Monday, October 6, 2008

Official: China-EU trade healthy, but risks looming

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A senior Chinese official with the Ministry of Commerce expressed satisfaction to the status quo of the China-EU trade but at the same time he warned against the possible impact of the international financial turmoil on the prospect of the trade and investment.

Mr. Sun Yongfu, Director-General of European Affairs Department, MOFCOM, said in his recent interview with People's Daily Online that the trade between China and the European Union still boomed in the year to August. The 27 percent growth is "satisfactory" especially comparing with the 13 percent increase in trade with the US, China's second largest trading partner and the 18 percent rise with Japan, the third largest trading partner.

Chinese Minister Chen Deming and European Trade Commissioner Peter Mandelson also gave positive comments on the bilateral trade during the 23rd China-EU Economic and Trade Joint Committee in Beijing on Sept. 25, the most important annual ministerial meeting to address trade issues.

However, Sun warns against the possible negative impact of the international financial turmoil on China's foreign trade and investment. "The impact in China must be taken into consideration", he said, concerned how China would be affected when the investment was down 10 percent globally.

Chinese small and medium sized enterprises are particularly vulnerable in the difficult time. They are generally struggling with increasing production costs and yuan value. Mr. Sun added that for EU-oriented SME exporters, too many anti-dumping cases and too difficult technical criteria were adding more risks.

Mr. Sun promised more help from MOFCOM to those SMEs in terms of quality control and early warning and training of technical standards. The ministry is offering training programs on REACH, the chemical standards in products on the EU market. "Such criteria will have big influence鈥�they are difficult to be reached by SMEs", said Sun.

China and EU agreed at the Joint Committee to cooperate on the application of chemical regulations.

China remains the No. 1 for FDI among developing countries. According to the figures from MOFCOM, for the first eight months of the year the old 15 EU members established less enterprises by 22.69 percent. But the amount of investment rebounded and went up by 29.09 percent, compared with the decrease of 33 percent in the same period of last year. However, the share of EU investment has been down slightly in total FDI into China in the past two years.

Chinese companies are at the "beginning stage" of investing outside. There is much more EU investment in China than the Chinese investment in the EU. Mr. Sun thinks the reason lies in the China's large domestic market, Chinese companies' lack of understanding of the laws, cultures and potential of the European market.

The MOFCOM, said Sun, would also give support to Chinese investors, either big or small, to invest in the EU market by providing business opportunities and trainings.

He also urges the EU countries to be more open to Chinese investors. MOFCOM is trying to use bilateral platforms with EU member states to raise the issues of investment facilitation, eg. the visa application and work permits for Chinese business people.

"We welcome European investors and encourage Chinese companies to invest in Europe," said Sun.

According to the consensus reached at the Joint Committee, a seminar will be held soon to boost the two-way investment between China and EU.

By the People's Daily Online

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