Dagong expects China to retain position among largest FDIs

Dagong Europe, the European branch of Dagong Global Credit Rating Co., Ltd., a rating agency based in China, said in a report on Thursday that China was expected to retain its position among largest foreign direct investors in the world.

"China's high foreign exchange reserves continue to fuel its sizeable foreign investments," said Head of Corporates Analytical Team at Dagong Europe Richard Miratsky, commenting on the report "China's Investments - Refocus on Europe" published on Thursday.

The report provided an analysis of the dynamics and progress of the Chinese investments across Europe over the last decades and identified the major drivers for their future development.

According to Dagong Europe, China's foreign exchange reserves will remain high in the medium term, resulting from strong export and continuing control of the RMB exchange rate.

Focus on high-tech will drive China's investments to Europe, the report said. Both the desire to overcome the comparative disadvantage in high-tech sectors and the acquisition of natural resources will maintain a significant position in China's foreign investment policies over the long term.

Dagong Europe estimated that Europe's share in China's investment portfolio will grow. "China aims to increase currency and geographic diversification to reduce its high exposure to the U.S. dollar and the U.S. government fixed income instruments," the report said.

The agency also expected "the first-in-history investment agreement between European Union and China," currently under discussion within the European Commission, to reduce concerns over legal and rights protection and further encourage the bilateral investment flows.

Dagong Europe was established in Italy's Milan in 2012 as the first Asian rating company operating in the European Union as the result of a Sino-Italian joint venture between Dagong Global Credit Rating and Mandarin Capital Partners, a private equity fund by institutional investors.