Cookies on Pinsent Masons website

Our website uses cookies and similar technologies to allow us to promote our services and enhance your browsing experience. If you continue to use our website you agree to our use of cookies.

To understand more about how we use cookies, or for information on how to change your cookie settings, please see our Cookie Policy.

Chinese overseas investment to reach $20 trillion, with focus on Europe

China will become the world's biggest overseas investor by 2020, with a particular impact on Europe which should prepare for the changes this will bring, according to economic research firms Rhodium Group and the Mercator Institute for China Studies. 30 Jun 2015

Projections see China tripling its global overseas assets up from the current $6.4 trillion to $20tn, said the report, Chinese FDI in Europe and Germany: Preparing for a New Era of Chinese Capital.

Annual investment by Chinese companies in EU member states grew from almost zero in the mid 2000s to €14 billion by 2014. There were over 1000 Chinese greenfield projects and investments in that period, worth more than €46bn, the report said.

UK is the largest recipient of Chinese outbound foreign direct investment (OFDI), with investments over the period 2000 to 2014 of €12.2bn, followed by Germany with €6.9bn and France with €5.9bn. More than 50% of cumulative investment from 2000 to 2014 went to the UK, Germany and France, the report said.

However, in recent years investment has become more diverse, and the share of Portugal, Ireland, Italy, Greece, Spain, and Cyprus in total Chinese investment in the EU rose from 10% before 2011 to more than 30% between 2012 and 2014, as Chinese companies moved into formerly state-controlled sectors including utilities and transportation, the research firms said.

Energy, automotive, food and real estate were the most popular sectors for Chinese capital, the report said.

Europe has a a once in a lifetime opportunity to attract capital, to help to re-start economic growth, the report said. However, China's unique political and economic system raises concerns, it said.

"There are legitimate concerns related to China's specific nature, which if unaddressed could threaten Europe's economic and security interests," the report said.

Europe must put in place a robust bilateral investment agreement for all EU states, to ensure the support of EU citizens. "Europe must speak as one voice, instead of following national agendas," the report said.

European leaders also need plans in place on how to react if structural economic reforms promised by Beijing happen slower than planned, affecting investments.

There is also "an urgent need to initiate a debate about greater coordination of security review processes within Europe… to increase the confidence of European citizens that there is a functioning solution in place to monitor and mitigate potential security risks," the report said.

Recent Infrastructure Experience