China's new European trade hub: An Irish town of 18,000

As China's government readies to buy up European infrastructure, a trade hub slated for the Irish midlands could prove a showcase for the world's second-largest economy in a struggling continent and provide much needed jobs in debt-addled Ireland.

In December, local authorities in the Irish town of Athlone gave the go-ahead to a trade hub that would give Chinese business an anchor in Europe. Backers say the 1.4 billion euro ($1.8 billion) project "will become the largest European source of Chinese-branded goods in Europe.” With the World Bank's growth forecast for China reduced, partially because of the reduction in European demand for Chinese goods, a revived Europe is in China's interest.

Meanwhile, Ireland is looking at 63 billion euros in bank debt and is mired in a deep recession. Although the country was edging toward growth earlier in 2011, by the third quarter of 2011 the government reported a 2 percent decline in national output. 

The Athlone Institute of Technology hosts more than 200 Chinese students – one of the links that helped bring the trade hub to the town, says Prof. Ciaran Ó Catháin, the president of the school and one of the players in the project negotiations. Professor Ó Catháin would not disclose who the Chinese backers are, but says, “suffice to say there are significant players involved on the Chinese side." Plans for the project predict at least 400 Chinese businesses using the trade hub to launch their products in Europe.

The Athlone announcement came on the heels of a November announcement by Chinese Commerce Minister Chen Deming that Beijing will send a delegation to Europe in 2012 to explore options for investing in state-owned infrastructure. China has already bought about 600 million euros worth of European debt and is now looking to invest in state assets as well, such as roads and trains.

According to Mr. Chen, European countries facing substantial debt are seeking to convert their assets into cash – and are looking to foreign investors for that capital. As part of Ireland's debt reduction plans, The International Monetary Fund (IMF) has suggested that Ireland divest up to 5 billion euro worth of state assets, a fire sale that could interest more Chinese investors. Editor's note: This paragraph has been edited to correctly reflect the amount of state assets the IMF has requested Ireland divest.

If the Athlone project is successful, China could take the game to the US. According to Ó Catháin, Ireland's low corporate tax rate was "a major inducement" for Chinese investors to back the trade hub there, but Asian investment in Ireland is still almost subterranean compared to US investment there. While there are 41 Asian companies operating in Ireland, there are 491 American companies and 99 German ones, according to 2010 statistics from the Industrial Development Agency, the state body responsible for attracting foreign companies to Ireland. Editor's note: This paragraph has been edited to correctly reflect the ownership of the foreign companies.

Google, Facebook, and fashion retailers

1 | 2

Next