China Investors Taking Over Europe – Taking Advantage of Economic Turmoil

Posted on August 5, 2011

The Muslim militants in Europe talk a good game and pull off terrible, costly attacks but the Chinese “invasion” may, in the end, be more debilitating.

Consider that the Chinese are investing in the most troubled, peripheral countries Greece, Spain, Italy and Portugal.  40% of Chinese investment in Europe is in these countries:

Why pay so much attention to the periphery? Well, there are promising investments to be made there and these smaller, peripheral economies are an easy way in to a single European market of 500 million consumers. The EU market is far more open to Chinese investors than the Chinese one is to Europeans.

Investing heavily in these countries also has a political pay-off. The more dependent they become on Chinese investment and trade, the less likely they are to support common EU actions which China regards as inimical to its vital interests. It is not too cynical to see Beijing building up a kind of China lobby inside the decision-making structures of the EU, where the smallest state is at least notionally equal to the biggest. [Guardian]

In other areas, the Chinese have discovered they are in bad investments and are pulling out:

  • Chinese investors are the latest to pull out of long running Karachi refinery project intended to cut Pakistan’s costly reliance on fuel imports, the plant’s chairman told Reuters, a further sign of instability scaring off foreign money.
  • One of Australia’s biggest infrastructure projects has been dealt a blow with the decision of a major Chinese customer to withdraw from the development. Sinosteel has decided to stop developing a $2 billion iron ore mine which would have required one-third of the port’s capacity.  AM’s been told the company is concerned about delays and costs. Both the State and Federal Governments have significant stakes in the project.
  • Chinese buyers pulling our of Australian wool market. Jiang Chen from the Nunjing wool market says current prices can’t be sustained.  “We think this new season’s wool price is crazy.

Can the US count of Chinese money to save us.  Certainly not.