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20th Feb 2019

Focus

EU keen for Chinese investment in Juncker fund

  • Chinese New Year's celebrations in Prague. (Photo: EUobserver)

Representatives from several European regions on Thursday (4 June) tried to convince the four largest Chinese banks to invest in projects under the EU’s new investment programme.

At a workshop in Brussels, regions and cities including Berlin, Catalonia, Ile-de-France, and Lodzkie, held presentations of ideas for ICT projects.

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Their pitches were heard by officials from the European departments of ICBC, China Construction Bank, Agricultural Bank of China, and Bank of China, four of the seven largest banks in the world. A representative of HSBC was also present.

ICBC is the world’s largest bank with $3.3 trillion in assets, followed by the China Construction Bank.

The investment programme, often called the Juncker fund after the EU commission president, is meant to unlock investments from the private sector by guaranteeing part of the investment with money from the EU budget and the European Investment Bank.

The fund is hoped to reach a total of €315 billion to be spent on infrastructural projects that will kickstart the EU’s economy.

The four Chinese banks, plus HSBC, “are ready to assess with great interest the opportunity to invest in Europe”, said Luigi Gambardella, head of the international association ChinaEU, which aims to promote business cooperation between China and Europe.

One Chinese banker, who spoke to this website on the condition of anonymity, noted that the Chinese financial market is limited in opportunities.

“The European market is a very important strategic market for us”, the banker said.

“I haven’t talked with the EIB yet, but I believe Chinese banks would like to participate in this plan, to provide some finance.”

Fear of 'Chinese money'

One audience member from Austria noted that promoters of regional projects may be wary of Chinese-financed funds.

“For regions it’s quite sensitive to speak about Chinese money coming into the region. We don’t want to need money which does not come from Europe, or not from Austria, or not from the region”, she noted.

But that fear is unwarranted, noted Alessandro Carano, senior advisor on jobs to the commission.

“China is already a big investor in EIB bonds. China [has] already [been] indirectly financing the European economy for many years”, said Carano, adding that some Europeans might not be aware of it.

“But we have no problem with this. On the contrary, we welcome it”, said Carano.

Gambardella told this website that not many countries are as interested in investing in Europe as China is.

“There are not so many in the world. Maybe there is Qatar, Emirates. Quite few.”

A survey published in May by EY found that Europe has become the “most attractive investment destination”, overtaking the number one position from China.

But those surveyed do not necessarily put their money where their mouths are. The study showed that while 59 percent of investors have confidence in Europe’s prospects for the next three years, only 32 percent of executives plan to invest, or invest more than they already do, in Europe over the next year.

“Europe should do this with all the different regions in the world”, Gambardella said, referring to the workshop.

Political approval

Meanwhile Thursday afternoon, elsewhere in Brussels, negotiators from the EU institutions agreed on the last technical details of a political deal that was necessary to implement the Juncker fund.

The compromise will be put to the vote in the EUropean Parliament on 24 June, with national governments expected to rubber-stamp it in the following days, so that the fund will be operational on 1 July.

Analysis

Why Chinese investment is soaring in Europe

Today, it is the EU – not the US – that is Beijing’s most important technology partner. As the euro weakens, Chinese investments in Europe will increase.

Juncker fund gets political go-ahead

The EU plan for a €315bn fund to create jobs took final shape on Thursday, as negotiators agreed how it should operate and how to choose investment projects.

Hungary signs up to Silk Road project

Hungary has become the first EU country to join China's flagship initiative, which aims to revitalise a historic trade route between Europe and the Far East.

EU and China leaders to talk trade and climate

EU and Chinese leaders will meet in Brussels on Monday, with the EU hoping for Chinese investment in its new growth fund as well as support for a global climate deal.

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