BEIJING – Chinese business is expanding its presence in the Europeanmarket, as investors seek to take the leading role from their Americancounterparts. In recent years, Chinese investment in the European Union hassurpassed $100 billion, including in infrastructure and other key sectors.
Not Only Sea Ports
In 2016, COSCO Shipping, which owns the world’s fourth-largest containershipping fleet, bough 51 percent of Greece’s biggest port in Piraeus for$342 million. The Chinese company won the bid over five rival companies,including the American investment company Cartesian Capital Group. Theport’s new managing director, Fu Cheng Qiu, vowed to turn the port into oneof the largest container hubs in the world.
The following year, COSCO went on to buy a majority stake in Spain’s NoatumPort Holdings for $244 million and 100 percent of the container terminalin the Belgian port of Zeebrugge for $42 million. Earlier, COSCO PacificLtd. bought 35 percent of the Euromax terminal in Rotterdam.
However, the most sensational deal was signed by China CommunicationsConstruction Company (CCCC) in July 2017. The company won the bid to builda new container terminal in Hamburg, one of Europe’s oldest ports. TheChinese consortium also owns Zhenhua Port Machinery Company (ZPMC), theworld’s largest container machinery manufacturer. The new terminalin Hamburg will be able to accommodate ultra-large container vessels.
“In each of these deals, the Chinese companies were rivaled by companieswith American capital. This indicates that the European market favorsChinese investment more than money from American companies,” DmitryAbzalov, director of the Center for Strategic Communication, a think-tank,told RIA Novostilink>.
In addition to sea ports, Chinese companies have been buying up otherinfrastructure facilities, including energy companies, power plants,chemical companies and airports.
Exodus of American Companies?
In 2016, Chinese direct investment in the European market increased nearly22 times, to €35 billion from €1.6 billion in 2010, surpassing a total of€100 billion over 16 years, according to datalink>from theBerlin-based Mercator Institute for China Studies (MERICS).
[image: A security guard stands in front of the gate of the Center ofExcellence on Nuclear Security in the State Nuclear Security TechnologyCenter in Beijing, China, March 18, 2016]In 2016, Chinese investors bought or bought shares in 309 Europeancompanies, including in Britain (23 percent), Germany (19 percent), Italy(13 percent), France (11 percent) and Finland (7 percent). However, thecomposition of Chinese investment in Europelink> hassignificantly changed in the past seven years; the influx of moneyinto transport infrastructure has increased, as well as real property, themachine building industry and the automotive industry.
At the same time, direct investment from the US in EU countries has beenshrinking in recent years, dropping below €100 billion in 2012 and thenby another two percent in 2013.
“China is intensely building up its presence in Europe. This trend may notbe very substantial for now due to the remaining dominance of Americaninvestors, but it cannot be ignored,” said Alexei Portanskiy, a professorat the World Economy and International Affairs faculty of the NationalResearch University Higher School of Economics.
In addition to buying up companies in the European market, Chinesecompanies have also taken niches vacated by American investors. This trendis the most visible in the IT-industry, where companies such as Microsoft,Google, Apple, Facebook and Amazonlink> have beenunder pressure from European authorities, who intend to tighten their taxationpolicy link>. Theirmarket shares have been filled by Chinese IT companies, such as Huaweiwhich has increased sales of its smartphones and other products in Europeanmarkets.
Changing Global Roles
Many experts suggest that another major reason behind China’s economicexpansion in Europe is the protectionist policy of the US President DonaldTrump administration. His withdrawal from the Trans-Pacific Partnershiplink>(TPP) and theParis climate agreement has resulted not only in decreased US involvementin global affairs but also prompted Beijing to take the leading rolein these and other initiatives.
“After last year, Washington announced its withdrawal from the Parisclimate deal and the other countries held talks to work out a commonposition on the issue. As a result, the agreement is still in force,but without the US, and China now plays the major role, Abzalov said.
His assumption was echoed by Portanskiy, who said that Trump’s policy isnow resulting in protectionismlink>, isolationismand leading to diminishing US involvement in projects and agreementsinitiated and developed under former President Barack Obama.
“The withdrawal from the TPP gave a fresh impetus to another globalagreement, the Regional Comprehensive Economic Partnership (RCEP), which isbacked by China and in which Beijing wants to play one of the leadingroles,” the analyst pointed out.
The RCEP agreement will probably be signed this year. In addition, Beijinghas also intensified its efforts to establish a free-trade area in theAsia-Pacific.