A commentary on relations between the EU and China? We've read nothing else in the press, in recent days. And yesterday, our bulletin published a round-up shedding light on the results and atmosphere of the EU-China summit; that text will tell you far more than any commentary, you will learn far more by scanning through it again than by continuing to read this page. We need to add some specific information on the exchange rate of the Chinese currency, published in the last two editions of this bulletin.
Promises made in Rome and in Athens. After his trip to Brussels, the Chinese prime minister continued his journey in Italy, with his entourage of eight ministers and 50 top-level business people. In Rome, Wen Jiabao: 1) confirmed that it was he who had refused to hold a joint press conference in Brussels with Mr Van Rompuy and Mr Barroso (see also following page); 2) entered into a raft of bilateral agreements and projects with Italy, the result of which would be to double bilateral trade by 2015. 129 Chinese businesses are prepared to invest the equivalent of $46 billion in Italy. At the same time, the prime minister reassured his audience (in an immediate response to criticism from Brussels and elsewhere) that: foreign businesses are more than welcome in China; intellectual property will be respected; they may participate in local public procurement; they will be protected from faked products and imitations. A few days earlier, the European business association, BUSINESSEUROPE, had expressed its grave misgivings, speaking out against discrimination and other problems hindering the activities of the European companies in China.
The Rome stage came after the one in Athens, where, a few days before, Wen Jiabao had, amongst other things, announced that his country was to buy Greek state bonds when Greece returns to the financial markets once again. China is opening up the Mediterranean to itself.
There is, it is clear, no question of any criticism of either Italy or Greece. It is the duty of each government to defend the interests of its country, in full respect of European rules and directives. Both in Rome and in Athens, there is no doubt that the possible repercussions of the Chinese initiatives will have been taken into account. The possibility that China may one day sell on the Greek treasury bonds it is to buy, and the repercussions of this, must be taken on board. And mass Chinese investments in Italy (or anywhere else) often mean share purchases, and the right to be involved in how businesses are run. The volume of dollars China has means it can consider any operation of this kind.
Demanding that things move on. At the same time, the stability of the dollar is a matter of direct interest for China; any drop in the American currency means a loss in value for its reserves. On the other hand, developments in the euro are of far less interest to it: it will always be on the dollar that China tracks its currency. This explains why the Chinese prime minister refused to discuss the value of the yuan during the summit with the EU, and the almost brutal manner in which this refusal was uttered, with the explicit invitation to Italy not to try to raise this. But how can this not be taken into account? The EU is the world's largest importer of Chinese goods; if the value of the euro continues to climb, imports from China will increase and exports to the Chinese market become more difficult. The European commissioner for trade, Karel de Gucht, who is well known for not mincing his words, was characteristically frank a couple of days ago when discussing the conditions under which the EU may grant China the status of market economy country, saying: “This issue must be considered on the basis of clear commitments, on the subject, for example, of access to the Chinese market, public procurement, the protection of intellectual property, and even of exchange rates”. He went on to announce a reflection on reciprocity for public procurement issues. Taking account of the demands of the European industrial sector as well, it is clear that the EU does not consider that China's behaviour already corresponds to the words of the Chinese minister in Rome. If he announced developments which have already been decided upon, so much the better. But it is wise to remain vigilant and keep up the pressure, particularly over the currency. Dominique Strauss-Kahn, Director General of the IMF, has just stated that Chinese economic policy “will eventually lead to the appreciation of the yuan” and that we must accept that this will be a gradual development, but added: “under-evaluation is behind the tensions in the global economy, which are turning into threats. If we want to avoid creating the conditions for a new crisis, China will have to speed up its re-evaluation”.
I believe that this acceleration is just as vital in many other areas: faked goods, which continue to fill containers, respect for intellectual property, and so on. China's financial muscle is impressive; but the EU must not cave in in areas where it is in the right. (F.R./transl.fl)