China is currently the world market leader in alternative energy, with the greatest production of clean energy and largest investments in this field. According to recent data from the Chinese National Energy Agency, by 2020, China aims to spend more than $360bn on renewable power sources including solar and wind energy. In this context, Europe has become a major destination for Chinese investment flows in the clean energy sector. A new research paper from Toulouse Business School shows how trade and investments in the wind and solar sectors have evolved between the EU and China in recent years.

In the article, “Chinese investments the EU renewable energy sector: motives, synergies and policy implications,” combining data from the International Trade Center (ITC) and the Chinese Ministry of Commerce (MofCom) and drawing on existing studies – Louise Curran, Professor of Marketing and International Business at Toulouse Business School in France, Ping Lv from University of Chinese Academy of Sciences in China and Francesca Spigarelli from University of Macerata in Italy – explore the evolution of bilateral trade and investments in the renewable energy sector over the last decade (2004-2014) and in particular the extent of Outward Foreign Direct Investments (OFDI) from China to EU. The article was recently published in the Energy Policy review.

Destinations of investments

A vast majority of Chinese investments (80%) in the EU renewable energy industry were made in the solar and wind sectors, which are seen as the two key sectors where China have potential competitive advantage. Both sectors show similar investment trends. “At the same time, we also clearly see large increases in Chinese trade flows to the EU over the study period. Although it is clear that the value of trade in wind energy systems was significantly lower than in solar,” explains Louise Curran from Toulouse Business School.

According to the research, Germany is the most popular destination for solar and wind investments, which is in line with a general trend for Chinese investments in the EU. The high concentration of Chinese investments in Germany is linked to the strong bilateral economic and diplomatic relations with China, as well as to their leading position in green technologies and strong German government support for the renewable energy sector.

For the solar sector, almost 50% of the Chinese firms in the sample invested in Germany. Next in line came Luxembourg (a fact which was certainly affected by fiscal motivations), followed by Italy (6.9%), the Netherlands and the UK (5.9% each). In the wind energy sector, almost 30% of the sample Chinese firms invested in Germany, followed by Denmark (11.4 %), which has historically had a leading role in the wind industry in Europe.

Chinese clean energy firms are market-seeking oriented

The research shows that most of the solar and wind Chinese firms prefer to invest in the EU without a local partner, pursuing greenfield investments, rather than acquisition or joint ventures. This is consistent with their motivation being primarily market-seeking (sales and services), rather than strategic-asset seeking. Subsidiaries are opened in Europe mainly to penetrate the market, however there is some investment in production, R&D and operating facilities.

“Having acquired and consolidated a competitive advantage, and in a context of overcapacity in the industry, Chinese firms seem to be seeking outlet markets for their production in mature western locations. R&D and production are less often motivations, although the former is more common in wind,” said Curran.

Conclusion and implications

The research highlights that EU and Chinese renewable energy policy frames are converging, even if the sector has been subject to several bilateral trade conflicts, and both investment and trade have seen rapid falls since 2011. However, the researchers conclude that these trends are more related to difficulties in the local market (ie. cuts in consumption support in key EU markets), than to the trade tensions within the sector (ie. the anti-dumping duties against Chinese solar panels imposed by the European Commission).

“The key difference between solar and wind is that trade and the number of investments in the solar sector fell from the peak in 2011, while for the wind energy sector the fall began in 2012,” highlights Curran. In conclusion, over the last three years the attractiveness of the EU renewable energy market has fallen significantly.

There are clearly potential synergies between Chinese companies’ financial and technological capacities and those of EU partners. The challenge comes in managing the integration of these capacities in a shifting policy environment. The variation in national investment policy in the EU’s member countries, as well as the cultural and language differences, remain significant barriers to successful investments for Chinese firms.

The article “Chinese investments the EU renewable energy sector: motives, synergies and policy implications” is an outcome of the project POREEN (Partnering Opportunities between Europe and China in the Renewable Energies and Environmental iNdustries). POREEN was funded by the European Commission under the 7th Framework Programme for Research in the Socio-economic Sciences and Humanities (SSH). For more information, please visit

Press contact: Cinta PLUMA

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