European investment in China is holding up for now despite deteriorating political relations between the two trading partners, with businesses looking for ways to work around any decoupling threat.

Investment from the European Union into China was up 15% in the first half of 2022 compared with a year ago, according to data from Rhodium Group, helped by BMW AG’s purchase of a controlling stake in its car-making joint-venture in the first quarter.

Although investment has shown some weakness more recently, European firms aren’t pulling out of China as some had feared. In fact, rising geopolitical tensions may even be encouraging businesses to expand local production chains, analysts say.