Analysis: China investment wave unlikely to swamp EU
By Alan Wheatley, Global Economics Correspondent
VENICE (Reuters) - The sign in a boutique selling glass hand-crafted on the Venetian island of Murano betrays an uncertain grasp of English. But the owner is very sure who is to blame for the tough times confronting the 700-year-old local glassmaking industry.
"Everything in this shop is not made in China," it proclaims. A few doors away, imported Murano lookalikes sell for much less. To the untrained eye, they appear identical.
With Europe drowning in debt and flirting with recession, China's influence can only rise further. Euro zone governments would love Beijing to plough more of its $3.2 trillion in foreign-exchange reserves into their bonds.
China is also likely to chip in with a loan to the International Monetary Fund to provide a financing backstop in case Italy and Spain are shut out of the bond markets.
Last week's $3.5 billion acquisition by China Three Gorges Corp of the Portuguese government's stake in utility EDP (EDP.LS: Quote) is also a sign of things to come.
Financiers turn instinctively to fast-growing China as they try to flush out buyers for assets that are going on the block as European governments, banks and companies pay down debt.
But, despite Chinese leaders' expressing interest in diversifying the country's overseas asset base away from government paper, analysts do not expect a sea change in China's traditionally cautious approach to expanding in Western markets. Africa and Asia are likely to remain China's top targets for now.
"There are going to be opportunities, but we're not going to see China buying up Europe," said Thilo Hanemann, research director at the Rhodium Group, an investment advisory and strategic planning firm in New York. Continued...