Chinese direct investment in Europe averaged less than $1bn each year from 2004-2008, but tripled to $3bn in 2009 and 2010 before tripling again to nearly $10bn in 2011.

More and more Chinese companies have increased their offshore investments in European countries such as Britain, France and German through merger and acquisitions or greenfield investments. They aim to secure the technology, natural resources, expertise and brands and enhance their competitive position globally.

Ping An Insurance, China's second-largest insurer, has recently purchased the Lloyd's of London Building from a Commerz Real AG-managed fund for $400m. At the time, Michael Kilbaner, head of Greater China research at broker Jones Lang LaSalle, was quoted as saying that London "seems to be one of those global markets that everyone in the world is interested in and it seems natural that Chinese investors would view it similarly."

Jones Lang predicted that Chinese investors might spend further $5bn buying overseas real estate in 2013, 25% higher than in 2012 as Chinese Government in late 2012 relaxed its policies to enable insurers to buy real estate and other assets outside the country including UK and US.

Responding to these changes, Dalian Wanda Group, a Chinese conglomerate with activities in real estate, tourism, hotels, and entertainment, is planning to build a £700m five star hotel and residential twin tower development on London's South Bank in June 2013.

In addition, ABP (China) Holdings, a Beijing-based developer, has announced a $1.5bn to transform a dockland in eastern London into a business port for attracting Chinese and Asian companies to develop in Europe. It claims to be the largest commercial real estate project invested by Chinese in Britain.

 

China Investment Corporation, the country's sovereign wealth fund, paid $600m for a 10% interest in London's Heathrow airport in 2012. In addition, CIC bought nearly 9% of Thames Water in 2012. This is CIC's second major investment in UK infrastructure, which is worth at least $750m. Like Heathrow airport, CIC can receive reliable income from the public utilities sector.
 

Chinese companies adopt a "going out strategy" to diversify their investments from low-yield financial products into high-yield tangible assets.

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