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.