Exploring Chinese Investments in Europe: Scope and Governance Dynamics

Abstract

Abstract: Chinese investments in Europe have been significant over the past decade, with almost US$455 billion spent on investments in several sectors, according to the China Global Investment Tracker. Notably, a great portion of these investments are driven by the Belt and Road Initiative. This study analyzes China's investments, identifying the main beneficiaries based on relative economic size and assessing the impact of governance indicators. It employs panel data regression to examine the impact of Chinese investments in 15 European countries from 2011 to 2020. Results indicate that smaller economies and those with lower scores for voice and accountability received a greater proportion of Chinese investments relative to their economic size. Serbia, Belarus, and Ukraine are in the top four list of countries. These findings suggest that China's investment decisions in Europe are not solely determined by governance indicators. Consequently, countries with lower scores have the potential to receive investments and foster economic growth, offering an alternative to conventional methods of attracting foreign investments.