China's Outbound Direct Investment May Hit $2 Tril. by 2020

China’s outbound foreign direct investment (ODI) could reach a total of $2-trillion by 2020, according to a report by US-based research firm Rhodium Group.

The report was produced in partnership with China International Capital Co. at a time when China’s outbound direct investments are beginning to arouse fears on the part of a growing number of nations that their national security may be compromised by such investments. In particular, the European Union is thought to be readying protectionist measures against Chinese investments in its telecom sector.

Europe would see $250-500 billion in new Chinese M&As and green-field investment by 2020 if the continent continues to attract about 25% of global FDI, the same proportion as in the previous decade, according to the report.

Private firms account for 63% of Chinese investment in Europe, according to report author Daniel Rosen. The top five Chinese private investors in Europe are Geely, Huawei, Lenovo, Sany and Wolong Group.

China began encourage invest overseas a decade ago, but most of the ODI has taken place during the past several years, and has been accelerating. China’s ODI in the first quarter of 2012 jumped 94.5% over the first quarter of 2011 to $16.5 bil. comprising investments in almost 1,100 foreign companies in 109 countries. As of the end of March non-financial Chinese ODI totaled $338.5 bil.

So far, Chinese investment has created 45,000 jobs in the EU, according to the report.