Chinese investment in Europe plunged by more than a fifth last year to a decade low as a shift toward greenfield investments in electric-vehicle batteries only partially offset a steep decline in mergers and acquisitions, a survey showed. 

Foreign direct investment in Europe from China sank to €7.9 billion ($8.7 billion), a 22% decline from the previous year, according to a report published Tuesday by the Berlin-based Mercator Institute for China Studies and New York-based Rhodium Group. It was the first year that greenfield investments, which increased by 53%, outpaced deals. 

A range of factors contributed to the plunge, the authors said, including rising interest rates, growing strategic risks linked to Russia’s invasion of Ukraine, China’s constraints on capital outflows and Beijing’s zero-Covid strategy, which was in place for most of 2022. Globally, China’s investment activities fell 23%. 

In Europe, nearly 90% of the investment flowed to just four countries: Britain, France, Germany and Hungary. Each received major greenfield investments by Chinese battery makers, which are expected to dominate the industry in Europe.