Playing with the Dragon. How local actors interact with Chinese companies investing in Germany

Abstract

The pace of China's outward foreign direct investment (OFDI) is unprecedented. In particular, the global financial crisis in 2008 and the relaxed regulations by the Chinese government have facilitated the remarkable rise of Chinese OFDI in Germany. Initially, the German government welcomed Chinese investors buying various German medium-sized and family-owned companies. The rapid pace of Chinese companies entering Germany has, however, gained much attention from local stakeholders, such as the media, think tanks and the German government. Due to China's state capitalist system, the majority of Chinese investors in Germany being stateowned companies, and China's growing political and economic power, concerns have been increasingly raised by local stakeholders. On the grounds of national security interests, the EU created a regulatory framework for enhanced cooperation, and the German investment screening process was tightened. These legal and policy changes created increasing ambiguity and obscurity for Chinese investors interested in the German market, as can be seen in the decreasing Chinese investments in Germany since 2016. 'Playing with the dragon' in Germany has thus become more complicated.