Friday

29th Jul 2016

China to EU: We'll back the euro if you open your markets

  • China holds over €2 trillion in foreign currency reserves, giving it a vested interest in protecting the euro (Photo: dolmansaxlil)

China has offered to help save the euro in return for getting EU recognition as a 'market economy' - a new status that would help it to export more cheap goods to Europe.

Chinese premier Wen Jiabao made the offer at a meeting of business leaders and officials organsied by the World Economic Forum in Dalian, China, on Wednesday (14 September).

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

"European countries are facing sovereign debt problems and we've expressed our willingness to give a helping hand many times. We will continue to expand our investment there", he said. "Based on WTO rules, China's full market economy status will be recognised by 2016. If EU nations can demonstrate their sincerity several years earlier, it would be the way a friend treats a friend", he added.

A European Commission spokeswoman on Thursday played down the importance of the remarks.

Wen in a recent phonecall with commission head Jose Manuel Barroso made "no linkage whatsoever" between eurozone support and the new status, she said.

She added that commission officials are working "intensively" on the market economy negotiations.

The new status would change the way the EU calculates whether or not it is entitled to impose tariffs on Chinese exports in order to protect EU manufacturers.

Currently, the EU compares Chinese export prices with those of other low-cost exporters to see if it is "dumping" excessively cheap goods. If it becomes a market economy, the EU will have to compare its export prices with domestic Chinese prices instead, meaning fewer products will make the dumping grade.

The EU as of June had 55 anti-dumping measures in place against China. The EU-China trade deficit hit €169 billion last year.

Wen spoke out the same day that the US think-tank, the German Marshall Fund, published a survey showing that Europeans are less afraid of China than Americans.

Forty six percent of Europeans - the biggest segment of those polled - see China as more of an economic opportunity than a threat and 62 percent do not think it poses a military danger. In contrast, 63 percent of Americans see it as an economic threat and 47 percent see it is a military adversary.

The most pro-China EU countries out of the 12 covered by the study are Romania, Bulgaria, the Netherlands, France, Portugal, the UK and Spain. Germany, Italy and Slovakia were at the other end of the scale.

Despite its China-wariness, Italian officials last week met with China's sovereign wealth fund, the China Investment Corporation, in Rome, amid speculation that China will buy Italian government-owned assets.

"They are interested in buying real stuff ... this is completely different from their approach in the US which was to invest in treasuries [government bonds]", an unnamed Italian official told the FT on Tuesday.

EU to tweak rules on Chinese 'dumping'

The EU Commission has tried to fudge the issue of whether China is a “market economy” amid efforts to protect European industry from cheap exports.

Stakeholders' Highlights

  1. Dialogue Platform
  2. GoogleHelping Emergency Services Find You When You Need It Most
  3. Counter BalanceWhat's New in the Investment Plan for Europe: Business as Usual or True Innovation ?
  4. Belgrade Security ForumMigration, Security and Solidarity within Global Disorder: Academic Event 2016
  5. GoogleHow Google Fights Piracy: Creating Value While Fighting Piracy
  6. EJC"My Visit to Israel" - Opinion by MEP Lopez Aguilar, Chair of the EP Working Group on Antisemitism
  7. World VisionChildren Migrating, Out of School and at Work as Hunger Deepens in Southern Africa
  8. European Healthy Lifestyle AllianceStand-Up (and Exercise) to Prevent Chronic Diseases
  9. Centre Maurits CoppietersLaunches a Real-time News Hub Specialised in EU Stakeholders
  10. GoogleEU-US Privacy Shield: Restoring Faith in Data Flows and Transatlantic Relations
  11. World VisionWorld Leaders & Youth Advocates Launch Partnership to End Violence Vs. Children
  12. Counter BalanceReport: Institutionalised Corruption in Romania's Third Largest Company