Chinese firms need to be welcomed and not be feared by the eurozone

According to research by Dr Hinrich Voss and Prof Jeremy Clegg at Leeds University Business School, commentators in China have perceived a hostile stance in the EU towards Chinese investment.

Dr Voss said this perception might be informed by alarmist reports of an influx of Chinese investors buying up Europe.

“In fact, the vast majority of cross-border investments are based on mergers and acquisitions and the number of European acquisitions by Chinese firms is actually very small,” he said.

Prof Clegg said that better statistics are needed in order to better inform policy making and reporting. The report is calling on EU statistics company Eurostat to remedy the problem.

“EU level action and member state co-operation will be necessary for the Union to have as clear a picture of inward foreign direct investment as China does of inward foreign direct investment from the EU,” said Prof Clegg.

“Anything less places the EU at a distinct disadvantage,” he added.

The EU needs all the help it can get at a time when Chinese officials are concerned the debt crisis in Europe will hurt the outlook for bilateral trade for the rest of 2012.

Senior Chinese officials are calling for more structural reform in the eurozone.

Chinese vice finance minister Zhu Guangyao said Beijing believes the eurozone can deal with the debt issue and China appreciates the efforts taken so far to ease the crisis.

Nonetheless, the damage has already been felt in trade. China’s exports to Europe fell 12.7 per cent in August from a year earlier, for the third month in a row.

“According to forecasts, Europe’s economic situation will not show a substantial improvement.

“We cannot be optimistic about the bilateral trade outlook,” said vice commerce minister Zhong Shan.

China’s overall exports grew by a lower-than-expected 2.7 per cent in August from a year earlier, while imports fell 2.6 per cent.

China’s economic slowdown is expected to reach its nadir this quarter, with a recovery of momentum delayed until the final quarter, leaving growth for 2012 likely to fall below eight per cent, a level unseen since 1999.

Many economists lowered their forecasts for the world’s second largest economy after weak July and August data, reflecting both external headwinds and domestic weakness.

At a time when China is worried about the health of the eurozone, Dr Voss said it is vital that Chinese firms feel they will be welcomed in the EU.