London - As Chinese investment in Europe rises in the future, it will play an important role in driving European economic recovery and generating employment.

In an exclusive interview, Hungarian National Development Minister Tamas Fellegi acknowledged that China’s investment helped Europe to emerge from the economic turmoil.

China's Wanhua Industrial Group acquired full control of Hungarian isocyanate maker BorsodChem for 1.2 billion euros ($1.72 billion) in early February.

This is the largest investment a Chinese company has made so far in Hungary. “We are very happy...I hope that it is just the first step,” Fellegi added.

Besides Wanhua, large Chinese companies are increasingly expanding to Europe, including CICC, China telecom and Huawei.

Like Hungary, many European countries are eager to attract Chinese investment.

Business leaders and experts agree that the expected growth in infrastructure construction and other industries in the coming years will likely be an important source of employment.

"There are already 420 Chinese companies in the UK and in the next few years it will grow rapidly," said Stephen Phillips, CEO of the China-Britain Business Council.

Last summer, leading Chinese automaker Changan established an R&D centre in Nottingham which focuses on the development of power train and transmission technologies as well as alternative energy vehicle technology.

"This is great news for job creation in the UK as recruitment is expected to increase to approximately 200 employees by the end of 2013," said Guy Drury, chief representative of the Confederation of British Industry China.

Drury added, "The UK is considering adopting Chinese high-speed railway technology as it plans to dramatically expand its railway network over the next 15 years."

Focusing on the issue of job creation can help reduce some of the frictions that could arise from Chinese investments and from pre-existing concerns that Chinese exports undermined manufacturing jobs in the first place, said Rodger Baker, vice president of Strategic Intelligence, a global intelligence company.

"However, there remains an underlying concern in Europe not only that the job creation from new investments doesn't match the job losses due to competition with Chinese goods, but also that the Chinese are taking advantage of Europe's hard luck," Beker said.

When it comes to the key barriers for Chinese companies setting up in the EU, analysts said that while regulations in the EU are fairly open to Chinese investment, the biggest hindrances are nationalism, intellectual property rights, and national security concerns.

"There are times when deals may make perfect sense from an economic perspective, but become political hot potatoes in the sector, locality or country," said Baker.

It remains fairly easy for local nationalistic sentiments to rally opposition to foreign investments, particularly when it is seen as threatening a particular industrial sector or presents potential risks to national security interests (telecoms, aerospace, etc), Baker said.

A structural barrier to investments in the EU can come from the diverse make-up of the EU itself.

Certain countries are affected in different ways by Chinese investments, and they may pressure other EU members to resist if they perceive the Chinese investment as a potential threat to one of their own state champion industries, Baker added.

Phillips noted, "The challenges for UK businesses going to China and Chinese businesses going into the UK are the same. There is fear of going into a different country and that cultural practices will be different. "

Liu Yanqiu contributed to this story.