China, Europe, and the Pandemic Recession: Beijing's Investments and Transatlantic Security   [open pdf - 13MB]

From the Introduction: "With most of Europe suffering the effects of a pandemic-induced recession, will China repeat the role it played in the wake of the 2009-12 European sovereign debt crisis, essentially acting as a lender of last resort for countries and firms in need of liquidity? A decade ago, in the wake of the global financial crisis, Chinese investment in Europe exploded. In 2008, Chinese outbound foreign direct investment in Europe totaled just €700 million in completed transactions. By 2016, this amount had grown to €37.3 billion in completed transactions. At the time, Chinese investments brought much-needed capital to the cash-strapped continent. Chinese investors have been drawn to Europe for several reasons, including the undervaluation of European assets, the appeal of technologically advanced industry, and a friendlier investment climate relative to the United States. [...] From a traditional national security perspective, much of this investment was relatively harmless. But some investments led to Chinese ownership and operation of infrastructure relevant to military operations and exercises in or through Europe. Additionally, some of these investments provided Beijing with access to technologies and research vital to current and future European defense capabilities. More broadly, Chinese investment also strengthened Beijing's hand in several capitals across Europe, augmenting China's soft power and influence. The purpose of this study is to assess whether and how China is repeating the role it played in the aftermath of the sovereign debt crisis and the Great Recession, to identify related national security risks for the United States and key allies, and to offer recommendations on how to reduce these risks."

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