Tuesday

16th Jul 2019

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."

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

“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.

News in Brief

  1. North Macedonia expects EU accession talks this year
  2. EU states threaten Turkey with 'targeted' blacklists
  3. Iran one year away from nuclear weapon, UK warns EU
  4. US trade war slows China's economy
  5. UK, France, Germany call for dialogue with Iran
  6. EU satellite system temporarily offline
  7. New flaw detected in Brexit app for EU citizens
  8. Italian coalition clashes over Russian financing

Von der Leyen vote the focus This WEEK

MEPs will vote to confirm - or not - on Tuesday the new commission president, Ursula von der Leyen - a candidate put forward at the last minute by the EU leaders, and grilled by lawmakers recently in Brussels.

Stakeholders' Highlights

  1. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  2. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  3. Nordic Council of MinistersNo evidence that social media are harmful to young people
  4. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  5. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  6. Nordic Council of MinistersEducation gets refugees into work
  7. Counter BalanceSign the petition to help reform the EU’s Bank
  8. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  9. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  10. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  11. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  12. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North

Join EUobserver

Support quality EU news

Join us