The EU’s Foreign Subsidies Regulation creates a regulatory hurdle and acts as a deterrent for Chinese companies willing to make greenfield investments in the EU, a director at the China Chamber of Commerce to the EU said today. Linlin Liang said that despite these difficulties, Chinese companies were definitely willing to invest in the EU.
The EU’s Foreign Subsidies Regulation creates a regulatory hurdle and acts as a deterrent for Chinese companies willing to make greenfield investments in the EU, a director at the China Chamber of Commerce to the EU said today.Speaking at an event* hosted by MLex, Linlin Liang argued that the new EU subsidy vetting tool has introduced "huge complexity" for Chinese and other investors in the bloc.
In 2023, the EU started to police the impact of subsidies given by governments outside the bloc on business conducted within it under the FSR. The European Commission has the power to vet mergers, investments and public procurement bids if it believes there is a distortion due to foreign aid.
The new tool applies to all foreign investments, but China has been the primary focus for now.
“The FSR actually serves as a deterrent to further Chinese greenfield investment,” Liang said, arguing that this is because companies establishing operations in the EU remain subject to investigation, “which can trace back to their parent companies in China.”
She also said that although the number of Chinese greenfield investments has been increasing since 2015 — now accounting for around 80 percent of all investment in the EU — Chinese businesses are worried about the uncertainty and red tape that the FSR creates for future investors.
Despite these hurdles, Liang said Chinese companies were definitely willing to invest in the EU. “Chinese companies still have extremely good appetite for boosting the EU's ecosystem,” she said.
— Guidelines needed —
Speaking at the same event, Eva Monard, a partner at law firm Steptoe, emphasized the need for clear guidelines for foreign companies on how to operate in the EU market, to avoid being "attacked" — either under the FSR or under any of the bloc's other trade defense measures.
“I think that getting some more clarity on that, what you need to do to avoid being attacked under any of those new tools, would really spur cooperation in some of those key industry areas,” Monard said.
She argued that the uncertainty created — particularly by the FSR — is having a chilling effect on foreign investment in the EU.
“If you look at the possible remedies under the FSR: if I have to make a very significant investment, and I know I can face those remedies, I would also get scared,” she said.
Monard also argued that it would be useful for Chinese companies to have “more clarity on the kinds of projects that [the EU] would consider to be beneficial for the EU — and therefore unlikely to be targeted under the FSR, irrespective of the situation in China — because individual companies cannot change the situation in China.”
In January 2026, the commission is expected to adopt guidelines setting out its experience in applying the FSR (see here).
* “From US tariffs to a competitive China: Europe’s trade strategy of tomorrow,” Brussels, June 25, 2025.
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