Chinese companies more than doubled their investment in European firms last year, according to a new study, a welcome development for Continental policy makers looking for new sources of capital and growth.

In 2011, Chinese direct investment in European firms surged to $10.4 billion, from $4.1 billion in 2010, according to estimates by A Capital, a private-equity firm based in China and Paris that takes stakes in European companies alongside Chinese investors.

Europe became the leading destination for Chinese firms investing abroad in 2011, accounting for 34% of all outbound merger and acquisition activity, according to A Capital's new Dragon Index, which was scheduled to be launched Tuesday and will track China's overseas investment on a quarterly basis.

The report comes as top European and Chinese leaders, including Chinese Premier Wen Jiabao and European Commission President José Manuel Barroso, are to meet for an annual summit in Beijing on Tuesday. The summit will also be attended by companies such as France's GDF Suez SA, in which China Investment Corp., China's sovereign-wealth fund, invested around $4 billion late year, taking a a stake in two of its units.

Chinese investment in Europe's private sector, while still relatively small, is becoming a bigger source of support for corporate Europe.

In 2010, 61% of overseas mergers and acquisitions by Chinese companies were in the resources industry, but this fell to 51% in 2011, as investment in high-end manufacturing and chemical industries rose, according to A Capital's index. The share of investments made by state-owned companies also declined to 72% in 2011 from 82% in 2010.

Relative to the size of its economy, China's overseas investment remains quite modest. The total stock of investment abroad rose to 5.3% of gross domestic product in 2011 from 2.6% in 2001, but it remains well below the average of over 27.7% for developed countries in the Organization of Economic Cooperation and Development, Mr. Loesekrug-Pietri said.

Nonetheless, A Capital expects Chinese investment abroad to grow strongly in the years ahead, driven by official support for companies going overseas in Beijing's 12th five-year plan, which runs from 2011 to 2015. It projects there will be $800 billion of new investment by 2016.

Please contact us in case of Copyright Infringement of the photo sourced from the internet, we will remove it within 24 hours.