CROUCHING MIGRATION HIDDEN INVESTMENT: An Analysis of the Impact of Chinese Immigration on Chinese Investment in the European Union

Abstract

As the European Union has become a new favorite destination for Chinese Foreign Direct Investment (FDI), European countries have started to compete against one another to attract Chinese capital with a variety of residency and citizenship incentives, commonly referred to as Golden Visas. What is the link, if any, between immigration and investment? This thesis explores whether and how Chinese immigration in Europe has contributed to Chinese investment flows into the EU. Only recently have researchers begun to tackle the possibility of migrant networks affecting FDI levels, and this thesis contributes to this under-researched field. The central argument, derived from a mixed-methods analysis, explores several hypotheses about the links between migration and investment, suggesting that the number of Chinese immigrants in a foreign nation positively impacts the inflow levels of Chinese FDI. Through a quantitative model, we present a significant correlation between immigrant networks and FDI, though more significant correlations with varying lagged years of FDI. To examine the precise mechanisms that immigrant networks create, we explore three qualitative case studies for destination countries – Hungary, Italy, and the United Kingdom. In each, we discover that entrepreneurial, wealthy, and high-class migrant types generate powerful network mechanisms. The mechanisms of information transfer, business trust, and cultural practices are integral to foreign market discovery and investment negotiations, thus inducing FDI from the China. Implications of this research include fostering Chinese migrant networks within European nations that wish to attract increased volumes of Chinese FDI. As the network mechanisms imply, further studies may include research on cultural integration for migrant networks as a motivator for bilateral FDI.