Chinese Premier Li Keqiang said on Monday (29 June) that the Greek crisis was of great concern for Beijing, as it had consequences for the world’s financial stability.
In a move to calm down European financial markets panicking at the growing risk of Greece leaving the euro, China promised it would hold on to its eurozone debt, saying the Greek debt crisis was Beijing’s problem too.
“Even though Greece is an internal EU affair, the issue concerns China, as a key EU trading partner, but also because it affects the world’s financial stability and economic recovery,” he said during a press conference following the EU-China summit in Brussels.
“As a true friend of the European Union, China has always supported EU integration. Because we want a prosperous EU, a united Europe and a strong Europe, we want Greece to stay in the Eurozone,” Li Keqiang added, urging creditors to return to the negotiating table and strike a deal sooner than later to overcome the crisis.
“China is ready to play a constructive role to help Greece overcome the crisis,” he said, reiterating Beijing’s commitment to help the troubled country. China, with almost $4trillion in foreign reserves, hasn’t disclosed its exposure to Greek debt. Li said China had provided support in the past without any hesitation and will continue to do so.
The EU is China’s largest trading partner, with bilateral trade between the two sides reaching €467 billion in 2014. An economic crisis in the EU – including a threat to the eurozone – could be a disaster for China’s already-slowing economy.
Ready-to-invest cash for Juncker plan
In a bid to strengthen further trade and investment relations with the EU, which in recent years have been strained by a number of investigations launched by Brussels into alleged dumping of Chinese solar panels and illegal state subsidies for two top Chinese telecom companies, Huawei and ZTE, Premier Li said China is ready to invest in the €315 billion investment plan.
Even though China did not pledge a specific amount which is willing to commit, Premier Li said that China’s decision to participate is a grand one. “I hope you have a great appetite,” he said jokingly to European Commission president Jean-Claude Juncker, during the EU-China Business Summit.
“China has ample foreign exchange reserves,” he added, also suggesting the creation of an additional joint EU-China investment fund. The pledges follow decisions by EU governments to join the Chinese-led Asian Infrastructure Investment Bank (AIIB), in defiance of Washington.
“Europe is taking seriously this opportunity to further our business ties with China,” said European Commission Vice-President for Jobs, Growth and Competitiveness Jyrki Katainen, who is expected to visit Beijing in September. “We have untapped potential to exploit in the future.”
China’s interest in participating in the so-called Juncker Plan is very much linked to the country’s eagerness to tie its ‘One Belt, One Road’ projects to the EU.
“China is rolling out visionary policies,” Rio Tinto’s CEO, Sam Walsh told EURACTIV, alluding to the Silk Road Economic Belt and the 21st Century Maritime Silk Road, whose grand scheme is to improve connections on land and at sea between Asia, Europe and Africa.
“Coordinating the two projects could stimulate economic growth in Europe through enhanced connectivity and extend the European single market to a better integrated Eurasian maket,” according to analysts at the European Parliamentary Research Service.
During the summit on Monday, the EU and China agreed to improve their infrastructure links and establish a new Connectivity Platform to develop synergies between their respective long-term projects.
“It will allow us to combine forces – uniting the expertise and strength of our companies to develop high quality infrastructure, create new jobs in Europe, China and Asia, and build bridges between our two continents along the old silk road,” said Juncker.
Meanwhile, talks to pursue an EU-China bilateral investment agreement (BIA) are advancing and both parties expect to accelerate negotiations to make progress by the end of the year.
The idea is to mutually liberalise investment by eliminating restrictions for foreign investors and provide a proper legal framework have started three years ago. So far, six rounds have tried to remedy the uneven playing field resulting from the patchwork of 27 BITs in force between China and individual member states.
Business leaders meeting in Brussels, however, pointed at the many challenges European companies still face in China, starting with forced technology transfer and joint venture requirements, weak enforcement of intellectual property rights, counterfeiting, as well as uncertainty and predictability of legal protection.
But the biggest hurdle remains the preferential treatment of state-owned enterprises and subsidies. China has pushed for important structural reforms that aim at transitioning from an export-led economy to one that builds on the potential of the domestic market, but progress has been slow.
“European companies can participate and even accelerate this process of transformation by bringing advanced know-how and technology to China. But for this to happen, we need a transparent, reliable and non-discriminatory legal framework,” said BusinessEurope president Emma Marcegaglia.
Many opportunities relate to public contracts, added Marcegaglia, urging China to join the WTO’s Government Procurement Agreement as early as possible. China is due to assume the G20 Presidency in 2016.