing, information transmission, software and information technology services rising 7.3% and 31.7%, respectively, bucking the trend. Based about Chinese overseas mergers and acquisitions fallen sharply, Ernst & Young’s global head of China’s overseas investment sales department Zhou Zhaomei said: “In the first half of 2019 China overseas mergers and acquisitions is a sharp fall in external investment environment wave superposition response and internal review decision. Europe and the United Stated government general tightening in the past two years the foreign investment review, external resistance increase, however, along with those in emerging developing countries has also intensified its efforts to open China overseas investment preferences from Europe and the United States to the Asia-Pacific. Asia has become the most popular with China’s overseas investment destination (EY, 2019)”. At the same time, the report pointed out that in recent years, a number of European countries have proposed foreign direct investment screening regulation. The EU foreign investment screening regulation came into force in April 2019, heralding a tightening of overall investment supervision in Europe. In the first half of 2019, the mergers and acquisitions amount of Chinese enterprises in Europe was only 3.62 billion USD, with a sharp decline of 86.6%, becoming the largest drop in years (EY, 2019). By reading the latest literature related to China-EU economic relations, the official statistic shows that China’s FDI to the EU fell by 40% in 2018, reached the lowest point in the last four years. Further exploring the reasons for the decline, the main reason can be found in China’s capital controls and tighter liquidity, as well as the proposal of the EU FDI screening regulation (FDIR). Therefore, to prove my thesis, I analyze the new EU FDI screening regulation by mainly introducing the background of the regulation, the core content, and implications and goals of the regulation. Based on the analysis of the regulation, I collected Chinese FDI data to the EU, analyzed the changes in the amount and distributions, and summarized the impacts of the EU FDIR to Chinese FDI. Finally, I provided some suggestions to the Chinese investors regarding what to do to overcome the new regulation. This paper tries to explain why the EU launched the FDI screening regulation. What will happen to the EU FDI screening? How it will influence China’s FDI to the EU? In the paper emphasize is put on these questions and issues. This article explains why the EU launched the FDI screening regulation. What will happen to the EU FDI screening? How it will influence the China’s FDI to the EU? These questions and issues are the research direction and logic. One of the main goals of this research is to help Chinese investors understand the meaning of FDIR and find solutions to overcome challenges. In my thesis, I analyzed the principles and main contents, and summarized some characteristics of these screening mechanism implemented by the member states. Based on this analysis, I concluded the challenges that Chinese enterprises might have, and provided some suggestions to them. By analyzing the cooperation and barriers between China and the EU, the FDI flows and stocks situation between each other, the discussion of the EU new FDIR and its impacts to Chinese OFDI to the EU. I got the conclusion that the new EU FDIR has negative impacts on Chinese OFDI to the EU. It will decrease Chinese FDI flows in the EU. In this case, Chinese enterprises and investors need to take proper actions to overcome these difficulties and challenges. Base on this conclusion, I offered some personal suggestions to reduce the risk, such as establish a risk prevention mechanism, strengthen high-level political communication to improve the investment environment, and establish a security review for the enterprises themselves. Literature: -Regulation (EU) 2019/452 pf the European Parliament and of the Council -EU foreign investment screening regulation enters into force. -Liu Yizhan & Zhang Haiyan: The impacts of EU FDI screening regulation to China and advices -Jacob, Kirkegaard Funk Chinese investment into the US and EU has plummeted since 2016 -Joseph Percy: Investment Screening in the EU: Impact on Chinese FDI -Kimberley Addison, Anne Federle, Thomas Verellen:EU Foreign Direct Investment Screening: What Investors Need to Know -John Seaman, Mikko Huotari, Miguel Otero-Iglesias: Chinese Investment in Europe A Country-Level Approach

Intézmény

Budapesti Gazdasági Egyetem

Kar

Külkereskedelmi Kar

Tanszék

Nemzetközi Kapcsolatok Tanszék

Tudományterület/tudományág

NEM RÉSZLETEZETT

Szak

Nemzetközi gazdálkodás szak (angol)

Konzulens(ek)

Mű típusa:	diplomadolgozat (NEM RÉSZLETEZETT)
Kulcsszavak:	Európai Gazdasági Közösség, Európai Unió, kína, külföldi tőkebefektetés, nemzetközi gazdasági együttműködés
SWORD Depositor:	Archive User
Felhasználói azonosító szám (ID):	Archive User
Rekord készítés dátuma:	2020. Dec. 05. 14:38
Utolsó módosítás:	2020. Dec. 05. 14:38

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