China Triples its Investment in Europe: Study
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
Chinese companies tripled their investment in Europe to $10 billion and that figure is expected to reach $500 billion by 2020. According to a report released yesterday, outbound global investments could hit $2 trillion by 2020.
As the European debt crisis extends into its fourth year, Chinese firms are increasing their investments into European companies as a way of acquiring new skills and technology as well as gaining access to new markets.
Chinese companies tripled their investment in Europe to $10 billion and that figure is expected to reach $500 billion by 2020. According to a report released yesterday, outbound global investments could hit $2 trillion by 2020.
As the European debt crisis extends into its fourth year, Chinese firms are increasing their investments into European companies as a way of acquiring new skills and technology as well as gaining access to new markets.
In a report by New York City based consulting firm Rhodium Group said Chinese companies have made a series of high-profile acquisitions in Europe over the past two years, with the expansion rate in Europe exceeding that in the United States.
Related News: China Promises More Help For Euro Debt
According to Rhodium’s study, Chinese outbound direct investment (ODI) into Europe tripled from 2006 to 2009 before tripling again to hit $10 billion last year. By 2020, that level of investment is expected to hit the range of $250 billion to $500 billion.
Rhodium added:
[quote] Europe is experiencing the start of a structural surge in outbound direct investment in advanced economies by Chinese firms … Even if Chinese outflows underperform and Europe ceases to attract as big a share, an annual average of $20-30 billion would be expected for the coming decade. [/quote]
The report predicts Chinese global ODI will reach $1 trillion to $2 trillion by 2020, with a quarter of that going to Europe, facilitated through merger and acquisitions and greenfield investments, or the construction of new plants and facilities.
Related News: China’s CIC Receives $30 Billion Boost To Buy European Assets
The study estimates that the current level of Chinese investment supports 45,000 jobs across the European Union, and downplayed the suspicion of political interference behind the investment deals. “Our detailed data support the view that Chinese direct investment in Europe is driven overwhelmingly by commercial motives,” it said.
[quote] Direct political guidance has played a very minor role in Chinese investment in Europe thus far. [/quote]
In a separate report released by private investment firm A Capital estimates that Chinese ODI surged to $21.4 billion in the first quarter of this year, with state-owned firms backing up to 98 percent of the deals, up sharply from 53 percent in the first quarter of 2011.
In particular, 92 percent went into resource and energy deals, and South Africa was the top destination for Chinese ODI, receiving 43 percent.
Related News: China Now Owns A $17 Billion Stake In North America’s Energy Industry
Related News: China Opens Its First European Auto Plant
Related Story: Can China Alone Save the Eurozone?
