China's Expanding Footprint: Europe's Tech Jewels and Strategic Assets Under Scrutiny

China's Growing Economic Footprint in Europe: A Look at French Tech and Italian Concerns

China's increasing economic influence in Europe, particularly through the acquisition of strategic companies, is raising significant alarms about economic security and technological dependence. France serves as a key example, with recent Chinese takeovers of critical firms in the chemical, automotive, and energy sectors. Simultaneously, Italy is expressing deep concerns about China's expanding presence in its economy.

Recently, Chinese entities acquired French chemical company Vencorex, automotive parts manufacturer GMD, and hydrogen bus maker Safra Group. These French companies were all in financial distress, highlighting a trend where struggling European firms turn to Chinese buyers in the absence of targeted state support. This situation, exacerbated by the ongoing US-China trade war, could become a structural issue, as China seeks new avenues for its excess production capacity in Europe.

Chinese investments in France surged significantly between 2010 and 2017, reaching €15 billion, and remained active post-COVID-19, hitting €13.5 billion in 2023. While France has implemented protective measures, China continues to invest, notably in the energy transition sector with major projects like battery and solar panel factories. Despite this, Hungary currently attracts a larger share of Chinese EV investments in Europe.

Italy shares similar concerns, with its Copasir committee warning about the penetration of Chinese capital, which grew from €573 million in 2015 to €4.9 billion in 2018. Of particular worry are investments in strategic infrastructure, such as the Chinese State Grid's 35% stake in CDP Reti S.p.A., which controls Italy's energy networks. This trend aligns with China's broader economic expansion in Europe, as seen with port acquisitions in Germany and Greece.

The European Union acknowledges these concerns, with the Commission emphasizing the need for Member States to implement robust screening mechanisms for foreign direct investments, especially in sensitive sectors. However, the primary responsibility for these controls currently rests with individual Member States, suggesting a potentially lengthy timeline for a fully unified EU approach. Meanwhile, ongoing vigilance by national security services across Europe remains crucial.

by Gabriele and Nicola Iuvinale

In recent years, China's growing economic influence in Europe has become an increasingly heated topic of debate. Chinese acquisitions of European companies, particularly in strategic sectors, are raising significant concerns about the continent's economic security and technological dependence. France is a prime example of this trend, with several key companies recently coming under Chinese control. Meanwhile, Italy is also expressing strong fears about growing Chinese penetration into its own economic fabric.

French Acquisitions: A Wake-Up Call

Three major French companies, active in the chemical, automotive, and energy sectors, have recently been acquired by Chinese groups, highlighting an acceleration of China's entry into the European market.

• Vencorex (Chemicals): In April of this year, the Chinese chemical giant Wanhua Group, through its Hungarian subsidiary Borsodchem, acquired the special isocyanates business of the French chemical company Vencorex. The operation was approved by the Commercial Court of Lyon.

• GMD (Automotive): In May, the Suzhou-based printed circuit board manufacturer DSBJ spent 100 million euros to acquire the French GMD group, a major car parts manufacturer with over a dozen factories in France, supplying automakers like Renault and Stellantis.

• Safra Group (Energy): Almost simultaneously, with the approval of the Commercial Court of Albi, the Chinese Wanrun group successfully acquired the French hydrogen bus manufacturer Safra Group.

It's significant to note that all these French companies were in difficulty, either heavily indebted or undergoing judicial restructuring. As Le Monde lamented, the fact that representatives of key French industrial sectors like chemicals, automotive, and energy are now Chinese-owned has generated considerable concern. French insiders believe that, without targeted state support, companies in crisis are often forced to turn to Chinese buyers – a risk that, with the protracted trade war between China and the United States, could turn into a structural problem.

The Trend of Chinese Investments in France

According to the French Ministry of Finance's Directorate of Economic Affairs, Chinese investments in France surged tenfold between 2010 and 2017, reaching 15 billion euros in 2017. Even after the COVID-19 pandemic, these investments remained active, touching 13.5 billion euros in 2023, a 5% year-on-year increase. However, 2024 has seen a decrease, largely due to protective measures adopted by France to safeguard its domestic industry.

Despite this dip, China ranks among the top ten investing countries in France. Yet, data from research firm Trendeo places it eighth in terms of investment and company acquisition value between 2020 and 2025, well behind the United States and the United Kingdom. China's primary objective seems to be the entire European market, and France isn't necessarily its "preferred gateway."

Another manifestation of Chinese companies' shift towards high technology is their growing presence in the energy transition sector. Recent examples include:

• In 2021, China Envision Group invested 2 billion euros to build a battery factory in Douai, northern France.

• In 2024, the Chinese lithium battery manufacturer XTC partnered with the French Orano to build a factory for positive electrode materials for lithium batteries in Dunkirk, investing 1.5 billion euros.

• In the same year, the Chinese photovoltaic company DAS Solar also announced it would invest in building a "super factory" for solar panels in Douai.

Business France estimates that Chinese companies have approximately 900 subsidiaries in France, employing over 50,000 people. Most are large conglomerates or state-owned enterprises, including Fosun Group, Jinjiang International, Tsinghua Unigroup, Bank of China, and Export-Import Bank of China.

Hungary: A More "Attractive" Partner for China than France

Despite China's significant presence in France, the country isn't yet China's priority partner in Europe. Hungary, in particular, is proving more attractive. Since 2023, under Viktor Orbán's government, Hungary has attracted 44% of Chinese investments in the European electric vehicle sector, with numerous projects from giants like BYD, CATL, and Huayou Cobalt, surpassing the combined investments in Germany, France, and the United Kingdom.

However, with a growing number of French companies facing difficulties, China may be prompted to increase its merger and acquisition activities. France has already identified a number of sensitive sectors (defense, nuclear energy, telecommunications, public health, transport, information technology, and key raw materials) for which foreign acquisitions require prior authorization. The structural risk also stems from the US-China trade war, which could push China to relocate some of its excess production capacity to other regions, including Europe.

Chinese customs data from May 2025 shows a 12% year-on-year increase in Chinese exports to the EU, while those to the United States plummeted by 34.5% during the same period. Growth among European countries has been uneven, with the Netherlands growing by 7%, Italy by only 1.85%; Germany, however, grew by 21%, and France jumped by 24%.

Italian Concerns: An Incalculable Risk

"Concerns" about Chinese investments are nothing new. As early as 2018, German media highlighted the scale of Chinese mergers and acquisitions in Europe, causing discomfort in political and economic circles. In Italy, the issue was raised by the Copasir (Italian Parliamentary Committee for the Security of the Republic) as early as 2020, issuing a warning about the penetration of Chinese capital into the Italian and European economic fabric.

Chinese investments in Italy rose from 573 million euros in 2015 to 4.9 billion euros in 2018. Particularly concerning are investments in companies holding strategic infrastructure assets. A striking example is the Chinese multinational State Grid, which holds 35% of CDP Reti S.p.A., which in turn controls the energy networks of Snam, Terna, and Italgas. Furthermore, over 50,000 entrepreneurs born in the People's Republic of China operate in Italy, 17,000 of whom are in the manufacturing sector.

This phenomenon is part of China's broader economic expansion plan in Europe, as demonstrated by the acquisitions of the Port of Duisburg in Germany and Piraeus in Greece. The risk of Europe and Italy becoming dependent on China is considered incalculable.

The European Union's Response

On November 11, 2020, Italian MEPs Silvio Berlusconi and Antonio Tajani of the EPP submitted a formal question to the European Commission on the "Penetration of Chinese capital into the Italian and European economic fabric." The response from Executive Vice-President Valdis Dombrovskis, received in March 2021, reiterated that the EU is open to foreign direct investment (FDI), but this openness must be balanced by adequate controls to ensure security.

Dombrovskis clarified that the Commission and Member States, under Regulation (EU) 2019/452, can identify, assess, and mitigate potential risks to security or public order associated with any FDI. While 17 Member States already have a screening mechanism, the Commission believes that all Member States should maintain a mechanism allowing them to screen FDI in all sectors for security or public order reasons. The current priority is the full implementation of the EU cooperation mechanism, active since October 2020, whose effectiveness will be evaluated by October 2023. However, the Commission does not intend to create a structure capable of conveying strategic economic and industrial information from Member States' security services.

This means that the primary control depends, in effect, on each individual Member State, and the timeline for implementing a common EU strategy could be lengthy. In the meantime, it's crucial for Italian and European security services to pay close attention to this evolving phenomenon.