Chinese direct investment in Europe reached $10 billion in 2011. Chinese investment in Europe tripled in 2011 to reach $10 billion, according to a study by the Rhodium Group consultancy in collaboration with CCPI, a Chinese investment bank. Having reached on average less than $1 billion per year from 2004 to 2008, Chinese direct investments tripled to about $3 billion in 2009 and 2010, before tripling again in 2011. Although this amount of $10 billion is relatively modest in comparison with the size of its economy, the country should noticeably increase its control on the Old Continent in the years to come, scheduling assets purchases between $250 and $500 billion by 2020. Assets have become financially attractive given the debt crisis. For all the developed countries, the report forecasts that out of the $2 trillion which could represent Chinese investment abroad in 2020, a quarter would go directly to Europe, through mergers and acquisitions or greenfield investment. Chinese companies are particularly interested in purchasing European technology, brands (for example Weetabix cereal) and top of the range production like chateaux and vineyards in Bordeaux. The Chinese government has encouraged its businesses to increase their investments abroad to make them more competitive at world level, to secure supply in terms of natural resources, technology and expertise for China, and also in order to diversify the massive exchange reserves - valued at $3.2 trillion. Unsurprisingly, Chinese investors prefer the three biggest economies in Europe (France, the United Kingdom and Germany). Another study, carried out by investment fund A Capital, points out that in the first quarter of 2012, Europe was the second most popular destination for Chinese investment abroad, after South America. Taking into account the investments affecting natural resources, the total could reach the impressive level of $2.14 trillion in the third quarter of 2012. China fears the collapse of the eurozone, however. In a recent interview with The Wall Street Journal, the head of sovereign wealth fund Chinese Investment Corp (CIC), Lou Jiwei, said that he had reduced his investments in European shares and bonds. Without entering into the detail about the amounts at stake, Lou Jiwei, who manages $410 billion, said that he had lowered his exposure to European public contracts, and he added that China would no longer buy eurobonds if these were issued, “the risk being too high and the return too weak”. Lou Jiwei nonetheless added that CIC was continuing to invest in Europe through investment funds and direct holdings, including in the infrastructure sector (especially the COSCO group in the port of Piraeus in Greece). (IL/transl.fl)