Comments on Geographical and Strategic Factors in Chinese Foreign Direct Investment in Europe

Riikka Nuutilainen, Bank of Finland, Institute for Economies in Transitions (BOFIT): The paper addresses an interesting and highly topical question of Chinese foreign direct investment (FDI) into Europe: the possible motivations behind the investment decisions and the FDI patterns observed in recent years. The compilation of bilateral FDI statistics are notoriously difficult even in advanced economies, but especially in China, where the Ministry of commerce (MOFCOM) bilateral FDI statistics are collected from company-reported investment plans. They record only the first destination country and sector (not the ultimate one). Most of China's outward investments are directed via Hong Kong or other offshore centers because of, for example, more favorable taxing conditions or round-tripping with the aim of ultimately investing the funds back to China.¹ The sectorial division is likely distorted as well because leasing and commercial service and financial intermediation are the largest categories. To complement the official statistics, some...