China's investments in the European Union dropped by almost two-thirds last year as a result of the coronavirus pandemic and Brussels' crackdown on foreigners buying up strategic European assets.
A new report from the EU shows that Beijing's share of the bloc's total inbound investments dropped to 2.5 per cent in 2020 from 4 per cent in 2019.
While there was a broad decline in overall investment in Europe, it was more pronounced for China and Russia, two nations that have prickly relations with the EU and whose purchases could be expected to be scrutinised by the EU's screening mechanisms.
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Last year, the 20 EU member states with foreign direct investment (FDI) screening tools of their own referred 265 cases to the European Commission for review. Of those, 80 per cent passed review in a short first phase, with 14 per cent going to a second phase of more substantial evaluation.
In total, the EU offered a final opinion on just eight transactions, with only 2 per cent of all inbound investments blocked.
A senior EU official, speaking on background, said the number may have been kept so low because the screening mechanism acted as a deterrent against investments that may have otherwise come under close scrutiny.
The EU would not divulge details of the individual transactions but said the top five sources of deals that were referred for review were the United States, Britain, China, Canada and the United Arab Emirates.
One of the deals blocked was in the semiconductor sector, the official said, while 50 per cent of those that progressed to the second review phase were in manufacturing.
The screening tool, launched in March 2019 amid concern over Chinese investments in key European infrastructure sites and technology firms, was used sparingly last year, the report showed.
Before its introduction, Chinese buyers had bought stakes in a host of European ports, including the Piraeus port in Greece, Zeebrugge in Belgium and Duisburg in Germany, prompting officials to propose legislation in 2017.
In September of this year, Chinese conglomerate Cosco bought up a 35 per cent stake in the Port of Hamburg, Europe's third busiest, with the EU keen to stress that the rules were not designed to block all investments from any single nation.
In 2020, China accounted for 2.45 billion euros (US$2.76 billion) of 98 billion euros total investment in the EU, down from 13.4 billion euros out of 335 billion euros in 2019.