European investment in China is holding up for now despite deteriorating political relations between the two trading partners, with businesses looking for ways to work around any decoupling threat.
Investment from the European Union into China was up 15 percent in the first half of 2022 compared to a year ago, according to data from Rhodium Group, helped by BMW’s purchase of a controlling stake in its car-making joint-venture in the first quarter.
Although investment has shown some weakness more recently, European companies are not pulling out of China as some had feared. In fact, rising geopolitical tensions may even be encouraging businesses to expand local production chains, analysts say.
“We are not seeing any large exodus yet and companies are still working on completing already planned projects,” said Mark Witzke, a research analyst at Rhodium Group. “At least for European companies, it’s mostly the larger players that already have significant interests in China continuing their planned investments, albeit with some delays” due to lockdowns to curb COVID infections.