Closer Economic Links

Promoting trade and economic cooperation between China and Europe with a focus on green economy By Ding Ying

Closer Economic Links

Promoting trade and economic cooperation between China and Europe with a focus on green economy By Ding Ying

COMMON LINK: Chinese Premier Wen Jiabao and German Chancellor Angela Merkel attend the opening ceremony of the Chinese central pavilion at the Hannover Messe 2012 on April 23 in Hannover, Germany

MULTI-FIELD COOPERATION: Chinese Premier Wen Jiabao visits a farm in Iceland on April 21

This year is crucial for both China and Europe. The former needs to realize its economic transformation and steady development, and the latter has to deal with the sovereign debt crisis. Closer trade and economic ties will help both sides to fulfill their tasks more easily.

From April 20 to 27, Chinese Premier Wen Jiabao visited Iceland, Sweden and Poland, while attending the Hannover Messe 2012 in Germany.Experts believed that this is an important trip for China and Europe to boost their trade and economic cooperation. And cooperation on green economy will be a hotspot of future cooperation.

Business cooperation

Last year, many EU members, like Iceland,Spain, Portugal, Greece and Italy, were stuck in the sovereign debt swamp. Now the crisis is still far from over. Experts said both China and Europe have realized that enhancing practical cooperation is a reliable way to overcome the crisis.

Feng Zhongping, Director of the Institute of European Studies at the China Institutes of Contemporary International Relations(CICIR), said that thanks to EU members’joint efforts of strengthening fi scal discipline,the euro zone has passed the key period of the first quarter of 2012, and market confidence has recovered. But the crisis is still hovering over the continent.

“There is some pessimistic tone about Europe and the euro zone. Some even predict that the EU will fall apart. In spite of Europe’s actual dif fi culties, we still trust that Europe will get past the crisis, and the EU will maintain its important in fl uence on world events,” Feng said.“We are willing to strengthen the Sino-EU comprehensive strategic partnership.”

Wen said in a speech at the Hannover Messe 2012 that the fi nancial crisis is still going on. He suggested putting more resources to spur the development of the real economy,and create an environment conducive to job creation and the development of the real economy. He also urged efforts to vigorously push for innovation-based growth while calling for openness and cooperation.

Shen Jiru, a researcher with the Institute of World Economics and Politics under the Chinese Academy of Social Sciences (CASS), said, “It is still uncertain whether or not the domino effect of the debt crisis will occur in the EU, which is of a similar size to the U.S. economy.” He warned that European nations face a stronger challenge than the United States, because EU nations’ sovereign debts are owed to banks of other countries,while the United States can actually transfer its fi nancial crisis to other nations by releasing more dollars.

He said that since China and the EU have established a close economic and trade relationship, the EU debt crisis will de fi nitely influence China. “Premier Wen’s recent trip is also based on the target of coping with the challenge together by strengthening their complementary cooperation,” said Shen.According to statistics from Chinese Customs,the Sino-EU trade volume reached $567.21 billion in 2011, increasing 18.3 percent from the year before. Now the EU is China’s biggest trade partner and importer.

The EU is also an important investment market and technology exporter to China. Professor Zhao Huaipu with China Foreign Affairs University said that strengthened cooperation will help Europe get through the current financial crisis, and China can urge Europe to open its market to China, recognize China’s market economy status, and expand hi-tech exports to China so as to promote investment.

Statistics show that the EU has become the second most attractive investment market for Chinese enterprises. By the end of 2010, China had already invested more than $12.49 billion in the EU.

“There is a common zone between China’s 12th Five-Year Plan (2011-15) and Europe 2020 Strategy because both emphasize creativity, hi-tech, green economy and sustainable development, which creates a strong basis for their practical cooperation.”

—Feng Zhongping, Director of the Institute of European Studies at the China Institutes of Contemporary International Relations

New focus

Besides traditional cooperation fields like processing industries, China and Europe plan to pay more attention to trade and investment in hi-tech and green economy fi elds. Experts said considering the strong complementary nature of the two economies, cooperation in these fi elds will be a new hotspot.

Li Weiwei, an expert in European studies with the Chinese Institute of International Studies (CIIS), said for long time cooperation between China and Europe has focused on automobile and mechanical industries. In recent years, the two sides conducted more cooperation in wider fi elds like new energy and green economy-related products.

Feng with the CICIR said that the cooperation space between China and Europe is very big. He explained that there is a common zone between China’s 12th Five-Year Plan (2011-15) and Europe 2020 Strategy because both emphasize creativity, hi-tech, green economy and sustainable development, which creates a strong basis for their practical cooperation.“China is an important market, and Europe has advanced technology. There’s obvious interdependency and complementariness between them and this is the crucial point,”Feng stressed.

There is a lot of room for cooperation between China and Europe, because there are many countries in Europe and each one has its distinguished features, Feng said. Wen’s trip proved that China and Europe have been conducting cooperation in areas outside of foreign trade and investment, like development patterns, social management, intellectual property protection and hi-tech, he added.

China and Iceland signed several agreements on geothermal energy and polar science. Rich in geothermal energy, Iceland has advanced expertise in its utilization and has trained a considerable number of personnel for China in recent years. China has abundant geothermal resources in need of development. By April 2010, China had imported three geothermal energy technological and equipment projects from Iceland, with a total value of $7.4 million. And Iceland has trained more than 60 geothermal energy technicians for China. The two countries have a common intention to develop cooperation on geothermal utilization, fishing, shipbuilding,biochemical industries and hi-tech research.

During Wen’s trip, China and Iceland also signed an agreement on polar cooperation. The Chinese premier stressed that polar cooperation was aimed at maintaining the peaceful, stable and sustainable development of the Arctic region, and the two countries could cooperate in many fields, such as the environment and security.

The trade between China and Europe is on steady increase for these new hotspots, in spite of the in fl uence of global fi nancial crisis.And the promoted cooperation will help the two sides to deal with possible challenges.

Shen with the CASS said unless the domino effect of the EU sovereign debt crisis triggers a vast economic disaster, trade and economic cooperation between China and the EU will not be seriously affected. He explained that like Germany, China is also a big country paying great attention to the real economy and processing industry. Europe has a reliance on China’s labor-condensed products, and China needs Europe’s hi-tech products, said Shen.

Li from the CIIS concluded that strengthening trade and economic cooperation will benefit both sides. And in recent years, the investment has steadily increased.“If there is more cooperation based on reciprocal bene fi t between China and the EU,both sides’ economy will grow faster, which is going to lead to an obvious economic growth of the world economy. Then, they will be able to deal with different kinds of challenges and crises,” said Li.