BRICS cementing Euro-deals

While Western economies are struggling, the East has seen rapid financial growth. China's presence in Europe can be felt more than ever, with Beijing making strategic investments, although it is still cautious about buying the continent's debt.

­With the current economic turmoil there is no better time for countries like China to snap up a bargain such as the recent acquisition of the well-known Italian fashion brand Cerruti by a Chinese luxury clothing retailer owned by the Hong Kong-based trading group Li & Fung.

“The interest of China is to invest in Italy and European countries in general. I suppose it’s a good opportunity to catch,”
says Tiberio Graziani, analyst from the “Eurasia, Rivista di Studi Geopolitici” quarterly magazine.

It is not just China cashing in on the crisis for countries doing well economically buying up European assets is a sound investment. Whilst the West struggles, it has been the emerging group BRICS – comprising Brazil, Russia, India, China and South Africa – which have been powering ahead.

“This could be the moment where you look back and say this was when emerging markets got their chance to be much bigger players and much bigger powers around the world,” believes Wall Street Journal economics reporter Sudeep Reddy.

But whilst Chinese businesses are proving strong competition, China has been cautious when it comes to buying up European debt. It rather wants to participate in big infrastructure projects in Europe and the US – and not as a contractor only, but also as an investor, developer and operator, Lou Jiwei, the chief executive of China’s sovereign wealth fund, said Sunday in a Financial Times op ed article.

“We at CIC believe that such an investment, guided by commercial principles, offers the chance of a ‘win-win’ solution for all,”
he argued.

Liu Baocheng, Professor at the University of International Business and Economics, says China would not blindly pump money into troubled economies without having a say on how it is used.

“China should view this as a matter of investment and not financial aid. The investment should be more towards the valuable assets to help the industries instead of writing a blank check,” he said.

As Chinese investments in Western companies and infrastructure grows, so too does China’s control and influence, not just in fashion, but across the entire European economy. With a Chinese trade and investment delegation due to visit Europe next year further investments are extremely likely.

“The geo-economical aggregation that we call BRICS could be a very interesting partner in overcoming the actual financial crisis,” hopes Tiberio Graziani.

As the crisis continues to readjust the economic leaders on the global stage, emerging economies such as China look set to remain firmly in the spotlight.