Wednesday, 4 February 2009

"Made in Europe" - China to start spending

If China starts buying European technologies and increases procurement in the EU will it placate those who still see China as protectionist and a country who is keeping its currency artificially low to boost exports?

I do not think so. However, Wen Jiaboa disagrees. For sure, it will help. The man in the street recently made redundant may not see it so clearly.

Let us be clear - these purchases by China is not charity but will benefit China considerably.

China to go on European spending spree [FT]

China will set up “procurement missions” to buy goods and technologies in Europe in an effort to stem protectionist sentiment in the region against its exports.

Wen Jiabao, the Chinese premier who was talking in London on Monday at the end of a five-day trip to Europe, said the procurement trips would be established as soon as possible.


He said Chinese companies had signed contracts totalling $15bn (€11.7bn, £10.6bn) during his trip to Europe.

The announcement underlines Beijing’s anxiety that the global financial crisis will prompt a new wave of protectionism which would be damaging to a country such as China which is the second largest exporter in the world. Europe is China’s largest trading partner.

China hopes initiatives of this kind will help shift attention away from questions about the level of its currency, which some governments believe to be undervalued.

However, Gordon Brown is correct to point out that a return to protectionism would be disastrous for the global economy. China is to be applauded for its stance that encourages openness and trade as the solution and not the problem to getting out of the current recession. It is also good to see "education" getting a mention. Education is one of the UK's top exports and the number of Chinese students coming to the UK continues to increase.

The sectors of British industry most likely to benefit from China’s enhanced government spending would include aerospace, hi-tech manufacturing, education, pharmaceuticals and low-carbon technologies.

Mr Brown said: “Premier Wen and I agreed that the biggest danger the world faces is the retreat into protectionism, which is the road to ruin. The best attack on protectionism is to demonstrate today the benefits of trade for jobs, for businesses and for eventual prosperity.”


1 comment:

Anonymous said...

That's a drop in the bucket. China will have to spend trillions to erase the effects of a decade of trade surpluses.