Europe remains tough export market(3)

Chinese investment

While European investment in China shrank in the past few months, Chinese investment in the EU is rising.

According to the Ministry of Commerce, in the first five months of the year, investment in China from the European Union dropped 5.1 percent year-on-year to $2.78 billion.

But China's investment in the EU increased 23.6 percent, after growing by 100 percent in 2010 and 94 percent in 2011.

One of the biggest deals so far this year was Chinese construction equipment maker Sany Heavy Industry Co Ltd's announcement that it will pay 324 million euros ($426 million) for a 90 percent stake in Putzmeister, Germany's largest concrete pump maker.

Asia, Europe and Africa are the top three destinations for China's outbound direct investment. But since the outbreak of the eurozone debt crisis, Europe has led the growth and will probably continue to do so, experts said.

Recent research by consultancy Rhodium Group and China International Capital Corporation showed that China is set to accelerate its overseas investment, and debt-stricken Europe will be the most attractive market for Chinese companies.

By the end of 2020, China's investment in the region will range between $250 billion and $500 billion, it predicted.

"The fast growth could be attributed to China's 'go overseas' strategy and the devaluation of assets in some European companies," said Yao from the Chinese Academy of International Trade and Economic Cooperation.

A survey conducted by Ernst & Young showed Europe remains the top destination for Chinese investors over the next three years.

But Zhang Jianping, an expert at the Institute for International Economic Research, a think tank of the National Development and Reform Commission, warned of the risks.

Growing Chinese investment in the eurozone is putting the bloc on alert, and uncertainties over the eurozone debt crisis are casting a shadow over investment deals, Zhang said.