Xi Jinping’s European Tour Traces China’s FDI Trail

Chinese President Xi Jinping’s visit to Europe, his first since 2019, strategically follows China’s foreign direct investment (FDI) trail, notably focusing on countries like Hungary and Serbia, which have seen substantial recent Chinese investment.

During his visit, President Xi’s itinerary included stops in France, Serbia, and Hungary, carefully chosen for both geopolitical and economic reasons. In France, discussions with President Emmanuel Macron underscored Europe’s pursuit of “strategic autonomy” amid US-China tensions. Serbia, a non-EU and non-NATO member, shares ideological similarities with China regarding territorial claims, making it an essential stop on Xi’s tour. Hungary, the final destination, witnessed Xi proclaiming the “best in history” relations between China and Hungary.

These countries, apart from their geopolitical significance, share another commonality: high levels of recent Chinese FDI. Between 2021 and 2023, Hungary attracted $12.1 billion in Chinese investment, while Serbia saw FDI double to $6.84 billion during the same period. France, meanwhile, welcomed $2.3 billion of Chinese FDI in 2023 alone, reaching its highest level since 2016.

Xi’s European tour coincides with heightened scrutiny on Beijing, with concerns ranging from the EU’s reliance on China to the tech war with the US and Russia’s conflict in Ukraine. Abishur Prakash, founder of The Geopolitical Business Inc., notes that China’s strategy in Europe is shifting towards smaller economies willing to align with Beijing, aiming to establish new geo-economic chains.

In Hungary, Xi emphasised the country’s importance as a target for Chinese investment, particularly in critical supply chains like electric vehicles (EVs). Chinese companies, including battery maker CATL and EV manufacturer BYD, are spearheading major projects in Hungary, highlighting China’s growing influence in the region.

Similarly, Serbia has attracted significant Chinese investment, with projects like Zijin Mining’s $3.8 billion investment in a copper-gold mine and plans for a €2 billion hybrid wind and solar plant. These investments underscore China’s strategic interests in Europe’s green transition and critical industries.

Max Zenglein from the Mercator Institute for China Studies highlights Xi’s visit as a way to promote positive business ties amidst concerns about a more aggressive EU stance. Xi’s emphasis on greenfield investments and job creation reflects China’s efforts to showcase the benefits of its relationship with the EU.