Chinese Investment in Portugal Grew 34.52% in 2023

by: Jessica Ferreira

Chinese Foreign Direct Investment (FDI) in Portugal grew 34.52% in 2023, to EUR 368 million, against a downward trend in Europe, according to a report by the Mercator Institute for China Studies (MERICS).

Portugal has seen an accumulated volume of EUR 6.9 billion in Chinese FDI since 2000, MERICS added.

However, within the Southern European Group – comprising Portugal,Croatia, Cyprus, Greece, Italy, Malta, and Spain – Chinese investment fell from 8,8% of the total invested in Europe in 2022, to 3,5% in 2023.

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Chinese investment in Europe fell to its lowest point since 2010, with a drop to EUR 6.8 billion in 2023 from EUR 7.1 billion in 2022.

Mergers and acquisitions also took a tumble, as their value fell by 58% to just EUR 1.5 billion, the lowest figure since the global financial crisis in 2009, caused by fewer acquisitions in general, smaller average deal sizes and the absence of billion-euro mergers and acquisitions.

On the other hand, the percentage of greenfield investment soared to 78% in 2023, up from 51% in 2022, with the main projects coming from private companies CATL, AESC and Huayou Cobalt.

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According to MERICS, more than two-thirds, 69%, of Chinese FDI was in the electric vehicle sector, up from 41% in 2022.

The European health, consumer products, entertainment and information and communication technology (ICT) sectors continue to attract Chinese investors, attracting EUR 3 billion in annual Chinese FDI on average over the period 2021 to 2023.

The report also states that investment is likely to remain at low levels due to economic headwinds and strict capital controls in China, along with increased scrutiny of Chinese investments in Europe, accompanied by weak global economic growth and rising geopolitical tensions, which may also have dampened Chinese investors’ appetite for investing abroad.

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