U.S. Markets

Chinese foreign investments up 40 percent to record in 2016: study

A 100 Yuan note is seen in this illustration picture in Beijing March 7, 2011. REUTERS/David Gray/File Photo

BERLIN (Reuters) - China’s foreign direct investments soared 40 percent to a record 180 billion euros ($189 billion) in 2016 from a year earlier, according to a study released on Wednesday by the Berlin-based Mercatur Institute for China Studies (MERICS) and Rhodium Group.

Chinese investments in the European Union rose 77 percent to over 35 billion euros in 2016, with Germany accounting for 11 billion euros or 31 percent of total Chinese investment in Europe, according to the study by MERICS and Rhodium, a consultancy specializing in Greater China and India.

Chinese investors were particularly interested in acquiring technology and advanced manufacturing assets, the report said.

At the same time, European investments in China totaled just 8 billion euros, dropping for a fourth straight year, the report said.

It said the decline reflected slowing economic growth, looming overcapacity and lower margins in the Chinese market, as well as persistent formal and informal market access barriers for foreign companies in China.

“The growing gap in two-way investment flows is fueling European perceptions of a fundamental lack of ‘reciprocity’ between the EU and China,” the report said.

European leaders were increasingly concerned that the sale of core industrial technology could pose risks to Europe’s industrial base given new Chinese policies that viewed overseas deals as a way to displace foreign companies in China and elsewhere, it said.

Germany is reviewing its powers to block foreign acquisitions and pushing for European measures to safeguard key technologies after a spate of Chinese takeovers, but experts say changes will be limited given the government’s commitment to free trade.

Reporting by Andreas Rinke and Andrea Shalal; Editing by Toby Chopra