(Yicai Global) May 10 -- China's greenfield investment in Europe increased by more than half in 2022, exceeding the other type of foreign direct investment of mergers and acquisitions for the first time since 2008 as new energy firms built more factories amid the lowest FDI inflows in the past decade.

Greenfield investment, which involves building facilities from the ground up abroad, rose by 53 percent last year to EUR4.5 billion (USD4.9 billion) from 2021, making up 57 percent of the annual total, as Chinese firms were busy setting up electric vehicle battery factories in Europe to seize market opportunities, according to a report released by Rhodium Group and the Mercator Institute for China Studies yesterday. However, the total FDI slumped by 22 percent to a 10-year low of EUR7.9 billion due to sluggish M&A activity.

This year, China's outbound investment may increase but it is unlikely to rebound to the levels seen around 2015, the two research bodies predicted.

The European new energy sector is getting heated with Chinese investments. For example, Envision AESC said in June that it will build a battery factory in Spain with a total capacity of 50 gigawatt-hours. The plant should be ready by 2025. Contemporary Amperex Technology said in August it will construct a battery base in Hungary with a planned production capacity of 100 GWh and a total investment of EUR7.3 billion. The facility should start trial production next year. Moreover, SVOLT Energy Technology said in September it will establish a battery cell factory in Germany.

Last year, the top fields of FDI remained consumer goods and automotive products as three-quarters of all funding went into these two areas. And the direction is up as Chinese companies are considering expanding their footprint in the upstream and downstream parts of the electric vehicle value chain, per the report.

Finally, most of the money went into four countries, namely the United Kingdom, France, Germany, and Hungary, making up nearly 90 percent of the total FDI.

Editor: Emmi Laine, Xiao Yi