Monday

20th Feb 2017

Focus

EU sees dramatic surge in investment from China

  • Money: Europe needs it, China has it. (Photo: dolmansaxlil)

In what has been called “a definite turning point,” China’s direct investment in Europe over the last couple of years has multiplied by a factor 10, according to a new study.

EU trade commissioner Karel De Gucht welcomed the news, saying that “we need the money."

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

“Our dataset shows a profound post-2008 surge,” says the new study, presented on Thursday (7 June) in Brussels by consultancy firm Rhodium Group. “From €700 million yearly 2004-2008, to roughly €2.3 billion in 2009 and 2010, to €7.4 billion in 2011.”

Most of that money went to France - with more than €4.5 billion in investment over the last decade - the UK (€3bn), and Germany (€2bn).

Outliers are Hungary (€1.7bn) and Greece (€571 million), who according to the study both attracted one large-scale investment from China: Hungary in its chemical sector and Greece in the port of Piraeus.

The study adds that even though the numbers remain small compared to the EU’s total inward foreign investment - around 3 percent - “the change in trend line is what matters.”

Over the next decade, it says, “even if Chinese outflows underperform, an annual average of $20-30 billion (€16-24 billion) [of direct investment in Europe] would be expected” - which would amount to an annual inflow greater than total investment over the last decade.

“This is definitely a turning point,” Daniel Rosen, a partner at Rhodium Group and co-author of the report, told EUobserver in an interview.

Chinese companies are not as “inherently international” as Western companies are, he said, due to cultural and political reasons. “It is very difficult for them to go abroad.”

The fact that now they do, encouraged by the Chinese political leadership, means that “we’re entering a new era."

China recently became the world’s fifth biggest outward investor after the United States, Germany, France and Hong Kong. Rosen: “China is no longer just a host but now also a source of investment.”

For his part, EU trade commissioner De Gucht welcomed the news.

“In Europe today, let us be frank: We need the money,” he said in a speech at the presentation of the study, referring to the old continent’s dire state of economic affairs.

“On the one hand, as member state governments privatise in response to the crisis, they need investors to buy what they are selling. On the other, new capital is the basis for new growth,” he added.

Yet fears of Europe putting itself up for sale are unjustified, Rosen said. “We see the same pattern in the US. This is not a fire sale.”

Nor, he said, are fears of impending political influence through the backdoor of companies.

“China is investing like any other commercially motivated investor, not in some odd and idiosyncratic way,” the study says. “We see practically no evidence of declining investment prospects for states which run afoul of China politically over issues such as Tibet or arms sales.”

If anything, Rosen said, Europe should be happy with his new-found stockholder.

“It is great news for European consumers,” he said. And even though “producers might have mixed feelings, it is also good or job creation.”

Chinese companies today employ some 45,000 Europeans, according to the study, “and this figure is poised to grow further."

By contrast, US companies today employ some 4.3 million Europeans.

MEPs and China mark change in relationship

Members of the five big political groups in the European Parliament have met with members of the one big political group in the National People's Congress of China, in what has been described as a “changing” and "very friendly" climate.

Analysis

Why Romania erupted in protest

Current anger over corruption laws can be traced back to a night-club fire in 2015, when many died because of lax safety standards. Romanians then realised that corruption can kill.

Stakeholders' Highlights

  1. Malta EU 2017End of Roaming Fees: Council Reaches Agreement on Wholesale Caps
  2. Nordic Council of MinistersNordic Innovation House Opens in New York to Help Startups Access US Market
  3. Centre Maurits CoppietersMinorities and Migrations
  4. Salzburg Global SeminarThe Child in the City: Health, Parks and Play
  5. UNICEFNumber of Ukrainian Children Needing Aid Nearly Doubles to 1 Million Over the Past Year
  6. Centre Maurits CoppietersThe Situation of Refugee Women in Europe
  7. Salzburg Global SeminarToward a Shared Culture of Health: Charting the Patient-Clinician Relationship
  8. European Free AllianceAustria Should Preserve & Promote Bilingual and Multinational Carinthia
  9. Martens CentreShow Your Love for Democracy! Take Part in Our Contest: "If It's Broken, Let's Fix It"
  10. CISPECloud Computing Leaders Establish Data Protection Standards to Protect Customer Data
  11. Malta EU 2017Landmark Deal Reached With European Parliament on Portability of Online Content
  12. Belgrade Security ForumBSF 2017: Building a Common Future in the Age of Uncertainty