80% Chinese companies invested in EU plan more investment in 2026

As of March 2026, roughly 80% of Chinese companies already operating in the European Union (EU) plan to expand their investments over the next three years. This trend is driven by a desire to bypass trade barriers and capitalize on Europe’s green and digital transition.

80% Chinese companies invested in EU plan more investment in 2026 core investment drivers

"In Europe, for Europe" Strategy. Companies are increasingly localizing production to mitigate risks from EU tariffs and regulatory scrutiny (such as investigations into "unfair subsidies" for EVs and batteries).

Domestic Market Saturation. Intense competition and a "brutal race to the bottom" in China’s home market are pushing firms to seek more profitable opportunities abroad.

Strategic Industrial Fit. There is high interest in sectors where China has a competitive edge, specifically new-energy vehicles (NEV), battery value chains, and renewable energy.

Market Access & Brand Building. Chinese firms view the EU as a "proving ground for global brands" and a vital hub for technological innovation and setting international standards.

U.S. Market Restrictions. The de facto closure of the U.S. market to many Chinese products has made the EU a more critical destination for global expansion.

CHINESE companies invested in EU plan more investment in 2026 already showing corn trends

Shift to Greenfield Projects. Investment is moving away from mergers and acquisitions toward building new factories from scratch.

Geographic Focus on Hungary. Hungary has become a top destination, capturing roughly 31% of Chinese investment in Europe in 2024 due to its openness and large-scale EV projects.

Revenue Growth. Despite regulatory "headwinds," 53% of surveyed companies recorded revenue growth in the EU in 2024, and 62% expect further growth in 2025.

While 80% plan to invest more, these companies remain "cautiously optimistic". Over half cite "policy uncertainty" and increasing protectionism as their primary concerns, fearing that shifting EU regulations could still reshape the competitive landscape.

HERE to highlights of the specific EU regulatory barriers these companies are currently facing, further to explore the motivations and trends behind Chinese companies' increased investment in the EU: 

1. Key Regulatory Hurdles

The EU has introduced several tools to ensure "fair competition" and "economic security," which Chinese firms cite as their top concerns.

Foreign Subsidies Regulation (FSR):

The Power. The European Commission can investigate and block mergers, investments, or public procurement bids if it believes a company has received "distortive" state aid from a non-EU government.

The Impact. As of March 2026, over 60% of Chinese firms report their operations have been affected by the FSR.

Real-world Costs. Investigations have already led to the abandonment of projects worth over €1 billion and an additional €1 billion in affected ventures due to bidding exclusions and compliance costs.

EV Tariffs and Price Undertakings:

Current Duties. On top of the standard 10% duty, the EU has imposed additional countervailing duties (up to 35.3%) on China-made EVs.

The Loophole. Companies can bypass these tariffs by committing to "minimum price undertakings" or by localizing production within the EU to qualify as European-made.

Industrial Accelerator Act (IAA):

This new policy prioritizes EU-based firms for subsidies and procurement in sectors like hydrogen, solar, and batteries. It introduces "local content" requirements that can exclude Chinese products unless they are produced within the bloc.

2. Hungary is the Top Destination

Hungary has become the "bridgehead" for Chinese investment in Europe by offering a stable, business-friendly alternative to the more skeptical Western EU states.

Investment Leader. In 2025, China was Hungary’s largest source of foreign investment for the third consecutive year, accounting for 57% of total inflows.

Strategic "Greenfield" Projects:

CATL (Debrecen). A €7.3 billion battery Gigafactory—one of the largest in the EU—is scheduled to begin production in early 2026.

BYD (Szeged). Trial production for its first European passenger car plant began in January 2026, with mass production expected by Q2 2026.

Government Support. Unlike some EU members, the Hungarian government actively supports Chinese firms with fiscal incentives, such as tax exemptions and custom relief.

Logistics Hub. Hungary has positioned itself as a central European air cargo hub, with Chinese electronics making up over half of the cargo volume at Budapest Airport

While Hungary remains the primary "bridgehead" for Chinese firms, other major EU economies like

Spain and Germany are taking divergent, more complex approaches to these investments.

Spain: The "Third Way" Pragmatist

Spain is actively positioning itself as a "bridge" between China and the EU, pursuing a middle ground that avoids a full-scale trade war while maintaining its EU commitments.

Investment Hub. Spain is currently the fourth-largest destination for Foreign Direct Investment (FDI) in Europe. It appeals to Chinese firms through lower energy and labor costs compared to Northern Europe.

The Chery-Ebro Venture:

Status. Chinese automaker Chery is revitalizing a former Nissan plant in Barcelona through a joint venture with Spanish brand Ebro.

Timeline. After several delays due to EU tariff uncertainty, production of the Omoda 5 and Jaecoo 7 models is set to begin as soon as possible in 2026.

Goal. The plant aims to produce 150,000 vehicles annually by 2029, serving as an export hub for both Europe and Latin America.

Political Stance. Prime Minister Pedro Sánchez has publicly urged the EU to "reconsider" punitive tariffs on Chinese EVs to avoid a trade war, even as Spain offers €1.5 billion in subsidies to boost its own domestic EV market.

Germany: The "De-Risking" Dilemma

Germany's relationship is characterized by a "delicate balancing act" between deep economic dependence and new national security concerns.

Investment Paradox. While Berlin’s official policy is "de-risking" (reducing strategic dependencies), German corporate investment in China actually hit record highs in early 2026, driven by auto giants like Volkswagen and BMW.

Selective Openness:

Welcomed. Investments in green technology and advanced manufacturing are generally accepted as they help Germany’s own energy transition.

Blocked. Germany has recently blocked Chinese acquisitions in sensitive sectors like telecommunications (5G) and energy grid operators on national security grounds.

Political Shift. Under the leadership of Chancellor Friedrich Merz (since May 2025),

Germany has echoed the EU's "partner, competitor, and systemic rival" framework while still voting against certain EU duties to protect its own automakers' interests in China.

HERE are European car models will be the first to use these locally-produced Chinese batteries in 2026

In 2026, the first wave of European cars using batteries produced at Chinese-owned plants in the EU (specifically CATL and BYD facilities in Hungary and Germany) will hit the market. The primary beneficiaries are German luxury brands and specialized "affordable" EV projects.

Key Models Launching with "Local" Chinese Batteries

BMW iX3 (Neue Klasse). The first model on BMW’s revolutionary "Neue Klasse" platform is scheduled for a March 2026 market launch. It will use Gen6 cylindrical cells produced by CATL at its new Debrecen, Hungary plant.

BMW i3 Sedan (Neue Klasse). Following the iX3, a fully electric 3 Series successor (the i3) is expected in 2026, also drawing from the CATL Hungary supply chain.

Mercedes-Benz "Next Generation" EVs. Mercedes is the "first and biggest" customer of CATL’s Hungary plant. Starting in 2026, its new modular architecture (likely including the electric CLA-Class) will utilize these locally-produced, CO2-neutral cells.

Renault Twingo EV. This upcoming "affordable" EV (aiming for a price near €11,800 after subsidies) is expected to use CATL batteries produced in Hungary to qualify for European manufacturing incentives.

BYD Dolphin Surf. BYD confirmed that this compact model will be the first vehicle produced at its new Hungary assembly plant, which will use batteries from its own localized supply chain starting in 2026.

Stellantis (Opel/Vauxhall & Fiat). Stellantis has a joint venture with CATL to build LFP (Lithium Iron Phosphate) batteries in Europe. While their Spanish plant starts late 2026, early 2026 models like the Leapmotor B10 (jointly produced with Stellantis in Poland/Europe) are slated to use these localized battery solutions.

IN conclusion

China’s net overseas assets rose 28% year-on-year to $4.07 trillion at the end of last year, as a large current account surplus was partly channeled into outbound investment.

The increase lifted China to the world’s second-largest net creditor position, reflecting stronger capital outflows as domestic firms expand globally and diversify holdings.

Data released Friday by the State Administration of Foreign Exchange showed China’s current account surplus reached $735 billion last year, or 3.7% of GDP, the highest in more than 10 years.