A report released on Thursday said that Chinese direct investment in Europe is set to boom with $250 billion to $500 billion in fresh capital this decade. Although Europe is eager to benefit from the creation of new jobs due to the investments, its policymakers are getting headaches in return.

A New York-based economic research firm said that annual ODI outflows from China to Europe tripled from 2006 to 2009 before tripling again last year to $10 billion but it has failed to keep pace with its booming economic growth. However, companies are now looking for technology and brands that will give them a cutting edge over competition at home.

In each of the years 2010 and 2011, the number of deals worth more than $1 million doubled to almost 100. The trend is likely to continue with projections that between 2010 and 2020, between $1 trillion and $2 trillion of Chinese ODI will take place. That would mean $250 billion to $500 billion cumulatively in new Chinese investment in the form of either mergers and acquisitions or green field projects.

The current Chinese investment supports 45,000 jobs in the 27-member European Union and concluded that firms are venturing overseas overwhelmingly for commercial reasons, however, the only catch is that Europe should be able to avoid the collapse of the euro and maintain the 25 percent share of ODI it captured in the 2000s.

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