Sunday

24th Jul 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.

Investigation

ECB in ‘bail-out’ of scandal-tainted VW

The ECB has started to “bail out” Germany’s Volkswagen Group by buying its corporate bonds, but other EU-linked banks continue to shun the scandal-tainted firm.

Stakeholders' Highlights

  1. Belgrade Security ForumMigration, Security and Solidarity within Global Disorder: Academic Event Agenda for 2016
  2. GoogleHow Google Fights Piracy: Creating Value While Fighting Piracy
  3. EJC"My Visit to Israel" - Opinion by MEP Lopez Aguilar, Chair of the EP Working Group on Antisemitism
  4. World VisionChildren Migrating, Out of School and at Work as Hunger Deepens in Southern Africa
  5. European Healthy Lifestyle AllianceStand-Up (and Exercise) to Prevent Chronic Diseases
  6. Centre Maurits CoppietersLaunches a Real-time News Hub Specialised in EU Stakeholders
  7. Dialogue PlatformFethullah Gulen Calls for International Probe Into Turkey Coup Allegations
  8. GoogleEU-US Privacy Shield: Restoring Faith in Data Flows and Transatlantic Relations
  9. World VisionWorld Leaders & Youth Advocates Launch Partnership to End Violence Vs. Children
  10. Counter BalanceReport: Institutionalised Corruption in Romania's Third Largest Company
  11. Access NowEuropol Supports Encryption. We Can Relax Now… Right?
  12. GoogleLearn about Google's projects across Europe on Twitter @GoogleBrussels

Latest News

  1. Munich attack might not have been terrorism
  2. A very British (and Corbynite) coup
  3. Poland 'changing for the worse' for Muslims and refugees
  4. EU aims to lift visas on Turks despite purge
  5. ECB in ‘bail-out’ of scandal-tainted VW
  6. EU failed to learn lesson from Brexit, Poland says
  7. UK accord on EU workers 'crucial', France says
  8. EU and US take different lines on Turkey crackdown