China-Austria Trade and Investment Profile and Key Developments

• In 2023, total bilateral trade between China and Austria amounted to US$12.55 billion, confirming China’s status as Austria’s top trading partner in Asia and its second largest globally. This included Chinese exports to Austria valued at US$4.7 billion and imports from Austria amounting to US$7.86 billion.
• Chinese foreign direct investment in Austria has increased significantly, enhancing sectors such as automotive, renewable energy, and digital technology, with partnerships fostering technological innovation and economic growth.
• The strategic partnership between China and Austria presents opportunities for expanded cooperation in high-potential areas like electric vehicles, green technologies, and digital infrastructure, aligning with both countries’ goals for sustainable development and innovation.

China plays an essential role in Austria’s foreign economic relations, with significant strides in bilateral trade and investment in recent years. Since the elevation of China-Austria relations to a “friendly strategic partnership” in 2018, both countries have deepened cooperation in sectors such as green technology, digital innovation, and sustainable infrastructure.

Austria, with its strengths in renewable energy, high-tech manufacturing, and environmental engineering, has aligned well with China’s growing demand for green and sustainable development. Austrian companies have increasingly engaged in China’s energy and environmental sectors, while Chinese investments in Austria have supported technological advancements, particularly in electric mobility and digital solutions.

The complementary economic strengths of China and Austria—China’s large market and production capacity and Austria’s technological expertise and high standards in quality manufacturing—provide a solid foundation for further growth in trade and investment cooperation. The bilateral relationship promises expanded collaboration in areas such as climate technology, e-mobility, and cross-border digital trade, opening new opportunities for sustainable economic progress.

China-Austria bilateral trade

China remains a critical partner in Austria’s foreign economic relations, particularly in trade and investment. In 2023, total bilateral trade between China and Austria amounted to US$12.55 billion, confirming China’s status as Austria’s top trading partner in Asia and its second largest globally. This included Chinese exports to Austria valued at US$4.7 billion and imports from Austria amounting to US$7.86 billion.

In 2023, Austria’s trade relationship with China thrived, marked by significant exports across key sectors. The largest category was nuclear reactors, boilers, machinery, and mechanical appliances, which reached approximately US$1.76 billion, highlighting Austria’s advanced engineering capabilities and the demand for high-quality machinery in China’s industrial landscape. Following closely, electrical machinery and equipment totaled around US$752.62 million, showcasing Austria’s expertise in producing innovative electrical devices essential for China’s technological progress.

The automotive sector also played a crucial role, with exports of vehicles (excluding railway and tramway rolling stock) amounting to US$578.77 million, reflecting robust demand in China’s expanding automotive market. Additionally, pharmaceutical products contributed US$414.27 million, underscoring Austria’s reputation for high-quality healthcare innovations. These figures illustrate Austria’s strategic focus on high-value sectors, reinforcing a strong economic partnership centered on technology, healthcare, and advanced manufacturing in its trade with China.

Meanwhile, in 2023, China maintained a strong export presence in Austria, delivering a diverse range of goods that significantly contributed to bilateral trade.

In 2023, China’s exports to Austria were led by electrical machinery and equipment, including sound recorders and television equipment, which totaled approximately US$1.798 billion. This figure underscores China’s status as a global electronics leader and its capability to provide high-quality components crucial for Austria’s technological and manufacturing sectors. Following this, exports of nuclear reactors, boilers, and machinery amounted to US$989.39 million, reflecting China’s growing proficiency in machinery production to meet Austria’s industrial needs.

Additionally, China exported vehicles (excluding railway and tramway rolling stock) worth US$305.10 million, indicating strong demand for Chinese automotive products in Austria. Organic chemicals accounted for US$272.68 million, highlighting China’s role in the chemical sector, while optical and precision instruments were valued at US$229.90 million, showcasing advancements in precision technology essential for both consumer and industrial applications.

China-Austria bilateral investment

Chinese investment in Austria

China’s foreign direct investment (FDI) in Austria has steadily increased, bringing both economic opportunities and substantial value to key Austrian industries. Austria’s strategic location within Europe, combined with its advanced manufacturing and technological expertise, has made it an attractive destination for Chinese companies seeking growth within the European Union. This is particularly evident in sectors such as automotive, renewable energy, and digital technology, where Chinese investments are adding both capital and technological innovation to Austria’s economy.

For example, companies like China’s CRRC and Geely have partnered with Austrian firms to collaborate on advanced automotive and railway technology, enriching Austria’s already robust supply chains with new technologies and resources.

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Chinese investment has also contributed significantly to Austria’s renewable energy and green technology sectors, aligning well with Austria’s commitment to sustainability. For instance, Chinese energy companies have partnered with Austrian firms to support green technology innovations, including sustainable energy solutions and electric vehicle components.

Furthermore, large Chinese financial institutions, such as ICBC, have established a presence in Austria, offering financial backing and facilitating cross-border transactions that make Austria an essential hub for accessing Central and Eastern European markets.

This influx of Chinese FDI not only enhances Austria’s industrial capabilities but also fosters a climate of shared growth, as both countries leverage their respective strengths to drive innovation and market expansion.

Austrian investment in China

the current business climate for Austrian companies in China is marked by both challenges and cautious optimism. Following the removal of COVID-19 restrictions, Austrian businesses have encountered an uneven recovery, hindered by slow economic growth in China, rising youth unemployment, and a strained real estate sector. While sentiment has slightly improved compared to 2022, ongoing geopolitical tensions and unclear regulatory requirements contribute to persistent uncertainty. According to the Austria in China Business Confidence Survey, about 56 percent of Austrian firms reported a worsening business environment in 2023.

Investment dynamics reflect this cautious outlook. Over the same period, nearly half of Austrian companies reported decreased turnover, with 36 percent also reducing capital expenditures. FDI flows into China are similarly affected, with China recording its first-ever quarterly deficit in FDI in November 2023—a trend potentially linked to Western “de-risking” strategies and China’s relative disadvantage in interest rates.

However, despite these challenges, China’s demand for green and sustainable development continues to align with Austria’s strengths in sectors such as:

• Renewable energy;
• High-tech manufacturing; and
• Environmental engineering.

This alignment has fostered Austrian engagement in China’s energy and environmental sectors, with potential for further cooperation in climate technology, e-mobility, and digital trade. The complementary strengths of China’s vast market and production capabilities with Austria’s technological and quality manufacturing expertise lay a foundation for resilient and sustainable economic progress in the years ahead.

According to statistics from China’s Ministry of Commerce, Austria’s actual investment in China in 2022 reached US$160 million, marking a year-on-year increase of 65.8 percent. By the end of 2022, Austria’s cumulative direct investment in China totaled US$2.89 billion. Austrian investments in China are concentrated in sectors such as electronics, machinery, metallurgy, building materials, environmental protection, food, and wood processing. Investment locations include not only major provinces and cities like Shanghai, Guangdong, Jiangsu, Shandong, and Liaoning but also central and western regions like Shaanxi, Ningxia, Sichuan, and Yunnan.

China-Austria bilateral agreements

China-Austria bilateral investment agreement

In 1985, China and Austria signed a Bilateral Investment Agreement (BIT), aimed at fostering an investment-friendly environment and bolstering economic collaboration between the two nations. The BIT agreement includes several key provisions:

• Investment protection: The BIT protects investments from actions like expropriation, nationalization, and discriminatory treatment, ensuring the security of investor interests from both countries.
• Dispute resolution mechanisms: The agreement provides pathways for resolving disputes through negotiation, mediation, or arbitration. It also incorporates an investor-state dispute settlement (ISDS) clause in Article 9 to address investor grievances effectively.
• Incentives for investment flows: The BIT promotes investment flows by offering guarantees, support, and incentives for investors, creating a favorable environment for mutual economic growth. The agreement upholds principles of non-discrimination, ensuring that investors from either country receive fair and equitable treatment.
• Transparency and rule of law: Emphasizing transparency, the BIT mandates clear and consistent investment regulations, ensuring that investors have access to legal remedies when required. This focus on the rule of law provides a stable regulatory framework for investors.

China-Austria double taxation avoidance agreement

In addition to their economic partnership, China and Austria have signed a Double Taxation Avoidance Agreement (DTA) to prevent companies and individuals from being taxed on the same income in both countries. The China-Austria DTA, effective as of January 1, 2003, provides a framework that addresses income tax issues for individuals and businesses operating between the two nations.

The DTA pertains to income taxes imposed by both China and Austria, covering:

• Chinese individual income tax (IIT) and corporate income tax (CIT)
• Austrian income tax, corporate income tax, and other associated levies

The agreement also provides clarity on the concept of a “permanent establishment,” which determines tax liability in either contracting country. Under the DTA, a permanent establishment exists if a business operates in a contracting state through employees or personnel for the same or related project exceeding a cumulative period of 183 days within any 12-month period.

The withholding tax rates for various types of income are set as follows:

• Dividends: Rates vary depending on the extent of ownership and income source, typically between 7 percent and 10 percent. The lower rate applies where the beneficial owner of the dividend is a company that directly owns at least 25 percent of the voting shares of the paying company.
• Interest: Set between 7 and 10 percent. The lower rate applies to interest payable to banks or financial institutions.
• Royalties: Rates range from 6 percent to 10 percent, depending on the type of royalties paid.

The DTA also defines circumstances under which capital gains derived by a resident of one contracting state may be taxed by the other, including:

• Gains from the sale of immovable property;
• Gains on movable property tied to a permanent establishment; and
• Gains on shares whose value is predominantly derived from immovable property in the other state.

To address double taxation relief, China applies the credit method, allowing taxpayers to claim a credit in China for taxes paid abroad, thereby reducing their total tax liability. Conversely, Austria generally follows the exemption method, meaning that foreign-earned income may be exempt from Austrian taxation, provided specific conditions are met. However, Austria may apply the credit method for certain types of income under its tax legislation.

Multilateral treaties

China and Austria, both members of the WTO, are signatories to various multilateral treaties concerning trade and investment. These include:

• The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which mandates WTO members to extend intellectual property rights to owners in any member state. It incorporates a most-favored-nation (MFN) clause, ensuring equal treatment for IP rights protection across all member countries. Additionally, it provides mechanisms for dispute resolution and compensation.
• The Agreement on Trade-Related Investment Measures (TRIMs), which prohibits the implementation of investment measures that restrict trade between members. This includes measures like local content requirements, which mandate the use of locally-produced goods or services by companies operating in a market.
• The General Agreement on Trade in Services (GATS), which grants most-favored-nation status to service providers of any WTO member, excluding governmental services such as social security, public health, education, and certain services related to air transport.

Looking ahead: Opportunities between China and Austria

In looking ahead at the opportunities between China and Austria, the strong foundation of strategic partnership and complementary industries offers promising potential for expanded economic cooperation. Despite the challenges posed by recent global developments, China continues to welcome Austrian investment, especially in high-potential areas such as electric vehicles (EVs), green technologies, and digital infrastructure. Austrian companies, recognized for their strengths in high-tech manufacturing, environmental engineering, and renewable energy, align well with China’s goals in sustainable development and technological innovation.

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China’s robust market demand presents vast opportunities for Austrian companies to contribute to key growth areas, including the automotive and energy sectors. The recent push toward localized EV production, combined with ongoing trade in auto components, strengthens this critical area of cooperation. As Austria looks to increase its role in Central and Eastern Europe (CEE), collaboration with China is poised to bolster regional connectivity under the Belt and Road Initiative (BRI), tapping into growing networks and emerging markets.

At the same time, China remains an attractive market for Austrian companies seeking to capitalize on increasing demand for premium goods in sectors like home furnishing, healthcare, and green energy. With a focus on fostering high-quality, sustainable economic growth, both nations stand to benefit from partnerships in cutting-edge fields such as automation, robotics, and digital solutions.

As both countries navigate the evolving geopolitical landscape, this partnership is marked by resilience and adaptability. Strengthened by China’s support for Austrian enterprises amidst regulatory shifts and economic uncertainties, the two nations remain committed to long-term collaboration. The dynamic, complementary nature of China-Austria trade and investment promises continued mutual benefit, paving the way for a new chapter of sustainable economic progress and shared innovation in the years to come.

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