Sunday

28th Aug 2016

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.

Italy earthquake is test for Renzi

Italian prime minister is expected to present a quick reconstruction plan and request more budget flexibility from the EU after this week's tragic earthquake.

News in Brief

  1. Hungary plans to reinforce border fence against migrants
  2. France's highest court suspends burkini ban
  3. Greeks paid €1bn more in taxes in June
  4. Greek minister denounces EU letter on former statistics chief
  5. Turks seeking asylum in Greece may cause diplomatic row
  6. Merkel becomes digital resident of Estonia
  7. Report: VW will compensate US dealers with €1bln
  8. EU mulls making Google pay news media for content

Stakeholders' Highlights

  1. GoogleBrussels - home of beer, fries, chocolate and Google’s Public Policy Team - follow @GoogleBrussels
  2. HuaweiSeeds for the Future Programme to Bring Students from 50 countries to China for Much-Needed ICT Training
  3. EFASpain is not a democratic state. EFA expresses its solidarity to Arnaldo Otegi and EH Bildu
  4. UNICEFBoko Haram Violence in Lake Chad Region Leaves Children Displaced and Trapped
  5. HuaweiMaking Cities Smarter and Safer
  6. GoogleHow Google Makes Connections More Secure For Users
  7. EGBAThe EU Court of Justice Confirms the Application of Proportionality in Assessing Gambling Laws
  8. World VisionThe EU and Member States Must Not Use Overseas Aid for Promoting EU Interests
  9. Dialogue PlatformInterview: "There is a witch hunt against the Gulen Movement in Turkey"
  10. ACCAACCA Calls for ‘Future Looking’ Integrated Reporting Culture With IIRC and IAAER
  11. EURidNominate Your Favourite .eu or .ею Website for the .EU Web Awards 2016 Today!
  12. Dialogue PlatformAn Interview on Gulen Movement & Recent Coup Attempt in Turkey