China

MERICS | English | AcademicThink | Dec. 12, 2025 | Regulation

Chinese greenfield investment in the EU, particularly from electric vehicle (EV) and battery makers, has tripled to EUR 5.9 billion between 2019 and 2024. However, these investments often rely heavily on imported parts and labor, limiting local job creation, technology transfer, and supplier opportunities. Examples include Chery and Leapmotor assembling imported semi-knockdown kits in Spain and Poland, and CATL planning to bring in 2,000 Chinese workers for its new Spanish battery plant, raising concerns about limited local economic benefits and poor working conditions.

The EU currently regulates foreign direct investment (FDI) through member states, but application is inconsistent and sometimes lacks conditions, as evidenced by EUR 900 million in state aid given to CATL and LG Energy without strings attached. However, EU officials have indicated a shift toward conditioning Chinese investments on technology transfer and other requirements. The European Commission’s new economic security communication highlights a move from risk identification toward active risk reduction, with an Industrial Accelerator Act expected to introduce local content rules.

To maximize local benefits from greenfield investments, the article suggests imposing EU-wide minimum conditions. These include setting concrete local content targets within the EV supply chain, especially at the supplier level, requiring co-funding of local research partnerships or minimum local R&D expenditure, and enforcing social conditions like worker rights, local hiring, and funding for infrastructure and training. These measures could be applied either as prerequisites for public support or as binding conditions for investment approval, potentially necessitating a comprehensive reform of EU FDI screening.

Despite potential opposition from China, which has tightened export controls on battery technologies, the EU holds significant leverage due to its large automotive market. With limited access to the US market, Chinese EV makers cannot easily forgo the EU. Moreover, Europe’s leadership in sectors like high-end machine tools and aerospace offers additional strategic advantages. The article concludes that Europe must enhance its regulatory approach to ensure that Chinese greenfield investments deliver real economic and technological benefits to the region.

China Daily | English | News | Dec. 12, 2025 | UndeterminedEconomic Growth

The World Bank has raised its economic growth forecast for China in 2025 by 0.4 percentage points, reflecting a more optimistic outlook for the world's second-largest economy. This revision is attributed to supportive fiscal and monetary policies that have bolstered domestic consumption and investment.

Exports have also been sustained by demand from developing countries, contributing to the positive growth expectations. The World Bank emphasizes that China's future growth will increasingly rely on domestic demand rather than external factors.

Mara Warwick, division director for China, Mongolia, and Korea at the World Bank, highlighted the importance of short-term fiscal stimulus alongside structural reforms, particularly in the social protection system. She also called for a more predictable business environment to enhance confidence and support resilient, sustainable economic growth.

Yicai Global | English | News | Dec. 12, 2025 | UndeterminedOperating Results

Global airlines are projected to achieve record profits in 2026, with net profit expected to increase by 3.9 percent to USD41 billion, according to the International Air Transport Association (IATA). This growth is attributed to all-time high load factors and fleet utilization despite softer fares and rising costs. Revenue is forecasted to rise 4.5 percent to USD1.05 trillion, with global passenger traffic increasing 4.4 percent to 5.2 million passengers. However, average net profit per passenger is predicted to remain steady at USD7.90, below the USD8.50 peak in 2023.

IATA highlighted ongoing challenges, including supply chain bottlenecks, geopolitical conflicts, sluggish global trade, and increasing regulatory pressures. Fuel costs are expected to decline slightly by 0.3 percent to USD252 billion due to an anticipated 11 percent drop in Brent crude oil prices to USD62 per barrel. In contrast, non-fuel costs, especially maintenance and leasing, are projected to rise 5.8 percent, driven by an aging fleet, parts shortages, and historic leasing prices. Airport and air navigation fees are also set to increase.

By region, Asia-Pacific airlines are forecasted to earn USD6.6 billion in 2026, led by China and India’s growth, though they have the lowest profit per passenger at USD3.20. The Middle East boasts the highest profit per passenger at USD28.60, followed by Europe at USD10.90 and North America at USD9.80. IATA noted imbalances in value chain profitability, with airlines earning disproportionately less than engine manufacturers and service suppliers.

Air cargo volume is expected to rise 2.4 percent to 71.6 million metric tons, defying negative trade outlooks. Despite a fall in China-US exports, alternative markets have offset the impact of trade tensions. Cargo yields are forecasted to remain stable, declining slightly by 0.5 percent but remaining about 30 percent above pre-pandemic levels. Air cargo has been crucial in adapting to protectionist trade policies, supporting sectors like e-commerce and semiconductors, and enabling early delivery ahead of tariff deadlines.