As tensions surrounding the global trade war continue to rise, a new report from a firm of international lawyers has highlighted an unforeseen consequence. China is now investing much more in Europe than it is in North America. It's a direct consequence of the trade war, according to the Baker McKenzie law firm. Richard Bestic reports from London.  

With multi-million dollar investments in projects like Hinkley Point nuclear power station here, Britain benefits from Chinese money. It's a similar story across much of Europe, where investments in the first half of the year reached $22 billion dollars, according to a report this week from lawyers Baker McKenzie. However, in the US, the trade war weighing down on deal-making, with just two-and-a-half billion dollars in Chinese investment.

TIM GEE, PARTNER MCKENZIE BAKER "The rhetoric from the Trump government is very unappealing for the Chinese. They absolutely have an imperative to continue their policy of outbound investment, but they're only going to do that when they feel they're stepping into a situation where they've got long-term security about the way they will be treated."

In response to the escalating trade war, China and Europe have grown closer. Chinese Premier Li Keqiang and EU leaders in Beijing this week voicing joint support for free trade.

TIM GEE, PARTNER MCKENZIE BAKER "The talk between the EU and China about reciprocal access is exactly the dialogue that the Chinese respect and that's what's making them feel comfortable about continuing to invest in Europe."

Europe benefits from many high-end Chinese investments in the automotive industries; health and biotech, claims Baker McKenzie, at the expense of the US.

TIM GEE, PARTNER MCKENZIE BAKER "I think that it's got a few more phases to run through, I think things will get worse before they get better. But there is a need for both the US and China to find a basis upon which they can co-exist on the global economy."

RICHARD BESTIC LONDON "Baker McKenzie's says that Chinese companies are also doing a little financial housekeeping – selling assets, in North America nearly $10 billion dollars' worth with another $4 billion dollars pending. And while the scale is smaller in Europe, the picture is something similar. Clearly, when the dust settles on this global Trade War, the world financial investment situation is going to look very different. RB CGTN London."