Increased Chinese investment in the EU in the first quarter suggests that the trend is likely to enjoy strong growth this year after a highly magnified in 2014.
There were 11 Chinese deals in the EU announced a total of US $ 9.6 billion in the first quarter, an increase of 31.2 percent over the first quarter of last year, which saw seven Chinese deals totaling US $ 7.3 billion, according to Mergermarket, a firm that monitors international research offers.
"We are very optimistic in regards to this trend. The growing trend of Chinese investment in the EU is bound to continue. I'm doing a lot of work on Chinese investment in the EU," said Thomas Gilles, president of the EMEA and China group of Baker & McKenzie. "However, the trend of rapid growth of Chinese investment in the EU can possibly be stopped if the EU economy deteriorates further," Gilles said.
A large part of the investments in the first quarter came from China National Chemical Corporation (ChemChina) € 7.1 billion (HK $ 59,800,000,000) acquisition of Pirelli, the Italian tire manufacturer.
Chinese investment in the EU doubled to a record $ 18 billion last year, according to a report from Baker & McKenzie, an international law firm. Given that Chinese investment in the EU was approximately US $ 9 billion in 2013, this means that in the first quarter, the value of such investments tied the set of those in 2013 and made half of the year Last.
"The Chinese investment in Europe is likely to increase again in 2015. The investor base in China, who are willing to enter Europe with large-scale investment is expanding," Edward Freeman, Hong Kong partner at law firm international Freshfields Bruckhaus Deringer, said.
Simon Weller, partner at Freshfields Hong Kong, adding that "the value proposition to invest in Europe is strong at this time. The Chinese buyers are in a good position due to the current exchange rates."
The exchange rate of the yuan-euro fell more than 7 yuan per euro in February to 6.7 yuan last Thursday. Currently, China and the EU are negotiating a bilateral investment treaty that Gilles estimated to be signed in 2016. "Today China is facing 26 bilateral investment treaties with different EU member states," he said.
"A unification of these treaties greatly facilitate Chinese investment in Europe and, therefore, increase the flow of investment." The investment treaty between China and the EU would reduce Chinese government approvals necessary for Chinese companies before investing in the EU, said Gilles. This would provide greater clarity for the sale of assets of the EU to Chinese investors since the chances of an agreement being blocked by the Chinese authorities would be back, he said.
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