Europe has attracted twice as much investment as the United States from Chinese investors in the past two years for commercial opportunities and political reasons, the Rhodium Group said in a report. Annual flows of Chinese direct investment to the European Union increased from less than USD1 billion before 2008 to an average of USD3 billion in 2009 and 2010, before tripling to more than USD10 billion in the past two years. In the U.S., Chinese direct investment surged from below USD1 billion in 2008 to USD5 billion in 2010, before dropping to USD4.7 billion in 2011 and reaching a record high of USD6.5 billion in 2012, which remained below the levels seen in the EU in the past two years. “Chinese investors seized opportunities to buy into cash-strapped European industrials and assets promising stable long-term returns such as utilities and other infrastructure,” Thilo Hanemann, Research Director of the Rhodium Group and the author of the report noted. For example, China invested more than USD5 billion in EU transport infrastructure and utilities through 2012, while the U.S. attracted close to zero investment in transport infrastructure from China. Hanemann also mentioned national security concerns as an important factor in affecting China’s investment. “Chinese telecommunications equipment firms spent more than three times as much in Europe than in the U.S., where the Committee on Foreign Investment in the U.S. (CFIUS) has interfered with several deals and firms have seen their business diminished by intervention from U.S. government officials, members of Congress and the security community”, the Shanghai Daily reports.

According to Rhodium, investors from China spent USD6 billion on the industrial machinery and vehicle sector in Europe, compared with less than USD3 billion in the equivalent sectors in the U.S. “Europe is a comparatively freer market than the U.S., exerting less interference on commercial and business activities,” said Huo Jianguo, President of the Chinese Academy of International Trade and Economic Cooperation, a think tank affiliated with the Ministry of Commerce (MOFCOM). The Rhodium report, however, found that the U.S. has outpaced Europe in attracting Chinese investment for several high-tech clusters, including aviation and information technology services.