Chinese influence continues to surge across Europe’s energy sector, with infrastructure investments strategically placed in everything from national power grids to fuel networks and vehicle supply chains. These growing footholds are not merely financial; they represent a structural challenge to European autonomy and transatlantic coherence, prompting hard questions in Brussels, London, and Washington alike.
Table of Contents
- China’s Quiet Quest to Reshape Europe’s Energy Future through Strategic Investments
- The Security Costs of China’s Grip on European Infrastructure
- Europe Awakening to the Security Cost of Chinese Control
- Europe’s Energy Awakening is Just the Beginning
China’s Quiet Quest to Reshape Europe’s Energy Future through Strategic Investments
Chinese companies—often with state backing—have pursued extensive investments across Europe’s energy sector. These investments span renewable energy, fossil fuel assets, electricity transmission grids, battery manufacturing, and nuclear power.
Chinese Firms Generate Electricity and Influence Across Europe
China’s state-owned enterprises have acquired significant stakes in European wind, solar, and hydro companies and projects, embedding themselves not just as investors but as long-term players with growing strategic relevance. A landmark example was China Three Gorges Corporation (CTG) buying a 22% stake in Energias de Portugal (EDP) in 2011. Through this stake, CTG gained influence over EDP’s extensive wind, solar, and hydro portfolio across Europe and beyond—securing both access to markets and opportunities for technology transfer that align with Beijing’s broader industrial ambitions.
Chinese power giants have historically taken stakes in wind farms across at least nine European countries, not only to diversify portfolios but also to absorb operational expertise, particularly from Europe’s global leaders in offshore wind energy sector. For instance, China General Nuclear (CGN) purchased wind farms in the UK and France via its CGN Europe Energy subsidiary, a move that offered it a seat at the table in Western energy management and regulatory systems. These deals have made Chinese firms not just financial participants but key minority shareholders and joint venture partners, which can provide soft leverage in policy-relevant sectors over time.
Hydrocarbon Joint Ventures Expand Quietly Beneath Europe’s Surface
Chinese national oil companies have largely entered Europe’s oil and gas domain through joint ventures in upstream projects, commercial positions that grant strategic access points across a vital energy sector. CNPC, Sinopec, CNOOC, and PetroChina have all partnered with Western majors to explore North Sea oil and gas fields. For example, China’s CNOOC gained a presence in the North Sea by acquiring Canada’s Nexen, and Sinopec has joined ventures with British Petroleum and others.
While these upstream investments are commercial in nature, they quietly integrate Chinese players into Europe’s broader energy ecosystem, positioning them to track production dynamics and market behavior from the inside. Notably, direct Chinese ownership of downstream infrastructure such as refineries or pipelines in Europe remains limited, but Chinese firms have been involved in gas import projects and commodity trading—roles that offer leverage in shaping not just supply chains, but also narratives around energy policy and strategic alignment. These partnerships provide Beijing with durable stakes in the legacy systems that still underpin Europe’s energy security posture.
Chinese Capital Powered Europe’s Electric Grid Upgrades
Perhaps the most strategically sensitive are Chinese stakes in electricity transmission and distribution networks, which provides visibility into how Europe’s nations move, store, and manage power across its energy sector. State Grid Corporation of China (SGCC) in particular made headline-grabbing moves in the early 2010s. In 2012, SGCC purchased 25% of Portugal’s national grid operator REN for €387 million, becoming its largest shareholder. This stake came with board seats and influence over a critical gas and electricity transport operator—an entry point into the decision-making layers of Europe’s energy backbone.
Around the same time, SGCC invested €2.4 billion for a 35% stake in Italy’s CDP Reti holding company. Through this holding company, SGCC indirectly owns between 10 and 13 percent of both Terna, Italy’s electricity transmission system operator, and Snam, its natural gas counterpart. These positions confer soft veto power on strategic decisions.
China also extended its grid footprint to Greece: in 2017, SGCC acquired 24% of Greece’s power transmission operator ADMIE for roughly €320 million as part of Greece’s bailout privatizations. Later in 2024, a subsidiary of SGCC purchased a 20% share of a Greek transmission system operator, deepening its presence within a NATO ally’s critical infrastructure at a time of shifting global power dynamics.
Even small states like Luxembourg have seen entries—China’s utility investors took 25% of Encevo, the parent of Luxembourg’s grid, in 2018. In 2024, Luxembourg and China strengthened ties through ambitious energy project plans following high-level talks in Beijing, signaling that even niche markets hold strategic value for Beijing’s grid playbook.
These moves peaked around 2012–2017, when economically weakened EU nations sold infrastructure stakes to raise cash. Chinese firms sought to lock in footholds across Europe’s power grid at a time of opportunity—positions that offer informational access and strategic visibility into the systems that underpin national and regional resilience. Today, Chinese companies retain ownership stakes in critical grid companies in Portugal, Italy, Greece, and beyond, providing an unprecedented level of access in a sector that quietly forms the foundation of national security.
Battery Gigafactories Deepen Europe’s Ties to China
In recent years, Chinese investments in Europe’s battery and electric vehicle (EV) sector has surged, giving Beijing a growing role in the energy industrial base that will power Europe’s next-generation transport systems. Chinese firms dominate the global battery industry, and they are building that capacity directly on European soil, embedding themselves in both supply chains and local industrial planning.
Contemporary Amperex Technology Co., Ltd. (CATL), the world’s largest EV battery maker, has established a large battery plant in Erfurt, Germany that has been operational since 2022, and is investing €7.3 billion in an even bigger gigafactory in Debrecen, Hungary. Hungary alone attracted 44% of all Chinese foreign direct investment in Europe in 2023, mostly due to these battery projects. This level of capital concentration gives China increasing weight in regional economic decisions
Other Chinese battery manufacturers and EV companies are following suit: for example, BYD is setting up EV production in Hungary, and Chinese-owned Envision AESC is building gigafactories in France and the UK. These facilities will supply European automakers with lithium-ion batteries, positioning Chinese firms as gatekeepers in a sector critical to industrial competitiveness.
While such investments bring jobs and support European manufacturing, they also extend Chinese companies’ control over a strategic energy supply chain—one that will increasingly shape procurement timelines, pricing power, and access to key technologies. Europe’s move to localize battery production has drawn it deeper into an ecosystem where Beijing holds both the upstream inputs and the downstream capacity, nudging Europe’s innovation and sourcing decisions in directions that align with Chinese industrial priorities.
European Resistance Forcing China from Nuclear Sector
Unlike in other parts of the energy landscape, Europe’s governments have drawn a hard line in the nuclear sector, recognizing the heightened security stakes and moving decisively to limit Chinese investments. Chinese participation in civil nuclear projects has been highly controversial from the outset, and in recent years, multiple governments have taken steps to unwind earlier commitments and block new ones.
The flagship case is the UK’s former partnership with China General Nuclear (CGN). In the mid-2010s, the UK government agreed to Chinese co-financing of new nuclear plants: CGN took a 33% stake in the Hinkley Point C project and was slated to invest in Sizewell C and lead construction of a new reactor at Bradwell in Essex. For CGN and Beijing, this was not simply a matter of capital deployment—it was an opportunity to validate indigenous reactor technology in a Western regulatory environment, a milestone that would bolster global credibility and open future export markets.
However, security concerns soon overtook the initial enthusiasm. By 2021, Britain’s ministers made clear that further Chinese involvement politically untenable. In 2022, the UK formally removed CGN from Sizewell C, buying out its 20% stake to leave the project in British-French hands. China also stepped back from the Bradwell project, abandoning its ambitions to build and certify a Chinese-designed reactor on UK soil.
Elsewhere in Europe, the pushback has been similarly firm. Romania canceled a deal with CGN to build reactors at Cernavodă, and Czechia passed legislation to bar Chinese firms from tendering for new nuclear plants following national security assessments. Across the region, nuclear energy is treated as a core national asset, given its dual-use implications and the strategic sensitivity of reactor technology.
Europe has thus charted a rare course correction, halting what had been a growing trend of Chinese involvement in critical infrastructure and clearly signaling that some lines are not up for negotiation. By prioritizing control over its nuclear sector, Europe has shown that it is capable of reversing course when the security stakes become too high to ignore.
The Security Costs of China’s Grip on European Infrastructure
China’s foothold in Europe’s energy sector is no longer viewed through a purely commercial lens. What once seemed like standard foreign investment has evolved into a strategic liability, one that touches the core of Europe’s security architecture. As policymakers take stock, a clearer pattern is emerging: control over the flow of electricity is not just about energy, but about leverage in moments of geopolitical strain.
Grid Ownership Gives China Visibility into National Usage
Electricity grids, power plants, and energy storage systems are not just industrial assets, they are foundational components of a nation’s command-and-control environment. Partial ownership by Chinese state-backed firms across Europe’s energy sector introduces a latent risk: the potential for foreign influence over operational decisions that have immediate national consequences.
Even minority stakes can offer touchpoints into sensitive areas. A Chinese investor with board representation in a transmission operator could, in theory, gain visibility into grid vulnerabilities, shape technical procurement decisions, or delay action during a crisis. In a high-tension scenario—whether diplomatic or kinetic—these footholds raise the possibility of disruption, sabotage, or passive interference with grid stability. The quiet spread of Chinese-made hardware such as high-voltage transformers and monitoring equipment only deepens this exposure.
Energy networks, like telecommunications, serve as critical infrastructure not because of what they produce, but because of what they enable. A blackout in the wrong place at the wrong time—whether accidental or engineered—could paralyze civil and military readiness alike. European leaders once worried about reliance on Russian gas; today, they face a parallel concern that power infrastructure could be shaped by actors with competing strategic objectives. The 21st-century battlefield includes cables, substations, and data streams, and in that arena, grid ownership is influence.
Infrastructure Ties Soften Resistance to Beijing’s Agenda
Chinese investment in Europe’s energy sector brings with it more than capital—it opens channels of political influence that can prove durable and difficult to disentangle. As Beijing deepens its role in critical sectors, countries on the receiving end often find themselves recalibrating their foreign policy posture in subtle but consequential ways.
EU officials have noted that member states eager for infrastructure funding may become less inclined to challenge China on politically sensitive issues. The pattern has been especially visible in states where Chinese firms hold high-profile energy or logistics stakes. In Greece, where Chinese entities control key energy infrastructure and operate the strategic port of Piraeus, the government has aligned more closely with Beijing. Notably, Athens blocked a unified EU statement condemning China’s human rights abuses in 2017—an action widely read as a concession to its primary investor.
Similarly, in Portugal, where China Three Gorges (CTG) maintains a dominant position in EDP and other critical assets, the government’s stance within the EU has often been viewed as markedly more accommodating to Chinese interests. While such alignments may appear modest in isolation, they accumulate over time, altering voting patterns, slowing consensus-building, and subtly shifting Europe’s center of gravity on issues that matter to Beijing.
The strategic concern is not overt coercion but latent alignment: nations whose infrastructure lifelines are tied to Chinese financing may grow more hesitant to support EU unity or transatlantic initiatives that draw Beijing’s ire. In this context, equity becomes leverage, and boardroom presence translates into diplomatic ballast. China’s stakes in energy infrastructure are thus more than commercial; they are a quiet extension of its foreign policy toolkit, using economic interdependence to shape the strategic behavior of others.
Chinese Investments Degrade Western Technical Advantage
Beneath the surface of China’s energy investments lies a parallel objective: acquiring access to intellectual property and engineering expertise that would otherwise remain out of reach. While marketed as mutually beneficial partnerships, these deals often serve as structured opportunities for Chinese state-owned enterprises to absorb Europe’s technical knowledge across the energy sector and accelerate domestic capability development.
Europe’s energy sector, particularly in high-value areas like offshore wind, grid automation, and nuclear engineering, represents a rich seam of intellectual property. By taking stakes in companies that sit at the forefront of these fields, Chinese firms not only gain a foothold in the market but also proximity to proprietary processes, operational data, and strategic know-how.
The CTG–EDP partnership, for instance, was more than a balance-sheet transaction; it was a deliberate move to extract project experience and technical insight from a seasoned European utility. CGN’s entry into the UK nuclear sector was as much about exposure to EDF’s expertise as it was about advancing its own reactor design through the validation of Western regulators.
Such technology transfers have compounding effects. They enhance China’s industrial base, improve its export competitiveness, and gradually close the innovation gap with the help of open-market systems that Chinese firms themselves do not reciprocate. Beijing’s industrial strategy has long prioritized asymmetric access: investing abroad to obtain capabilities while maintaining a tightly controlled domestic market that limits equivalent Western participation.
European policymakers increasingly view these transactions not as neutral capital flows, but as strategic extraction mechanisms, as tools by which China acquires crown-jewel capabilities without acquiring the companies outright. In the long run, the erosion of Western technical advantage may prove harder to detect than ownership changes, but the consequences are no less profound.
European Autonomy Undermined by Dependence on Chinese Supply Chains
China’s role in financing and constructing critical energy infrastructure across Europe has created a web of structural dependencies—interdependencies that may appear benign in times of stability but could become strategic vulnerabilities during periods of tension. These dependencies are not incidental; they are engineered outcomes of sustained capital deployment into sectors where long-term control confers lasting advantage.
One of the clearest examples is the battery supply chain. If Chinese-owned gigafactories dominate Europe’s electric vehicle production ecosystem, the continent risks replicating its existing reliance on Chinese critical minerals, only this time, China is even more deeply embedded in European industrial systems. This dynamic expands beyond batteries: grid equipment, power electronics, and component parts essential to system operations are increasingly tied to Chinese suppliers.
In a future scenario marked by trade disputes or geopolitical strain, such over-reliance could expose Europe to targeted supply cut-offs, pricing leverage, or deliberate delays, tactics Beijing has already deployed in other domains. China’s past use of economic coercion, such as rare earth export restrictions and trade boycotts against countries like Lithuania, signals a willingness to weaponize interdependence when its core interests are challenged.
As a result, European policymakers increasingly view long-term infrastructure dependence not merely as a market inefficiency but as a strategic liability. When a single external actor holds sway over everything from raw material inputs to final-system components, sovereignty becomes contingent, and resilience, conditional.
These vulnerabilities are not hypothetical. They are already embedded in procurement decisions, capital flows, and supply chain architecture. Without corrective action, these relationships risk becoming fixed points of leverage. Entry points for Beijing to exert pressure at precisely the moment Europe can least afford it.
Chinese Economic Coercion Threatening European Unity
China’s growing portfolio of energy investments across Europe brings with it not only financial influence but also the capacity for coercion. A significant risk is that these stakes become levers in geopolitical disputes, allowing Beijing to reward cooperation or punish resistance through capital withdrawal, project cancellations, or market restrictions.
This is not a theoretical concern. In 2023, China directed its companies to pause investments in EU member states that backed tougher trade scrutiny of Chinese electric vehicles. The message was clear: alignment with China’s preferences would be met with economic opportunity, while defiance would carry consequences.
This form of selective capital deployment has already begun to shape intra-European dynamics. Countries such as Hungary, which have embraced major Chinese battery investments, tend to take more Beijing-friendly positions in EU deliberations. Conversely, member states that have expressed skepticism toward China’s strategic ambitions have seen reduced flows of Chinese investment and limited industrial engagement.
Over time, this pattern of influence builds an uneven playing field within Europe itself, constraining policy choices in subtle but significant ways. When key infrastructure projects, local employment, or foreign direct investment hinge on maintaining Beijing’s favor, national leaders may recalibrate their foreign policy stances, not out of conviction, but out of necessity.
For U.S. and NATO strategists, the implications are stark. What appears on the surface as economic engagement is, in effect, a mechanism of strategic fragmentation that risks eroding the cohesion of Western alliances by turning commercial partnerships into geopolitical dividing lines. As China embeds itself more deeply into Europe’s infrastructure, the challenge will not be merely economic. It will be one of unity, resolve, and the ability of democratic partners to act in concert when it matters most.
Europe Awakening to the Security Cost of Chinese Control
Europe’s energy sector is no longer an open playing field for Chinese investments. After years of welcoming Chinese capital with few questions asked, policymakers are increasingly treating ownership of critical infrastructure as a national security issue. What began as overdue scrutiny has evolved into a broader recalibration: strategic control is no longer seen as a neutral investment—it’s a risk vector. The shift hasn’t been loud, but it’s gaining traction, one policy tool at a time.
EU Coordination on Screening Threats to Strategic Assets
One key turning point came in 2019, when the European Union established its first formal framework for foreign direct investment (FDI) screening. For the first time, Brussels and national governments began coordinating reviews of foreign acquisitions that could impact public order or national security. Energy infrastructure, long overlooked as a simple economic input, was explicitly designated a priority, alongside sectors like defense and communications.
The mechanism enables the European Commission and member states to share information on pending deals, assess systemic vulnerabilities, and flag risks early. Although ultimate decision-making remains in the hands of national governments, the framework has clearly tightened the perimeter. Recent reports from the Commission highlight the challenges of tracking ownership through layered offshore structures, particularly in deals tied to Chinese firms, but also show a growing commitment to collective vigilance.
Since implementation, more transactions have undergone security-focused review, and a handful have been quietly blocked or allowed to lapse under political pressure. The FDI Screening Regulation isn’t a blunt instrument, it’s a signal that Europe is beginning to treat foreign influence over strategic infrastructure as a shared threat, not just a local issue. That shift, however incremental, moves Europe closer to the kind of posture U.S. policymakers have long pushed for, even as doubts remain about the speed and consistency of its enforcement.
Nations Draw New Lines for Energy Independence
Individual European governments are no longer treating foreign ownership of energy infrastructure as business-as-usual. Across the continent, national authorities have begun rewriting investment rules, not out of ideology, but out of necessity. The shift is driven by a clear recognition that Chinese stakes in strategic sectors bring more than capital, they bring leverage.
Germany has tightened its investment screening laws, lowering thresholds in 2017 and again in 2020 to capture previously unreviewed deals. In 2018, Berlin blocked State Grid’s planned 20% purchase of transmission operator 50Hertz, engineering a domestic buyout through a state-owned bank to keep the asset in trusted hands. Around the same time, it vetoed the acquisition of a high-tech metal manufacturer by a Chinese firm, citing national security concerns.
France has also adjusted course. Since 2014, its investment decree has covered energy networks explicitly, ensuring that strategic firms like grid operator RTE remain majority state-owned. The message was clear: control over critical infrastructure would not be traded away for short-term investment. In Belgium, where foreign investment had faced fewer constraints, saw regional governments block a deal with Chinese investors over fears of foreign influence in local power distribution.
The UK has also taken decisive action. Under its National Security and Investment Act, London removed China General Nuclear (CGN) from the Sizewell C nuclear project, signaling a broader retreat from joint energy ventures with Beijing. In Eastern Europe, governments once open to Chinese bids are also shifting stance. Both Czechia and Romania have updated national laws or procurement frameworks to bar Chinese participation in future nuclear and grid projects.
What was once an open door is now a guarded threshold. A decade ago, Chinese firms faced few barriers when pursuing European energy assets. Today, they encounter a far more defensive operating environment, shaped by national security assessments rather than pure economics. This evolution echoes years of American warnings that control over infrastructure is not just commercial, it’s strategic.
Intelligence and Oversight of Chinese Investments
Europe’s awareness of the strategic implications of Chinese energy sector investments is growing, not just in policy circles, but across its intelligence and analytical ecosystems. What was once a bureaucratic blind spot is now a matter of active monitoring. The shift is not ideological, it’s reactive. And it’s overdue.
Several EU member states have introduced or expanded registers of foreign-owned infrastructure and land holdings, similar to U.S. systems used to track foreign stakes in agriculture and telecom assets. These efforts may seem administrative, but they represent an essential first step toward identifying vulnerabilities before they become national liabilities.
Europe’s think tanks, intelligence services, and institutional forums are also evolving. China now features regularly in NATO energy security dialogues and EU strategic reviews; forums where Beijing’s infrastructure footprint would have been ignored or underplayed just a few years ago. The vocabulary of threat has shifted. So has the map of who’s watching.
The EU’s second annual report under its Foreign Direct Investment (FDI) screening framework noted that around 11% of notified transactions were escalated to in-depth Phase II reviews. That number may seem modest, but it signals a deeper shift: Chinese acquisitions no longer move through the system unnoticed. Each flagged deal is a reflection of rising institutional caution, and a recognition that strategic influence doesn’t always arrive wearing a uniform. Even when Chinese investments proceed, they now do so under a different climate: scrutiny is the new default across Europe’s energy sector, and the margin for passive approval has narrowed.
Europe’s Energy Awakening is Just the Beginning
The Chinese playbook in Europe’s energy sector mirrors its approach in telecommunications investments: acquire stakes, embed influence, and shape strategic terrain through economic means. These moves have not been purely extractive. At times, Chinese capital has kept utilities afloat and helped launch high-cost infrastructure. But the net effect is a deeper tension between economic interdependence and strategic autonomy.
European governments are now responding with greater caution. The open-door era has given way to a more selective posture, grounded in the recognition that control over energy infrastructure is about more than electrons, it’s about leverage. This evolution, though uneven across the continent, reflects growing convergence with U.S. concerns about China’s use of critical infrastructure as a foreign policy tool.
The European experience offers a warning and a blueprint: when strategic sectors are treated as market commodities, influence follows ownership. The case for screening foreign investments and asserting national control over core systems is no longer theoretical, it’s operational. And as NATO allies and EU members ramp up efforts to secure supply chains and guard against coercive dependencies, China’s tactics will remain a persistent variable.
Beijing, for its part, is unlikely to retreat. Chinese firms are likely to recalibrate, favoring joint ventures, minority stakes, or sectors less likely to trigger scrutiny, but the underlying objective remains unchanged: long-term access, embedded presence, and influence without confrontation.
This emerging pushback is not a blanket rejection of Chinese capital. But it is a statement of limits. Strategic assets are no longer up for silent auction, and Western nations are showing signs of protecting what matters most. Europe’s course correction in its energy sector may prove to be more than reactive; it may be the early test case for how the West manages the expanding Chinese investments across every domain where control and criticality intersect.
