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Financial services can underpin China-EU relationship


The EU and China have consistently strengthened their relationship across the financial services sector since the 2008-9 financial crisis, according to a joint study conducted by Luxembourg for Finance and PwC Luxembourg.

The report entitled: Beyond the challenges: the strength of Sino-European ties, finds that Chinese investment into Europe has boomed from €6.1bn in 2010 to €79bn in 2018, with financial services representing the second largest investment sector. Meanwhile, the volume of EU foreign direct investment (FDI) into China still far exceeds China’s investments into the Europe, growing at a compound annual growth rate (CAGR) of 6.7% since 2002, reaching €189.4bn in 2018, with a notable increase in the EU’s FDI allocation to China’s financial and insurance sector.

The study argues that despite an increasingly challenging diplomatic backdrop between these two economic superpowers, the route to a more productive and stable relationship could be built around urgent shared goals, such as tackling the climate emergency and pandemic recovery, which must be underpinned by free-flowing global capital.

Key findings:

  • Trade – 2020 saw China overtake the US as Europe’s largest trading partner. The EU now holds goods trade deficit with China of €164bn. Despite political apprehension, this is not slowing.
  • M&A – Despite a notable decrease of outward M&A from China – with 83% of Chinese M&A deals in the EU expected to be scrutinised – Europe remains China’s M&A region of choice.
  • Asset & Wealth Management – Bilateral portfolio investment has increased by 10.4% from Europe into China and 9.0% from China into Europe since 2001. European-domiciled investment funds now account for an increasing proportion of inward investment into China, rising from 33.1% to 56.2% between end-2017 and end-2020.
  • Insurance – Increased deregulation and liberalisation are opening a similar wealth of cooperative opportunity through China’s vast insurance industry, with total assets seeing a CAGR of 19.5% from 2005 to reach €2.9tn at end-2020. Should this growth trajectory continue at pace, China’s share of global premiums could surpass the US by 2029, totalling around €5.5tn by 2030. There has been a surge of European players, such as AXA and Allianz, entering the Chinese market.
  • Banking – Chinese banking operations in Europe have accelerated post financial crisis, to support Chinese firms as they expand overseas, as well as the increasing internationalisation of the Renminbi. There has been a similar surge of European banks establishing offices in China, including Deutsche Bank, UBS, BNP Paribas and Credit Agricole.

Nicolas Mackel, CEO of Luxembourg for Finance, said: The world must build back better after the pandemic, and the relationship already established between China and the EU in financial services will be a key factor. While the political overtones are sometimes challenging, there is a need to be pragmatic, and to find a productive way forward. Right now, the need for global cooperation and free flowing capital have never been more critical to tackle the climate emergency.”

Dariush Yazdani, Market Research Centre Leader Asset & Wealth Management at PwC Luxembourg, said: “The data highlighted by the research showcases the evolution of financial integration between China and the EU and emphasises the need for continued cross border collaboration. The recent regulatory developments in China and the strong interest shown by global players in accessing the Chinese market and vice versa strongly suggests that the financial sector represents a veritable opportunity to foster a lucrative, long-lasting financial relationship.”


Luxembourg for Finance (LFF) is the agency for the development of the financial centre. It is a public-private partnership between the Luxembourg Government and the Luxembourg Financial Industry Federation (PROFIL). Founded in 2008, its objective is to develop Luxembourg’s financial services industry and identify new business opportunities.

LFF connects international investors to the range of financial services provided in Luxembourg, such as investment funds, wealth management, capital market operations or advisory services. In addition to being the first port of call for foreign journalists, LFF cooperates with the various professional associations and monitors global trends in finance, providing the necessary material on products and services available in Luxembourg. Furthermore, LFF manages multiple communication channels, organises seminars in international business locations, and takes part in selected world-class trade fairs and congresses.

PwC Luxembourg

PwC Luxembourg ( is the largest professional services firm in Luxembourg with 3, 019 people employed from 76 different countries. PwC Luxembourg provides audit, tax and advisory services including management consulting, transaction, financing, and regulatory advice. The firm provides advice to a wide variety of clients from local and middle market entrepreneurs to large multinational companies operating from Luxembourg and the Greater Region. The firm helps its clients create the value they are looking for by contributing to the smooth operation of the capital markets and providing advice through an industry-focused approach.

The PwC global network is the largest provider of professional services in the audit, tax, and management consultancy sectors. We are a network of independent firms based in 158 countries and employing over 250,000 people. Talk to us about your concerns and find out more by visiting us at and

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