China's outbound foreign direct investment could hit the $2-trillion mark by 2020, with the private sector playing an important role, according to a report by US-based research firm Rhodium Group.
The report said if Europe continues to attract the same share of global FDI as in the previous decade — around 25 percent — then Europe would see $250-500 billion in new Chinese M&As and green-field investment by 2020.
In partnership with China International Capital Co Ltd, Rhodium Group released the report on China's investment in Europe on Thursday in Brussels.
With the huge economic and employment impacts of China's upcoming surge in overseas investment, the authors urged European countries to keep their economies open in order to maximize the benefits of the Chinese inflows.
The report was released amid speculation that the European Union is preparing to resort to protectionist measures against Chinese telecom investors.
The report's author, Daniel Rosen, said that 63 percent of Chinese investment in Europe comes from private companies.
So far, the top five Chinese private investors in Europe are Geely, Huawei, Lenovo, Sany and Wolong Group.
China started to encourage its enterprises to invest overseas a decade ago, but the pace only started to pick up in the past couple of years.
"Europe must not risk losing its hard-earned reputation for openness by imposing additional barriers to capital inflows based on economic security considerations," the report said. "Several cases have already raised that specter."
Europeans will embrace foreign investment if a thorough, EU-wide process to address concerns is in place, guided by the principles of openness and non-discrimination, said the report.
So far, Chinese investment has created 45,000 jobs in the EU.
"Chinese investment in Europe is a very recent phenomenon, and Chinese investors still suffer from a lack of experience and managerial know-how," said Frank Xu, managing director of Investment Banking Department of CICC.
Against this context, the expansion of Chinese investment in Europe is experiencing structural difficulties.
"The predominating and the only advantage of Chinese investors is access to capital," said Xu.
At the report's launch, EU Trade Commissioner Karel De Gucht said the EU is committed to openness in foreign investment.
"At the same time we need to make sure that other countries — including China — increase their openness as well," said De Gucht.
