Chinese greenfield investment – EU Faces Rising Risks as Chinese Greenfield Investment Grows Without Guarantees for Local Jobs, Technology Benefits, Supplier Access and Long-Term Economic Security 11-12-2025
Chinese greenfield investment
Rethinking Chinese Greenfield Investment: Why the EU Must Strengthen Conditions for Real Local Gains
Chinese greenfield investment across Europe has surged over the past five years, reaching nearly six billion euros as Chinese electric vehicle and battery manufacturers build new facilities for the European market. Greenfield investments are typically expected to bring new jobs, supplier opportunities and technology spillovers. But recent projects reveal a very different reality. Europe risks hosting production sites that offer limited local value unless stronger, EU-wide conditions are put in place.
This challenge sits at the heart of the current debate on Chinese greenfield investment, which has become increasingly influential in the electric mobility transition. While Europe needs foreign capital and manufacturing capacity, it also needs guarantees that new facilities will strengthen—rather than weaken—its long-term economic security.
Imported Parts, Imported Staff, Limited Local Value
Some of the most prominent Chinese EV projects illustrate why stronger rules are necessary. Companies such as Chery and Leapmotor have opened plants in Spain and Poland that do not manufacture vehicles from scratch. Instead, they import semi-knockdown kits consisting of partly assembled cars requiring only final assembly in Europe. This process significantly limits job creation and provides few entry points for European suppliers.
The same pattern appears in the battery industry. CATL’s new plant in Spain is expected to rely on thousands of imported workers from China for its construction phase. Local officials have raised concerns about a lack of transparency, limited supplier engagement and weak technology transfer.
These examples show how Chinese greenfield investment can easily miss the goal of supporting local labor markets, improving working conditions or strengthening Europe’s technological base. Some EV battery plants have also been linked to poor labor practices, adding a social dimension to the economic concerns.
The EU Has Tools—but Application Remains Uneven
The European Union already has strong mechanisms to manage foreign direct investment, yet implementation differs widely across member states. The EU’s FDI screening regulation sets a shared framework, but individual countries decide how to enforce it. Meanwhile, tools such as state aid, Important Projects of Common European Interest and public procurement rules could be tied to conditions, but they often are not.
One recent study found that major battery makers received nearly one billion euros in public support from Hungary and Poland without any meaningful conditions to ensure local benefits. This uneven approach weakens Europe’s negotiating position and reduces the leverage needed to steer Chinese greenfield investment toward supporting European priorities.
There are encouraging signs of change. In late 2024, EU Trade Commissioner Maros Sefcovic and Danish Foreign Minister Lars Rasmussen publicly argued that foreign investments, especially from China, should meet clearer European expectations. The European Commission is also shifting toward a more proactive approach with its new communication on economic security. This prepares the ground for upcoming legislation, including the Industrial Accelerator Act, which is expected to introduce local content requirements.
Why Conditioning Greenfield FDI Should Become an EU Priority
For Europe to benefit from growing Chinese greenfield investment, it needs a coherent and enforceable framework that applies consistently across all member states. Three types of conditions would be especially effective.
1. Local Content Requirements in Strategic Sectors
Clear, enforceable local content rules are essential for the EV value chain. These rules should focus not only on final assembly but also on supplier networks. If localization requirements apply only to high-value components, companies could meet targets easily without stronger integration into the European supplier ecosystem. Supplier-level requirements ensure broader, more inclusive economic impact.
2. Requirements for Research Partnerships and R&D Investment
Mandating co-funded research programs or minimum R&D spending would promote real technology spillovers. A project like CATL’s Spanish plant has enormous potential to strengthen European expertise, but without conditions, that potential may remain unused.
3. Social Standards and Worker Protections
Labor conditions remain an underexamined issue in parts of Europe’s battery industry. Conditioning Chinese greenfield investment on fair labor standards, local hiring commitments and community benefit funds can improve worker protections and strengthen public support for industrial expansion.
These conditions could first be implemented as prerequisites for accessing public support such as IPCEI or state aid. If insufficient, they could be expanded into binding requirements for approving investments.
Europe Has More Leverage Than It Realizes
Beijing would likely oppose any additional conditions on Chinese greenfield investment, especially given China’s recent export controls on battery technologies. But Europe should not underestimate its bargaining power. The EU automotive market is the third largest in the world, and Chinese EV makers rely heavily on it for growth, especially as the US market remains politically closed to them.
If China were to respond with restrictive countermeasures, Europe could use its own leverage in advanced machinery, aerospace components and other high-tech sectors where European companies remain global leaders. China cannot easily replace these imports, giving Europe strategic room to enforce fair, balanced investment rules.
Europe Must Act Now to Shape the Future of Its Automotive and Battery Sectors
The rise of Chinese greenfield investment presents both opportunities and serious risks. Without strongerEU-wide conditions, Europe could host large industrial facilities that generate limited long-term benefits, undermine local suppliers, weaken technology transfer and contribute little to community development.
Stricter rules are not about rejecting investment; they are about ensuring that it truly supports Europe’s economic resilience, technological leadership and social standards. With clearer requirements, the EU can shape a healthier industrial ecosystem, protect its workforce and make sure foreign investors contribute meaningfully to the continent’s future.
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