Three different glances about the recent visit of the Chinese Premier Wen Jiabao to Europe
The Greek debt crisis and China: China Daily.[i]
The author, Professor John Ross, focuses on the following:
China became part of the discussion on how to resolve Greece’s debt crisis. A considerable impact of the visit took place in Germany, where a contract worth $15 billion was signed. On the other hand, it was in Hungary where the Chinese Premier announced that “…it would include that country in its international bond purchases…” Finally, in Britain, David Cameron wasted time trying to lecture China on human rights, while $2 billion trade agreements were signed.
Professor Ross adds that there are two aspects to the aftermath of the visit. The first one is about the economic relations between China and Europe. The second one is about the specific Chinese’s problems regarding its exposure to the crisis of Greece.
The latter is, however, a very important issue that needs to be carefully analyzed. It is necessary to realize that the present bailout packages are not going to work, so finally Greece will have to partially default on its debt.
Finally, John Ross emphasizes in the experience that the China’s economic policy makers have when it comes to calculate the benefits of participation in a scheme to postpone Greece’s default outweighs the financial cost. Anyway, “… that calculation needs to be made on the assumption of an eventual, at least partial, Greek default”.
Wen Jiabao’s European Tour Focuses on Greater Cooperation, Business Opportunities: China Briefing. [ii]
During the meetings with three European countries (Hungary, Germany and the United Kingdom), Wen stressed greater cooperation with each one of them, and signed multiple agreements in the matter of business and cooperation.
“Hungary: China interested in state bonds and ownership in Hungarian companies.”
24 years have passed since the last premier visited this land, so, now after those 24 years China showed a particular interest in investments related with the transport and the logistic sector.
A total of 12 agreements were signed between the two countries, which includes: two Memorandums of Understanding on aerial, naval and rail commerce, and three cooperation deals on logistics development. It is good to mention that China is also interested in buying ownership in some troubled Hungarian transport companies, such as: Malév (the Hungarian national airline) and the state rail firm MAV.
“Germany: Business contracts worth over US$15 billion signed to boost trade.”
China and Germany expressed their intention and determination to increase their annual bilateral trade volume in a significant level during the next five years. Last year the total bilateral trade volume was US$187.1 billion (38.5% surge from 2009), the German Chancellor, Angela Merkel, hopes the trade figure between China and its country will reach US$284 billion by 2015. On the other hand, Wen, anticipated the trade volume can even double over the next five years.
In the present time, China is Germany’s third largest trading partner (after France and the Netherlands), being the no. 1 importer to Germany and the seventh biggest buyer of German exports last year.
“The United Kingdom: Wen stresses common interests and pictures a free and democratic China.”
In this European country, Wen emphasized the importance of strengthen the bilateral ties, without strategic conflicts while promising democracy and human rights to the Chinese citizens. Wen also pointed out the common interests that both countries share. So, he urged both countries to advance cooperation, with the hope that closer business ties will help the two countries achieve the goal of US$100 billion in bilateral trade by 2015.
China abroad. Welcome, bienvenue, willkommen[iii]
There is a clear difference between the Americans and the Europeans when it comes to talk about China. European leaders want China to buy more of their debt while the Americans politicians are worry that “… it owns too much of theirs.” The European receptiveness to China has born of weakness. It is well known that delegations from the peripheral area have flown to Beijing with the aim to find buyers of their debt.
There are three main concerns according to the Chinese presence; those concerns are shared by the Americans and by the European citizens. The first one: Chinese firms are well known to be interested in buying European companies to use their expertise in China (or to steal it), anyway, Chinese firms want to conquer markets abroad, so if they want to conquer the European market, they definitely must create jobs over there. The second one: Chinese are buying European jewels on the cheap. There is no evidence about this topic, also it is more common that they overpay. The third one: The security of Europe is threatened by the Chinese investments in assets like utilities and mobile technology.
Despite the concerns, the European countries know that the opportunities are greater than the dangers, in the welcome of China, it is better to swim with the tide of history (as Europe do) than struggling against it (as America do).
As we have noticed, we have one single topic: the visit of the Chinese Premier to Europe with three different perspectives. The professor Ross is the only one that analyzes the Greek debt in the context of the visit and he mentions the precautions that China should have. The Global Times’ writer focuses almost exclusively in the trade agreements, the common interests, and the Chinese will to buy the debt of the European countries with economic problems.
Finally, the British press welcomes Chinese investments, mentioning the fears that they awake, but discarding in every case that there are concrete signs to justify them. It mentions some negative themes, such as the “know how” transference, but it doesn’t go much further. Finally it remarks the contrast between the European and the American postures towards Chinese investments.
No long ago, the European posture was quite similar to the American, and it was no long ago that China was just not investing in Europe. The variance came with the debt’s crisis and the uncertainty about euro’s stability.
The European governments and its companies need cash, and China is interested in the stability of its commercial partner with overcoming crisis, and with the resistance of the European currency. At the beginning China was buying sovereign bonds of over-indebted countries, such as the bought of the American Treasury Bonds, but now it also buy companies, and not all Europeans happily welcome a new and powerful competitor.
[i] Ross, John: The Greek debt crisis and China, website: http://www.chinadaily.com.cn/opinion/2011-07/07/content_12855993.htm
[iii] The Economist. http://www.economist.com/node/18897627