The Irish economy has been increasingly drawing Chinese investment, but is there a reputational cost associated with this trend? In 2020, 25 Chinese companies were operating in the Republic of Ireland. This figure has now risen to 40.
For some, the influx of Chinese capital presents an opportunity for Ireland to reduce its dependence on serving as the European base for U.S. tech giants like Apple and Alphabet, while also creating additional jobs. However, an increasing number of critics argue that hosting Chinese companies associates Ireland with the human rights abuse allegations linked to some of these firms. One such company is the Chinese clothing brand Shein, which established its European headquarters in Dublin in May 2023. Shein has been criticized for its treatment of workers and recently admitted to finding child labor in its supply chain.
The Irish government faces a diplomatic dilemma as it attracts Chinese companies that the U.S. has sanctioned. Two prominent examples are telecommunications firm Huawei and pharmaceutical company WuXi Biologics. In May, Ireland’s Minister of State for Trade Promotion, Dara Calleary, celebrated a report highlighting Huawei’s €800 million contribution to the Irish economy each year. Yet, this is the same Huawei whose telecom equipment has been banned in the U.S. since 2022 over national security concerns.
Meanwhile, WuXi Biologics has invested over €1 billion in a facility in Dundalk since 2018. Earlier this month, the U.S. House of Representatives passed a bill restricting U.S. firms from working with WuXi, citing similar national security concerns. The bill is now pending approval in the U.S. Senate.
Ireland’s Industrial Development Authority (IDA), tasked with attracting foreign investments, operates three offices in China. It actively promotes Ireland as a gateway to Europe for Chinese investors and investment. Another Chinese company headquartered in Ireland is TikTok, owned by Beijing-based ByteDance, while the parent company of Chinese online retailer Temu moved its global headquarters from China to Ireland last year.
Barry Andrews, an Irish member of the European Parliament (MEP) from Fianna Fáil, has been a vocal critic of the Irish government’s “green carpet” policy towards Chinese companies. He contends that human rights and environmental abuses should not be overlooked in the name of economic growth. He cites a U.S. Congress report from last year, which found a high risk of forced labor in Temu’s supply chain. While Temu maintains a zero-tolerance policy against such practices, Andrews argues that “one person’s bargain is another’s back-breaking work for poverty wages.”
Critics also point to differences between U.S. and Chinese companies operating in Ireland, particularly concerning transparency. For example, Huawei and WuXi declined to be interviewed for this piece, and Shein’s representative spoke off the record and did not respond to follow-up questions.
Some economists question whether Ireland even needs the relatively few thousand jobs created by Chinese firms. Dan O’Brien, chief economist at Ireland’s Institute of International and European Affairs, notes that the Irish economy has been operating at near full employment for the past decade. In August 2024, Irish unemployment stood at 4.3%, just above its all-time low of 3.9% in October 2020. O’Brien also highlights that a fifth of Ireland’s private-sector employment is linked to foreign direct investment (FDI), which he argues is excessively high.
Ireland’s low corporate tax rate of 12.5% has made it attractive to foreign investors, but this has led to concerns about over-dependence on FDI. With mounting pressure on U.S. tech companies to reinvest in the U.S. and competition from countries like Poland and Estonia, which offer cheaper housing and better weather, Ireland is facing new challenges. Additionally, recent global tax reforms have led Ireland to introduce a higher 15% tax rate for large firms, further complicating its FDI strategy.
While some see Chinese investment as a form of insurance against potential U.S. pullouts, others view it as risky. Economist Constantin Gurdgiev from Trinity College Dublin and the University of Northern Colorado believes Ireland is strategically positioning itself by courting Beijing, despite the inherent risks. He suggests that Ireland’s strong ties with the U.S. could protect it from negative repercussions.
Gurdgiev adds that Ireland serves as a neutral ground for U.S., EU, and Chinese firms, but acknowledges that the country is playing a “dangerous geopolitical game” for a small economy. Nonetheless, he believes Ireland’s close diplomatic relationship with the U.S. should help it maintain a relatively safe position amidst growing geopolitical tensions.
