Industry News
Chinese investments entering Europe on the rise
  • Europe has become China’s favoured destination for outward investment
  • Questions as to whether a Europe-wide screening process should be introduced
  • Wang Yi, China’s Minister of Finance says investment is a “win-win” for all sides


Recent years have seen a dramatic increase in investments from China entering Europe. In fact, in the previous decade, China has invested assets to the value of $318 Billion into Europe, 45% more than investments into America in the same period. These investments are not limited to a single country or industry sector; rather they are spread across the EU and in many different industries such as Air and Seaports, Oil, Solar energy, Building and even Football teams.


One of the regions where this dramatic increase in investment is evident is London, particularly the Canary Wharf financial district where Chinese based entities have purchased 4 buildings in this district alone. Moreover, the size of these deals appears to be on the rise, with in excess of $20 Billion in investment each year since 2014. Interestingly however, although the sum of these deals is on the rise, the average value of each deal has fallen significantly from $790 Million in 2008 to $290 million in 2016, this represents a reduction of $500 Million per deal.


This dramatic increase in overall investment has raised several questions however, the most pressing of which appears to be: Should the EU introduce a content-wide screening process to ensure the legality of each investment? While several major players in the European market, most notably Germany and France are pushing for increased regulation, several smaller EU economies such as Portugal and Greece are sceptical that this may result in a reduction in Chinese interest in their economies.


Speaking on the possibility of a more comprehensive review mechanism for Chinese investments into the European market, Derek Scissors, China researcher at the American Enterprise Institute noted “The money will flow to where it is most welcome. Until a European review mechanism is put in—the U.S. has one, Australia has one—Europe is likely to win the lion’s share of Chinese investment.”


Under such circumstances, it is essential that Europe strike a balance between ensuring security and economic openness. With China’s dramatic economic rise in the previous quarter century, coupled with its willingness to enhance its presence on the economic stage, more sophisticated policies may be required on both sides in order to safeguard their respective interests and ensure a win-win for all stakeholders.


While there is a emerging trail of thought that Europe needs China, particular inward Chinese investment, it must also be noted that China needs Europe – as Europe provides access to range of asset classes and opportunities highly sought after by Chinese investors including high-tech technology, a single market, corporate networks and a stable economic system.


Cohesiveness and reciprocity must underpin all investment, thereby reducing inherent disagreements, conflicts and risks while at the same time positively contributing to both economies and boosting jobs.


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