Developments in China have upset its relationship with the EU. Developments are such that it is difficult to know where exactly such a report on the subject should begin but three significant aspects of this issue are tackled below:
1. Active participation in the international bodies regulating world trade. For how many years has China been accused of not respecting any of the rules? Counterfeit products, abuse of patents, non-respect of registered designations... On a number of occasions this column has highlighted and criticised inappropriate behaviour by China, which has sometimes reached scandalous proportions. Abuses are still being committed, which is also the case elsewhere but the country's position has changed. It is now possible that China lodges a complaint at the WTO against a European measure and that the Geneva-based body finds in its favour. This occurred at the end of last month with regard to an anti-dumping law penalising a Chinese product. This is the first time ever that China has been successful in lodging proceedings at the WTO! It is true that the EU has appealed but it is important that the procedures be used.
2. Yuan moves towards currency conversion. As a general principle, China refuses to accept that the value of its currency be discussed at an international level and it has rejected outright any talk of the yuan being undervalued. A few days ago in a preparatory meeting for the next G20, the governor of the Central Bank of China declared to Nicolas Sarkozy that the yuan might one day be on the same level as the dollar, euro, pound and yen in the basket of currencies that the International Monetary Fund (IMF) uses for Special Drawing Rights (SDR) but added that there was still some way to go before this happened. It was not a commitment but the opening did allow Mr Sarkozy to announce that the G20 would discuss the extension of the SDR calendar to new emerging currencies. A date is still perhaps impossible to set but the principle for this initiative has now been accepted. Including another currency in the SDR would mean that this currency would become convertible. Its value would no longer be set by the country to which it belongs but by the markets. This principle might therefore be agreed at the next G20 meeting for the yuan.
3. Mutual recognition of food specialities. The Chinese authorities and European Commissioner for Agriculture Dacian Cioloº have reached an agreement on mutual respect of protected geographical indications (PGI). We are aware of the scale and importance of these products for the EU, as well as the problems the EU has to overcome in its quest for these designations to be respected. How many false “Parmigiano” cheeses are out in the world, thanks to semantic acrobatics or inappropriate use of a designation? This is just one example among many. China also has a number of food specialities whose designations have been used to describe inferior products produced elsewhere. The Euro-Chinese agreement is a model and an example in the arena of the different and sometimes vivid abuses committed, to the detriment of consumers and honest producers.
Rules respected. Monetary policy developments are perhaps the most important because they impact on all economic and political structures. Specialists had previously managed to identify the premises on which this new orientation is based. It is true that the yuan cannot yet be converted and that it is still being undervalued by between 20 and 40%. Nonetheless, companies in Hong Kong can already leverage funds in yuan and there are more opportunities for opening accounts in this currency. Developments in this domain are a reflection of the radical changes occurring at national and international levels. Industrial and technological progress (partly accomplished due to decades of inappropriate practices) has allowed China to produce and sometimes improve all kinds of hi-tech products but at the same time, other Asian countries have also learnt to manufacture similar products at even lower prices. China therefore has a direct interest in being involved in global organisations, abiding by their rules and procedures and at the same time meeting the demands placed upon it by its own citizens.
(F.R./transl.fl)