Euro China Business - Issue 14

8/6/2019 Euro China Business - Issue 14

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L i n k i n g C h i n a w i t h E u r o p e

November-2010

Wen Jiabao & George Papandreou

Prime Ministers of China & Greece

at the Parthenon on the sacred rock of Acropolis

attaining the future with condence!

RMB 30 US$ 6.00HK$ 45 EURO 4.00


2/60 EUROCHINABUSINESS


3/60EUROCHINABUSINESS

EDITORIAL

STAVROS NIKOLAKOPOULOS Executive Editor/

Wen Jiabao concluded a successfu lvisit to Athens, Brussels, Berlin and

Rome, reiteraiting once more that EU is

a strategic partner of China and Chinadid not look on unconcerned when some

(e.g. Greece) eurozone countries were introuble.

Wen Jiabao emphasized that China will

continue to render assistance and tidesome countries over their difficulties,

because China is a friend indeed.

During his first ever visit to Greece

h e a s s u r e d G r e e k P r i m e M i n i s t e r Papandreou tha t Ch ina i s r eady to

intensify cooperation with Greece andhelp the country tide over its current

difficulties at an early date.

We ap p l au d t h e e f f o r t s t ak en b ythe Greek government to tackle the

international financial crisis and the

debt crisis. And we support the measurestaken by the European Union and the

Internat ional Monetary Fund in thisregards, Wen said during a speech atthe Greek Parliament.

Wen and his team of Ministers signed 11

important agreements with Greece, ontrade, investment, shipping, culture and

tourism.

In Brussels, capital of the EuropeanUn i o n , Wen me t w i t h EU l ead e r s ,

Wen Jiabao's successful visit to Europe

emphasized that China wishes

to forge more extensive, deeper

and closer economic and tradeties with EU countries. The EU

is now Chinas largest partner interms of trade and investment,

ahead of the United States and

Japan.Wen Jiabao admitted that it is

in the fundamenta l i n t e res t s

of both China and the EU tod e v e l o p b i l a t e r a l t r a d e a n d

economic relations. He feels thathe is under heavy responsibilityand tha t he wi l l do h i s bes t

t o p r o m o t e C h i n a - E U t r a d ea n d e c o n o m i c c o o p e r a t i o n

and overcome the temporary

difficulties and problems thathave emerged in the process of

cooperation.

So , Wen J i ab ao s a i d , l e t u s j o i n h a n d s t o p r o m o t e t h e

deve lopment o f Ch ina EU

trade and economic relations and jointly usher in broad prospects

for future development of the

C h i n a E U c o m p r e h e n s i v estrategic partnership.

Stavros Nikolakopoulos



Under the auspices of

Euro Chinese Center of Research & Development

With the support of:

China Briefing

EUPIC

Our international licence: ISSN 1792 0027, listed in the

International Catalogue of Publications in Paris FRANCE.

Executive Editor: Stavros Nikolakopoulos

Creative Editor: Alexios Nikolakopoulos

Chief Photographer

Thimios TSIKNIS

Assistant to Editor:Rose Mao

Chief Designer: Guo Yonghai

Layout: Lei Jiaxing

Special Advisor: Li Chenggui

Legal Advisor: Jason Jiang

Published by: Eurasian Link International Consultant

(Beijing) Co., Ltd.

Address: L24, Tower 3, China Central Place

77 Jianguo Road, Chaoyang District

Beijing 100025, China

Tel86 10 8587 2470

Fax86 10 8587 2471

e-mail:[email protected]

Website: www.eurochinabusiness.comwww.eurochinabusiness.com.cn

China Briefing

ISSN 1792 0027

:

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www.eurochinabusiness.com

www.eurochinabusiness.com.cn



Obama

Dmitry Medvedev

Barroso

Kevin Rudd

Gordon Brown

Berlusconi

Sarkozy

Taso Aso

2009-3MAY-JUNE

The World in Recession

collective action the only solution!

!

EURO CHINABUSINESS


2009-4

J UL Y-AUGUST

GREEK PRIME MINISTER KARAMANLIS WELCOMES HE GUO

QIANG AT THE OPENING OF NEW ACROPOLIS MUSEUM

G4China - Brazil - Russia - Indiaa platform but not a mechanism to combat

the world's financial crisis

Jos Manuel BarrosoPresident

European Commission(most likely to be re-elected

next September)

Fredrik ReinfeldtSweden's Prime MinisterPresident of European Union(1st July - 31st December 2009)

(2009714~20091231)

COVER STORY Economiccrisis: 'accelerates reform'

OPINION Phantomof stagflation could be back

INTERVIEW Lord Mayor

of London

P4

P12

P32

IMPA

CT

TheNe

wAc

ropolis

Museum


2009-5

SE P TEMBE R-OCTOBE R

George PAPANDREOUNew Prime Minister of Greece

With plan & vision for the future

COVER STORY:Turning goodintentions into joint actions

INTERVIEW:China's enginesof growth

OPINION:Helping small firmsis key to recovery

P4

P16

P28

IMPA

CT

Doing

Busine

sswith

Portug

al

Papandreou asPresident ofSocialist InternationalmeetsHu Jintao

Jos Manuel BARROSOPresident of European Commission2009-2014A new era in EU-China relations 2009-2014


2009-6

Nov ember-December

HAPPY NEW YEAR!

PavlosGeroulanosGreekMinisterofCulture& Tourism

Angela GerekouGreekDep.MinisterforTourism

HermanVan Rompuynew President ofEUBaronessAshtonForeign AairsChief

Anewand more

effectivecultural&

tourismpolicy,to

promotethe treasuresandnatural beauties

ofGreece


2010-1

January - February SpecialFeature

ThePhenomenon of Dubai

FINANCIALCENTRE

TOURISM HUB

REALESTATE BOOM

P28

P30

P32

Leaders to watch in 2010

wenjiabao(China)1

BarackObama(US)

2 Ichiro Ozawa(Japan)

3 DavidCameron(UK)

4

LuizInacio LuladaSilva(Brazil)

5 Ali AkbarHashemiRafsanjani(Iran)

6 AshfaqKayani(Pakistan)

7

VladimirPutin(Russia)

8 Sheikh KhalifabinZayedalNahyan (UAE)

9 Olli Rehn(EU)

10

EXCLUSIVE INTERVIEW

GEORGE PAPANDREOU

THEGREENPRIMEMINISTER OFGREECE

.

--


May-2010

CHINA GREECE

Anewdealtocombat

the Greekfnancialcrisis

IMPA

CT

IMPACT

James Jao,the famous American-Chinesearchitectandcity planner, is buildingaGreekvillagein China!

GreekWine

Theelixir ofOlympusGods

SPECIAL SUPPLEM ENT

The Greek Wine

SPECIALSUPPLEMENT

TheGreekWine

HuJintao

WengJiabao

GeorgePapandreou


Se p tembe r-2010ANDREAS POTAMIANOS

Ambassadorof Friendship

ofChina

Shipowner

*thekingof cruises

Contest of the century

China v India

CHINA TO SAVE GREECE

Wen Jiabao's visit to Greece

opens new ways and opportunities

for tourism,investment and finance

(port facilities & modern railways)

GeorgePapandreou

PrimeMinisterof Greece

WenJiabao

PrimeMinisterof China


Nov embe r-2010

WenJiabao& GeorgePapandreou

PrimeMinisters ofChina &GreeceatthePar thenononthesacred rock ofAcropolisattaining thefuture withcondence!

RMB 30 US$6.00

H K$45 E UR O4.00



32

7 Ties need calmness and courage

12 Ready for the next big one?

14 A constructive role with China

16 Market economy status yet to come

17 China moves up the global ladder

19 Domestic market for economic bliss

21Chinese rms up the stakes in Europe

24 EU citizens would like to see their

countries help developing world

26 Greece beckons Chinese tourists28 Miyun

30 ASEM Summit

33 ANIMATION FESTIVAL

36COFACE: Survey on business payment

performance

40 Mutual benets, all-win results

42 CHINA to surpass JAPAN

45 Xuzhou

48 Shandong - Qingdao

50 LAOSHAN

55 ECCRD-Eurasian LinkThe Philosophy book of the year



On the global economic recoverys alread

unpredictableroad,the latest threat comes

From the possibility of a currency war.

Although worries about war have recently bee

alleviated,as G20 nancial ofcials

Vowed to refrain from competitive devaluatio

of currencies at their meeting in Gyeonju,

South Korea,more than just words and promise

are necessary to avert a currency showdown.

The G20 summit in Seoul certainly provides a

appropriate venue for participating leaders to tak

concrete and effective actions in this regard.

The lastest depreciation race started afte

quantitative easing initiated by the United State

and was followed by the EU and Japan. The go

was to spur their economies by devaluing the

currencies to make their exports more competitiv

as the effects of scal stimulus measures began t

fade.

Some developed countries, especially the Unite

States, have been accusing China of undervaluin

its currency, the yuan. The fact is, howeve

that China has accelerated the reform of i

exchange rate regime and increased the exibili

of the yuan since June this year. The yuan ha

appreciated more than 2 percent against the U.

dollar. Obviously, China should not be to blam

for the issue. (Beijing Review

PREVENTING A CURRENCY WAR



h i n a w i l l c o n t i n u e t os u p p o r t E u r o p e a neconomies in need and will

gradually allow more exibility in itscurrency.Ch inese Premier Wen J i abaodelivered a speech at the SixthChina-European Union BusinessSummit. The following is the fulltext:Condence was the keyword of myspeech at the China-EU BusinessSummit two years ago when thenancial crisis just broke out. Today,the keywords are calmness, wisdomand courage. W i t h s o m a n y C h i n e s e a n dEuropean business leaders sitting infront of me, I would like to focuson several issues the EU businesscommunity is concerned with anduse this opportunity to make a fewclarifications so as to eliminatemisunderstandings and boost ourcooperation.It is a basic fact that the bilateraltrade and investment between Chinaand the EU have been growingrapidly. EU statistics show its overallexports declined in 2009 due tothe impact of the financial crisis.However, its exports to Chinaincreased by 4 percent. In the first

half of this year, EU exports toChina surged by as much as 42percent.I paid a brief visit to Germany. Itold Chancellor Angela Merkel that

the monthly bilateral trade betweenChina and Germany averaged about$10 billion, and that the 2010 totalwould probably surpass $120 billion.The trade between China and theEU was worth some $400 billion in2009, and it would likely exceed $500billion this year. These are the basicstatus quo and facts.On the exchange ra te o f theChinese yuan, I said yesterday whenmeeting with the Euro Group troikathat European political and businessleaders should not join the "chorus"to pressure China to appreciate theyuan.Again, let's take a look at some basicfacts. The yuan has appreciated byan accumulated 55 percent in termsof the real effective exchange ratesince China initiated the reform ofthe yuan exchange rate mechanismin 1994. Some major currencies haveall depreciated during this period.C h i n a f u r t h e r d e e p e n e d t h ereform of the yuan exchange ratemechanism in July 2005. The yuanhas appreciated by 22 percentagainst the US dollar since then.During this period of time, however,China's trade surplus against theUnited States has still increased by alarge margin.We have registered surplus in tradein goods, but deficits in servicestrade. We have had surplus in

manufacturing trade, but deficits ingeneral trade. We have had surplusin trade with the US and the EU,but deficits in trade with SouthKorea, Japan and the Association of

Southeast Asian Nations (ASEAN).Doesn't all this show that it is anissue of trade structure instead of amere exchange rate?The euro exchange rate experiencedlarge uctuations recently, but it wascaused by the US dollar, instead ofthe yuan. How can you place theblame on China? The imbalanceof trade is caused by structuralproblems against the backdropof globalization. It should not bepoliticized. We pursue balanced andsustainable trade, and in no way seeksurplus.In the cold winter in January 2009,I visited Europe and brought withme not only the condence neededto overcome the financial crisis,but also a procurement delegationto place orders to the Europeancountries. The EU is a strategic partner toChina, and China did not look onunconcerned when some eurozonecountries were in trouble. Wecontinued to hold and buy euro-denominated bonds and helpedIceland, Greece, Spain, Portugal andItaly in their most difcult time.We will continue to render assistanceand tide some countries over theirdifculties. China is a friend indeedand I believe the entrepreneurs hereall know it. You should not pressure China

Ties need calmness and courage

By Wen Jiabao

COVER STORY



COVER STORY


9/60

on the yuan's appreciation if youconsider the issue from anotherperspective. Many Chinese exportenterprises have profit margins ofonly 2 to 3 percent, 5 percent atmost.Should the yuan appreciate by 20to 40 percent, as demanded bysome people, a large number ofChinese export enterprises will gobankrupt, the workers will lose theirjobs and the migrant workers willhave to go back to the rural land,making it hard for society to remainstable. The world will by no meansbenet from a crisis in the Chineseeconomy.China contributed about 50 percentof the global economic growth in2009. It is a huge market with greatpotentials for many enterprises.Once again, I would like to tell ourfriends in the industrial and businesscommunity candidly: Don't pressureChina on appreciat ion of theChinese yuan.We will stick fast to the reform ofthe yuan exchange rate mechanism. The reform involves developinga managed floating exchange ratesystem based on the market supply

and demand and adjusted to a basketof foreign currencies, to graduallyallow more flexibility in the yuanexchange rate while maintaining itsbasic stability on a reasonable andbalanced level.I f the yuan exchange r a t e i sunstable, enterprises will also beunstable. So will be employment,and society in general. Should Chinahave problems in economy andsociety, it will be disastrous for the

world.The second question is whether theinvestment environment in Chinais good or not. I would like to tellyou that China will steadfastly pushforward its reform and opening-upprocess and will in no way deviatefrom the path.Only through reform and openingto the outside world will Chinadevelop further. The basic policies

that have been established in thereform and opening-up drive willnot be changed. The only changesthat have taken place are thatforeign investment is now underbetter and more orderly regulation.Entrepreneurs' concern for theinvestment environment doesnot go beyond three aspects -intellectual property, innovation andgovernment procurement. I can tellyou in a responsible manner that allforeign businesses that are legallyregistered in China are entitled toenjoy national treatment, and that allproducts made by foreign-investedenterprises in China are made-in-China products. We will protect not only yourintellectual property, but also allyour legitimate rights and interests. The third question regards theexport of raw materials, specicallythe export of rare earth. As a long-time researcher on rare earth metals,I have a say on the issue. There aretwo kinds of rare earth metals, theheavy rare earth elements and thelight rare earth elements. Chinahas rare earth deposits in differentregions, with the heavy ones located

mainly in the south, such as Jiangxiprovince. The light ones are mainly in thenorth, such as Baotou city in InnerMongolia. In the 1980s and 1990s,there was a lack of well-regulatedmanagemen t ove r r a r e e a r thmetals in China, and also a lackof extraction technologies in thecountry.Some countries bought a largeamount of rare earth metals from

China at low prices in a period oftime when management over rareearth in China was the most chaotic,and even now they still have aconsiderable stockpile, which theyknow very well.C h i n a c o n t r i b u t e s a l a r g eproport ion of the global rareearth output, which far outdoesits share of the world's total rareearth deposits. We haven't imposed,

and will not, impose an embargoon the industry. We are pursuing asustainable development of the rareearth industry, not only to meet thedemand of our own country, butalso to cater to the needs of thewhole world.We not only need to accommodatethe current demand, but also, moresignificantly, need to take a long-term perspective. It is necessary toexercise management and controlover the rare earth industry, butthere won ' t be any embargo .China is not using rare earth as abargaining chip. We aim for theworld's sustainable development.Ch ina w i she s to fo rge moreextens ive , deeper and c lose reconomic and trade ties with EUcountries. The EU is now China'slargest partner in terms of trade andinvestment, ahead of the UnitedStates and Japan. To be frank, the EU has done abetter job in relaxing restrictionson high-tech exports to China. Forinstance, there is cooperation onthe Galileo satellite project, with Airbus and there is nuclear powercooperation, to name a few. This

morning, the Belgian King alsomentioned to me about cooperationon the fourth generation micro-nuclear technology.It is in the fundamental interests ofboth China and the EU to developb i l a te ra l t r ade and economicrelations. Standing here today, I amfeeling under a heavy responsibility.I wi l l try my best to promoteChina-EU trade and economiccooperation and overcome the

temporary difculties and problemsthat have emerged in the process ofcooperation.So, let's join hands to promote thedevelopment of China-EU tradeand economic relations and jointlyusher in broad prospects for futuredevelopment of the China-EUcomprehensive strategic partnership.

COVER STORY



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W e n J i a b a o w i t h P r i m e M i n i s t e r B e r l u s k o n i

COVER STORY


11/60EUROCHINABUSINESS 11

The Philosophy book of the year


12/60

Raymond Barre, former Frenchpr ime minister and author of numerous economics textbooks,once told me: "One of the fewthings we know about economicsis that it has cycles - the problemis that we do not know when theystart, how long they last and whythey end."The stigma of modern economicsis that we still do not know how toavoid recessions and unemployment.This is my fth recession. Some ofthe repercussions I have seen wereexpected, while others were totallynew.Kill and overkill - a recession is a

Ready for the nextbig one?By Stephane Garelli

costly experience. The EuropeanCentral Bank estimates that thetotal amount spent on areas suchas recapitalization, guarantees andtoxic assets on both sides of the Atlantic was 27 percent of GDP,or a staggering $7.2 trillion! Budgetdecits are in excess of 11 percentof GDP in the US and 6 percent inEurope. The total debt of the G20nations will reach 106 percent oftheir GDP this year. Did we have achoice? Probably not!The market only understands "bigmoney" and - just like in a pokergame - only respects a player that isready to place a huge and unlimited

amount of money on the table.Recessions occur at regular intervaIn the US, there have been 3recessions since 1854. Globally, thfour most recent recessions werexperienced in July 1981, July 199March 2001 and December 200If the same pattern is repeated, thnext recession will probably takplace nine to 10 years from now.It is doubtful if many governmen will have enough time to restopublic nance to confront the ne"big one". In addition, the "readebt of nations is deeper thareported. The US national publdebt exceeds $13 trillion. And if winclude local debt plus Medicare ansocial security, it could be more tha$105 trillion. For most advanceeconomies, the real level of debt three to ve times their GDP.United we enter , disunited wemerge. Growth produces a greatsynchronization of economienations went into recession amore or less the same time. Icontras t , r ecess ions genera tdesynchronizat ion: everybodescapes from the "big black holeat different speeds. The recover

of Europe is relatively flat, withgrowth of about 0.5 percent. ThUS is recovering faster, at more tha2 percent. Brazil and Russia caexpect to achieve 6 percent growtand a significant number of Asiaeconomies will grow at more than percent.Even within regions, the differencecan be signif icant: In EuropGermany could very well grow b3 percent, outpacing the other larg

European economies. Countries thshow a consistent surplus in thecurrent account balance rise fastebeneted by a regular inux of fresrevenue from abroad.Finally, every recession is followeby a jobless recovery. Unemploymenin the US remains high at 9percent and in Europe it is close t9 percent. Youth unemployment particularly worrying: 18 percent i

1 EUROCHINABUSINESS


13/60

the US, 20 percent in Europe and analarming 42 percent in Spain.A jobless recovery for about a yearis the norm. Companies start hiringagain only after being convinced thatthe recovery is for real. Experienceshows that even companies that farerelatively well during a recessiontend to cut jobs or hire part-timeemployees to increase productivity. T h e n t h e r e h a v e b e e n t h eunexpected repercussions.First, the "boomerang" effect isbroken. For years, the US andEuropean governments have lived atthe expense of others. Both regionsran current account and budgetdeficits without really sufferingthe consequences. The moneyaccumulated by emerging economieswould always come back "home" -re-invested in government bonds orreal estate.T h a t w a s b e c a u s e o f a l a c k of political stability and stablei nve s tmen t oppor tun i t i e s i nemerging economies. Withoutnoticing it, industrial nations haveexpanded their publ ic debt todangerous levels. Today, a signicantpart of th is debt i s owned by

emerging economies. China holds$877 billion and 520 billion in USand European governments' bonds.But now the money is invested"elsewhere"!The money is also not where it usedto be. Emerging economies areaccumulating funds at an impressiverate - more than $9 trillion - withChina boasting $2.5 tri l l ion inforeign currency exchanges. Thesovereign funds, which have become

the new global investment bankersof emerging economies, managemore than $3.8 trillion. This hugeamount of money attracts indebtedgovernments, such as Greece, aswell as private companies.For a while, emerging economiesdid show some interest in investingin industrialized nations or in buying Western companies. Now, however,new alternatives are available.

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We have seen the emergence ofa "South-South bloc", too. Forthe first time, an increasingly self-sufcient "South bloc" - lying southof a diagonal between Mexico andMoscow - is generating its ownmomentum. Despite disparities,these economies can rely on anemerging middle class, huge rawmaterial resources, home-growntechnologies and money. They breedan impressive number of globalbrands in banking and industry ofthe model.Haier from China - practicallyunknown a decade ago - recentlybecame the largest householdappliance company in the world.Many companies enjoy the activesupport of their governments: 21of the 22 largest Chinese companiesare State-nanced. These economiesa l so deve lop a new bus ine s smodel for the "emerging poor", apopulation emerging out of absolutepoverty but which has not reachedmiddle class status. Microfinance,mobile phone transactions, cheapcars or computers are just a fewexamples.In the end, the next recession will

be the real moment of truth foradvanced economies and businessesand governments better be preparedfor it. An aging population usedto a standard of living increasinglysubsidized by state aid and publicborrowing abroad may be in for aharsh reality with a reduced standardof living. What would happen,economically, politically and sociallyif emerging economies decide toclose the money tap? Advanced

economies have never been sovulnerable. They are now in direneed of a new solid economic modeland they may have to rediscoverfrugality.

The author is a professor anddirector of World CompetitivenessCenter at IMD, the global businesss c h o o l b a s e d i n L a u s a n n e ,Switzerland.

EUROCHINABUSINESS 1



h i s y e a r m a r k s t h e 3 0 t hanniversary of the historic

C h i n a - W o r l d B a n k G r o u ppartnership - a partnership that hasseen one of the most successfulengagements of the World Bank

Group and has contributed toshaping China's modernization anddevelopment.In April 1980, when Vice-PremierDeng Xiaoping first met the then-President of the World Bank,Robert McNamara, Deng describedhis vision of China at the turn ofthe millennium: an open and rapidlygrowing economy with a per capitaincome fourfold higher, well on itsway to achieving middle-income

levels by the mid-21st century. Forhis part, McNamara committed toproviding the Bank's best talent tosupport China on this mission. Inso doing, he hoped that the WorldBank would become one of China'smost impor tant deve lopmentpartners . Both leaders had toovercome resistance and skeptics.Looking at China now and theimportant role it plays in the global

economy, I am delighted that boththeir visions were realized.

Like all enduring ties, the China-World Bank partnership has evolved with the changing times. In theearly years, the World Bank couldbring global knowledge to China- how to appraise and implementpriority projects; how to encourageinnovation and introduce newtechnologies; how to developinstitutions and policy instrumentsn e e d e d f o r g o o d e c o n o m i cmanagement.

Later, the learning became moremutual as success with reform,growth and overcoming povertyga thered pace . Over the l a s tthree decades, growth in Chinahas averaged 10 percent a year,the poverty rate has fallen from65 percent to 10 percent, all theMillennium Development Goalshave been reached or are withinreach, and the economy is likely tobecome the second largest in the

world this year.

T h e s e a r e a c h i e v e m e n t s o f enormous magn i tude for any country, let alone one with the sizeand diversity of China. They havenot only benefited China but theEast Asia region more widely andindeed the world. China's effortsalone have ensured that the world'sMillennium Development Goal onovercoming poverty will be met.

It is now the World Bank that cadraw from China's experiencewhether in infrastructure, educatiorural development, forestry oenergy - and employ this knowledgwith other countries to overcompoverty in the world.One way the World Bank is doinso is by facilitating and supportinan active program of knowledgexchange between China and othdeveloping countries that wish tlearn from China's developmensuccess and its record in overcominpoverty. I am pleased to observthat China has been generous isharing its experiences and lessonfrom its development successes witits neighbors in East Asia and iless fortunate regions such as SubSaharan Africa.China's rapid growth and domesttransformation over the last thredecades have reshaped the domestas well as the global economy. Wi th the domest i c economChina is wisely addressing nechallenges. These include creatina greater balance between savingand consumpt ion , c rea t ing Harmonious Society that will bene

all its people, seeking to avoid "ThMiddle Income Trap" that coulcurb prosperity, and moving to mor value-added production that w warrant higher wages. In each othese areas, the World Bank may bable to assist in sharing knowledgand experience. We also believe ththe lessons we learn together wibe of interest to other developincountries.In the global economy, Chin

is altering the division of laboaffecting capital flows, and creatinnew growth oppor tun i t i e s iother developing countries. Thexpanding influence in the worl- including its recent elevation tbeing the third largest shareholdeof the World Bank - will come witnew responsibilities, opportunitieand expectations. China will neeto weigh how it can best contribu

A constructive role with China

By Robert Zoellick



as a responsible stakeholder inthe international system that hasbenefitted China in the past andwill offer cooperative opportunitiesin the future. China's influencewill be felt in designing effectiveclimate change policies, ensuringstable global growth, and providingd e v e l o p m e n t r e s o u r c e s a n dinvestment to overcome poverty inother countries.Looking ahead, the World Bank will continue to work with Chinaas it faces these challenges. China'squest now is to join the ranks ofthe high-income countries. I believe

that it can do so over the nextgeneration while also protecting itsenvironment and natural resources,enhancing social stabi l i ty , andprotecting the global commons.This is a demanding goal, but onethat I am condent can be reached.China has already accomplished agreat deal and earned the world'srespect. The World Bank Groupwill be proud to play a constructiveand support ive ro le wi th ourextraordinary partner.

The author is president of theWorld Bank.

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Market economy status yet to comehina faces an "unpredictables c h e d u l e " a s t o w h e n t h eEuropean Union (EU) will grant

it market economy status, mainlybecause businesses and some

politicians hold different views, saida senior business chamber leader."When the EU will grant such astatus is difcult to predict, as many,many things happen and they canaffect the decision," Bernard Dewit,chairman of Brussels-based Belgian-Chinese Chamber of Commerce,told China Daily ahead of the 8th Asia-Europe Meeting (ASEM)Summit.However, he said more and more

European companies have investedin China and they want China to begiven such a status."But there are politics within Europeand some in the economic sectorsare lobbying their governments toput a brake on it," said Dewit.Dewitt bel ieves the increasingmutual investment and businessexchanges will facilitate the process.More than 200 leading executivesfrom China and Europe attended

the China-Europe Business Summitduring Premier Wen Jiabao's four-country tour in Europe, which isexpected to bring multibillion dollardeals to Greece, Belgium, Italy andTurkey.Dewit said European businessmenwant to exchange ideas with theirChinese counterparts on revaluationof the renminbi, further openingup of the Chinese market and the

protection of intellectual propertrights."But a main topic should also bsustainable development," Dewiwho has presided over the chambe

since 1996. "Businessmen want texplore more opportunities in thdevelopment pattern shift."China has already made great efforto develop green energy and achievsustainable development and it expected that China will have more ambitious green economiagenda in the coming ve years.Resources and energy constraintare the big hurdles to overcome t

secure China's development.He suggested that China shoulcontinue to construct nuclear powestations to offer more energy tsustain its rapid growth." C h i n a i s a h o l d er o f s u ctechnology and it can export thtechnology of building nucleapower stations to other developincountries," Dewit said.Water supply, urbanization and thdevelopment of the western region

are also priorities for China, hadded.Following the nancial crisis, the Uand Europe have sought to develotheir real economies and in somareas, competition with China wiget tougher."We have to live with competitionwhich is good, but the point is thathe competition should not kill ussaid Dewit.



Apart from trade and investment,Dewit said China has taken stepsto encourage investment outward.However, "Europe is not an easymarket". Though the EU has rules,different countries have various

regulations. "All these have addedup to difficulties when the Chinesechoose to invest in Europe."He suggested Chinese investorsintending to expand businesses inEurope should enter into closerre la t ionship wi th loca ls g ivenEurope's diverse languages andcultures.However, he said many countriesin Europe have already set upinvestment promotion agencies and

investment incentives have beenoffered. "They welcome Chineseinvestment."

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China moves up the global ladder witzerland zooms past US astop nation in competitiveness:Report

BEIJING - China continued itsupward march in the rankings of

a global competitiveness reportreleased on Thursday, while theUnited States was displaced fromthe top of the table by Switzerland.The nation's ranking improvedby two notches on the back ofadvances made in the financialsector and the massive infrastructureconstruct ion, sa id the GlobalCompetitiveness Report (GCR)2010-2011, released by the World

Economic Forum (WEF).China has also increased its leadover other emerging economieslike Brazil, Russia and India, whoserankings remained stable, the report

said.China is now ranked 27th in theGCR compared with 29th place ayear back, the report said. The GCR was ba sed on theGlobal Competitiveness Index, which inc ludes the 12 p i l l arso f c o m p e t i ti v e ne s s s u c h a sinfrastructure, macroeconomicenvironment, health and primaryeducation.

"China has been rising and rising inrecent years," said Jennifer Blanke,chief economist of the WEF. Shesaid the gap between China andother BRIC nations (Brazil, Russia,

India and China) is also increasing.Brazil, India and Russia were ranked58, 51 and 63 in the WEF report.Switzerland dislodged the US tograb the top slot."The biggest strength of China isits large and growing market," saidBlanke. She expressed confidencethat China will continue to rise inthe ranking.According to the report, China has



The sun rises over the Shanghai World Financial Center (right) and Jin Mao Tower, landmarks in Shanghai's financial hub.China rose two notches to 27th in the global competitiveness ranking report released by the World Economic Forum. Jing Wei/ For China Daily

scored well in several assessmentfactors such as market size andmicroeconomic environment, withrankings of second and fourthrespectively. But in areas such ashigher education and training,technological readiness and nancialmarket development, the countrystill needs to make more advances."Most of the BRIC nations havebeen improv ing . But Ch ina ' simprovement has been more faster,"said Robert Greenhill, managingdirector and chief business officerof WEF.Speaking to China Daily, Greenhillsa id the global economy st i l lfaces uncertainties, as the present

economic downturn is somethingthat the world has never experiencedbefore.

"We have avoided the fallout froma great depression. But we are stillsailing in uncharted waters," he said.T h e n e e d o f t h e h o u r i s t oenhance and enlarge the scope ofcooperation between nations, he

said.China has made rapid advancesin shifting its economic focus toinnovation rather than efficiency,but it will take some time before theefforts bear fruit, said Greenhill.Policy instability, and corruptionand access to nancing are still themajor issues confronting investorsin China, the report said.Lingering concernsFor the US, the WEF report was

not exactly a rosy one. The nationslumped to the fourth positionas macroeconomic imbalances

increased , pub l i c and pr iva tinstitutions weakened, and concernremained about the state of thnancial market.Earlier this week, US PresidenBarack Obama unveiled a new $35

billion stimulus package to alleviathe pressure on the Americaeconomy and boost domestdemand.But Greenhill said other countriemay not follow Obama's move, ait is becoming increasingly cleathat most of the nations don't havthe wherewithal for more stimulupackages. What i s needed arsmarter and more focused stimulupackages, rather than broad-base

measures, he said.



hina could overtake Japanas the world's second largest

consumer market in the next decade.Its private consumption todayis only about 16 percent and 56percent of that in the United Statesand Japan. But China's strong GDPgrowth outlook bodes well for its

domestic consumers, since it goestogether with an increase in percapita income and the attainment of

consumption thresholds.Moreover, the Chinese governmenthas an array of active pol ic ieso r i e n t e d t o w a r d i n c r e a s i n g disposable income and rebalancingits growth model toward domesticdemand.Many Western consumer and luxurybrands have expanded into Chinaafter the global financial crisisstruck, and have reported brisksales, with some posting double-digit growth even during the globalrecession last year. One of the most

concrete examples of this can befound in the automobile industry.China overtook the US as the world'slargest automobile market last year,with vehicle sales reaching 13.6million units, compared with 10.4million cars and light trucks sold inthe US. Many of these products havepenetrated only the high-incomegroup of urban households. Thepotential of other groups such as

the high-income group in rural areasand middle-income group in urbanareas is yet to be fully explored.Official data show the numberof registered households in cities was 192.4 million in 2008, about46 percent of the total registeredhouseholds (403.8 million). Thismirrors the ratio of urban to ruralpopulation. The rural populationactually shrank from 796 million in1980 to 713 million last year.

In terms of annual householdincome, about 22 percent of China'surban households - or about 43million urban households - had anannual income of about 65,000yuan ($9,714.5) or above in 2008,rising from only 7.8 percent in 2005.Their number is likely to be close to50 million currently. As such, thisconsumer segment is comparable tomedium-sized, high-income Asianeconomies such as South Korea.

Data on consumer goods ownershipshow solid growth across all keyproducts in the past decade, withthe only exception being fixed-linetelephones. Ownership of washingmachines and refrigerators appearto be nearing the saturation mark.Automobiles have a lot of headroomahead because the ownership levelis still relatively low at 10.5 carsper 100 urban households. Mobile

Domestic market for economic bliss

By Syetarn Hansakul


20/60

phones have seen an explosivegrowth from 3.3 phones per 100urban households in 1998 to 180phones in September 2009.

Compared to the ear ly 1990s, w h e n d a t a o n c o n s u m p t i o nexpenditure baskets became firstavailable, consumption patternshave shown a shift away from basicnecessities such as food, clothingand household appliances towardtransport, residence and recreation.Rural households used to be amajor contr ibutor to nominalGDP in previous decades. Buttheir contribution has declinedin importance. At present, theycontribute about 9 percent ofnominal GDP, a steady decline from24 percent in 1990. This contrasts with the contribution of urbanhousehold consumption, about 26percent of nominal GDP at present,which is roughly unchanged from25-30 percent in the 1990s.On ave r age , p e r c ap i t a r u r a lhousehold income rose 12 percentfrom 1987 to 2009, slower thanthe 15 percent growth of urbanhouseholds. This means that the

gap in rural-urban per capita incomeincreased over time, especially after2001. The trend has intensifiedbecause of a more rapid rate ofurbanization.All rural income groups, just liketheir urban counterparts, spend thelargest percentage of their incomeon food. Data on rural consumptiononly goes back to 2002. Since then,the pattern of consumption by ruralconsumers has been more uniform

than urban consumption, and hasconcentrated on food, residenceand transport. Not surprisingly,rural consumers do not spend asmuch as their urban counterpartson discretionary items such asrecreation or clothing.As is to be expected, rural residentslag behind their urban counterpartswhen it comes to consumer goodsownership. This indicates that there

is still a lot of headroom for growthof consumer products' sales in ruralareas. The i tems that have seen thestrongest growth in recent yearsare mobile phones, which rosefrom 4 per 100 households in2000 to 115 in 2009, followed bycolor TV sets - from 49 per 100households to 109. The ownershipof household appliances such as washing machines, refrigeratorsand air conditioners, as well asmotorcycles, is still low among ruralhouseholds compared to their urbancounterparts. Motorcycle ownershipis about 57 per 100 households,even though it has more thandoubled from 22 in 2000.How signicant China's consumers will be to the global economy wi l l depend cruc ia l ly on howsuccessfully rural consumers catchup with their urban counterparts.Farming wil l remain the mostimportant source of income forrural families even in the foreseeablefuture, and there is plenty of scopeto improve income from farming.Since most farming activities inChina are small-scale and family-

based, the central government hasundertaken a major policy initiativeto develop modern agriculturalproduction, which should improveproductivity and raise rural income.The recent focus on improvingagricultural infrastructure, includingwater sources and irrigation facilitiesis encouraging.Putting aside the potential impactof structural policies to increaseurban and rural household income,

the continuation of current growthtrends i s l ike ly to create twopowerful groups of consumers inChina in the next decade. Urbanconsumers will expand both insize and spending power and theirspending behavior will increasinglyresemble consumers in the high-income Asian economies such as Japan, Singapore and South Korea,and Hong Kong. This bodes well

for many industries, including traveautomobile, real estate, luxury goodand information/communicatioequipment.As incomes rise in rural China, ispending behavior will be similar tlower middle-income economies Asia, which should boost the markfor consumer staple goods angenerate a second pole of privaconsumption on which Chinaeconomy can rely.

The author is a senior economist Deutsche Bank.

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Chinese firms up the

stakes in Europe

By Andrew Moody

(From left) Li Shufu, chairman of Zhejiang Geely Holding Group, Swedish Minister for Enterprise and Energy Maud Olofsson and Volvo

CEO Stephen Odell at the Volvo headquarters in Torslanda, Sweden, on March 28, when Geely bought Volvo from Ford.

EUROCHINABUSINESS 1


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BEIJING - Chinese companies areincreasingly looking toward Europeto extend their business operations.In recent months there have beena number of high-profile deals. InAugust, Zhejiang Geely HoldingGroup Co completed its takeoverof Swedish carmaker Volvo CarCorporation. And late last month Shanghai-based Bright Food (Group) CoLtd emerged as the frontrunner toacquire United Biscuits, the UKbiscuit maker currently owned byprivate equity rms.Other recent deals include Shanghaiindustr ial conglomerate FosunInternational Ltd acquiring a 7.1percent stake in French holidayresort operator Club Mediterrane,commonly known as Club Med, inJune.Eric Thun, lecturer in Chinesebusiness studies at the Said BusinessSchool at Oxford University, saidEurope was now of ten moreattractive than the United Statesfor Chinese companies looking forinvestments."They are interested in capital-intensive manufacturing processes

and countries like Germany areworld leaders in this area," he said.

"It is not always about acquisition.You see a number of Chinesecompanies setting up research anddevelopment facilities in Germanybecause they want to be in industrialclusters where they have accessto highly skilled labor, researchinstitutes and training facilities."According to China's Ministry ofCommerce, 5.8 percent of Chineseoverseas direct investment in 2007was directed at Europe, behind Asiaon 62.6 percent, Latin America 18.5percent and Africa 5.9 percent, butahead of North America on 4.3percent. There were 252 investments byChinese companies in Europe inthe 10 years up to 2007, accordingto research by international businessadviser Ernst & Young.Of these, the largest number, 101,went to the United Kingdom with40 going to Germany, 24 to Franceand 15 to Sweden.Andre Loesekr ug-Pietr i , chiefexecutive officer of private equityfirm A Capital Asia, which hasoffices in Beijing and Shanghai,believes there are going to be more

investments by Chinese companiesin Europe.

He said recent moves by the Chinegovernment to simplify foreigexchange approval procedures couprove a catalyst for more mergeand acquisitions."This should make it easier foChinese companies to invest abroaand Europe is a key interest fomany Chinese companies," he said.Loesekrug-Pietri, whose companadvised Fosun on the recent CluMed deal and was also a co-investosaid a lot of European compani were looking for Chinese partneto access a market with more thanbillion people."Having a Chinese investor coulgive them some sort of assurancthey have a strong ally in what is highly competitive market, but onthat is also perceived as more anmore difcult."Zhang Tianbing, a partner in globmanagement consulting firm A.TKearney, who is based in Shanghasaid bridging China's technology gais one of the main aims for Chinecompanies investing in Europe."If you look at the car industry anthe acquisitions of companies sucas Rover and Volvo by Chines

companies, these allowed Chinebusinesses to acquire technologic

EUROCHINABUSINESS


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ability that had been built up overalmost a century," he said.Zhang said that Chinese companies

were not always looking to take overEuropean companies so they couldbring their manufacturing facilitiesback to China."Keeping the manufacturing inEurope, and even most of theresearch and development, is partof the value of these acquisitions.Maybe some of that manufacturingwill migrate to China over time," headded.Eric Schmidt, chairman of Beijing-

based China Entrepreneurs, whichorganizes forums and conferences inChina linking Chinese and Europeancompanies, said Chinese companiesrepresent the perfect exit strategyfor many European family-ownedbusinesses."There are many second and thirdgeneration businesses, in suchsectors as fashion, for example,where the current generation don't want to be in the business their

parents or grandparents started.Chinese companies have the cashand are hungry for their brands," hesaid."They might have even beensuppliers to them in the past and it isa way for them to move up the valuechain."Mike Bastin, a brand expert and visiting professor at the China Agricultural University, warns there

are dangers for Chinese companiesthat overestimate the value ofEuropean brands.

"Brand values can be intangible andmight not always compensate for thedifficulties in integrating corporatecultures. Chinese companies needto pay more attention to modernmethods of quantifying intangiblebrand values," he said.The appetite for major acquisitionsin Europe by Chinese companies isunlikely to be sated any time soon,however. There is continued speculation that vulnerable European banks couldbe the next acquisition targets forChinese companies."I would not be surprised if therewas an announcement of a Chinesetakeover of a major Europeanbank," added Zhang at A.T. Kearney.


24/60

A report gives surprising resultsahead of UN summit.Nine out of ten Greeks want tosee their severely debt-r iddengovernment help reduce poverty indeveloping nations, according to anew survey released ahead of theUN summit on development.

In fact, the rate is higher thanaverage - at 89 percent - over otherEuropeans in the 27 EU memberstates who expressed the beliefthat, in moral terms, "the stronger"should help "the weaker."Some 45 percent said this is "veryimportant" - while 44 percent citedit as "fairly important."Chinese experts say the findingsare positive, and that Europeanpoliticians should listen to these

voices to improve their developmentstrategies overseas."I think the result of the survey isa positive signal - and even if someEuropean statesmen are reluctant toincrease such aid, they should listento common people's opinions," said Yang Chengxu, a former Chinesediplomatic envoy to Germany and aresearcher at the China Institutes ofInternational Studies.S u p p o r t e d b y t h e E u r o p e a n

Commission, the Brussels-based TNS Opinion & Social releasedthe findings late on Monday aftersurveying 26,500 Europeans thisJune. After examining European publicopinion on development policy ingeneral and the EU's role as an aiddonor in particular, the results areexpected to help the EU to improveits new development policy this

autumn.The ndings were also made publicbefore the UN Summit on theMillennium Development Goalsthis month - just five years aheadof the 2015 deadline for achievingthe goals agreed by the state leadersworldwide.

Swedish people are notably themost generous, with 96 percent ofrespondents saying that helpingpoor countries is "very" and "fairly"important.Sweden is followed by Ireland (95percent), Denmark (94 percent),Finland (94 percent), Luxembourg(93 percent) and the UK (91percent). In these countries, theofficial aid figures matched orexceeded the EU target of 0.51

percent of GDP in 2009.Meanwhile, a number of countriesthat have been severely strickenby the economic crisis still showrelatively lower - yet still signicant- levels of overall support fordevelopment aid.These countries include Bulgaria (79percent), Estonia (84 percent) andLatvia (86 percent).I n a d d i t i o n , t h e s u r v e y h a srevealed that citizens also back EU

commitments to increasing aid.Half of the respondents believethat aid should be increased in linewith the targets set by the EU, while14 percent would increase aid evenbeyond this.A non-negligible proportion (29percent), however, stands ready togive up the promise.In broader terms, Yang said theEU did not reach UN standards in

providing aid for developing or lesdeveloped countries and that theffectiveness of their aid was not sideal as they had expected."And their relations with developinor less-developed countries are novery friendly either, because the Ealways poses conditions with the

aid", said Yang, such as whether threcipient country is democratic, oif corruption has been eliminated.Yang said the EU has pinned highopes on maximizing the benefof its international aid. The EUhe added, has the intention tcooperate with China to increasinternational aid and expand iinuence.A s t o w h i c h c o u n t r y oorganizations should take the lea

in implementing the developmenprojects, the Europeans considethe UN and the Wor ld Banbetter-placed for their knowledgand experiences in anti-povertinitiatives.While 17 percent and 15 percenof Europeans believe the EU anthe US should play their respectivroles in helping the poor countrie4 percent also think China shoulfulll its own responsibilities.

Apart from the government's rolthree in 10 Europeans said that thewould like to be involved in helpinthe poor directly. About 26 percent, for instancresponded that they are willinto donate money, while the resaid they would like to work avolunteers.

EU citizens would like to see their

countries help developing world

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hinese tourists are becomingnew favorites in Greece as the

country recovers from the debtcrisis.Greece is focusing on furtherboosting our market share here,believing in the potential of theChinese market. Greeces efforts were awarded with increasingnumbers of visitors in 2010."Tour i sm i s one o f the mos timportant pil lars of the Greekeconomy. Packed with historicalheritage, Mediterranean coastlineand beaches, Greece attracts morethan 16 million tourists a year,contributing 15 percent to its grossdomestic product.However, after strikes and riotscaused by the debt cr isis thatengulfed the country in 2010, arrivalsin Greece fell 1.3 percent in the rstseven months compared with thesame period in 2009, according tothe Association of Greek TourismEnterprises. However, this has

not prevented hordes of Chinesevacationers ocking there."We saw a small decrease in ourcustomers at the beginning of theyear in our Greece-bound travelbusiness mostly due to the socialturbulence there," said Zhang Wei,general manager of the outboundt r a v e l de p a r t m e n t o f C h i n aInternational Travel Service."But now the negative impact onour business is fading away littleby little as the crisis is easing," sheadded. According to Yao Yao, marketingproject manager of China Comfort Travel, that the company's tourservice package to Greece and otherEuropean countries for the NationalDay holidays sold out by the end ofAugust.Outbound travel to Greece is not'super hot' but is more classical,mature and stable with a steadygrowth of Chinese tourists.Greece is well known as a top

Greece

beckonsChinese

touristshoneymoon destination in Chinbut it can also offer visitors a ricculture and magnicent landscapesChinese believed that Greece-bountours were only attractive to younChinese couples who wanted tenjoy a piece of natural scenery the eastern Mediterranean islandHowever, it turns out that middlaged and elderly people also go therfor the splendid historical relics othe ancient Hellenic civilization.Regular tours consist of seeing thremains of the Hellenic civilizatiothat lasted thousands of years anthe coastline scenery of islands sucas Santorini and Mykonos.Unlike traveling to several Europeacountries in quick successionavailable data indicates that Chinetourists in Greece tend to stalonger for in-depth tours.During Chinese national holidaysometimes all you see in the streeof cities and islands in Greece aChinese tourists.



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LONDON - The 8th Asia-Europe Meeting (ASEM) Summit, was held in Brussels,Belgium. It is the first of the biennial gatherings since the Lisbon Treaty came intoforce in December 2009.

Nations hope ASEM Summit will helpbind them closer together

By Zhang Haizhou



The treaty aimed to create greatercoherence among the memberstates, and thus enable the EuropeanUnion (EU) to have more globalinfluence. However, some analystsin the United Kingdom think it isstill very hard for EU members toachieve consensus on dealings withChina."Member s t a t e s have w ide l y different interests, and the creationof consensus between them is veryhard. Sometimes one thinks that theEU will never translate its immensecommercial importance into politicalinfluence," Kerry Brown, a seniorfellow on Asia at the London-basedRoyal Institute of InternationalAffairs, told China Daily.The ASEM Summit brings togetherthe 27 EU member states and theEuropean Commission with 16Asian countries and the ASEAN

Secretariat - representing 58 percentof the global population, 50 percentof global GDP and more than 60percent of global trade - for aninformal process of dialogue andcooperation.On the bilateral level, China and theUK have work to do if they are toimprove their relationship and makeit mutually benecial.China remains a major focus for theUK's economic interests, bilateraltrade, reaching $39.1 billion last year.Trade in the first four months of2010 was up nearly 30 percent,according to Chinese statistics." W e s h o u l d b e s t r i v i n g f o rinterdependent and symbiot icrelat ionships to create mutualbenefit," said Alex Mackinnon, aninternational strategy consultantand co-author of China Calling: AFoot in the Global Door and China

-

200912

2

.

Counting: How the West Was Lost.For example, Mackinnon said,China can benefit from the UK'sexperience in the development ofcontract law."There is also in the UK a fair andreasonable arbitration environmentand China could agree that somedisputes may be al lowed to bearbitrated in the UK under guidancefrom scholars of both nations," hesaid.

The UK can also learn from China. Jeremy Browne, the minister ofstate at the British Foreign andCommonwealth Ofce, for instance,intended to use his visit to China inmid-September as the opportunityto see "how the UK can learn fromthe extraordinary success of BeijingOlympics".

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ANIMATION

FESTIVAL


36/60

Jrme Cazes,CEO of The Coface Grou


37/60

Survey reveals steadilyimproving business payment

performance

with 80% of enterprises optimistic regarding

economic outlook

- Yet deteriorated default payment performance in electronic industry adds

note of caution to recovery

s u r v e y o f p a y m e n texperiences among HongKong businesses during

the second quarter of 2010 conducted by Coface, the leadinginternat ional credi t insuranceand credit management servicesgroup has revealed that both lateand default payments are broadlysteady, and over 80% of HongKong enterprises are optimistic thatbusiness performance will return tonormal by the end of 2010.

According to the survey, 21.1percent of respondents experiencedlate payments f rom buyers inthe second quarter of 2010 11percent less than in the previousquarter (23.7%), and substantiallydown from 40.2 percent in the rstquarter of 2009; while 4.9 percentof respondents reported defaultpayments by buyers in the secondquarter of 2010, slightly up from4.3% in the previous quarter. After

reaching a peak at 8.6% in Q1 2009,the percentage for overall defaultsreturned to levels prevailing beforethe financial turmoil. It has beenrelatively stable since then, and theslight increase of default paymentssince the previous quarter wasprobably caused by companies which cannot endure the adverseimpact of the nancial turmoil andare suffering from weak financialpositions.

Usually, increases in bankruptciesand default payments significantlylag behind actual events in themarketplace, said Richard Burton,Reg iona l Manag ing Di rec tor ,Coface Greater China. Thoughthe adverse impact will continuefor a while in the aftermath of thefinancial turmoil, it does not meanthe economy is worsening. The survey also revealed thatH o n g K o n g e n t e r p r i s e s a r ereceiving payments earlier. Among

respondents that exper ienceddelayed payments in the past sixmonths, 48.5 percent experiencedpayments that were 15 to 30 dayslate in the second quarter of 2010 up from 40.3 percent in rst quarterof 2010; while 22.3 percent ofrespondents experienced paymentsdelayed by 31 to 60 days downfrom 24.8 percent in the rst quarterof 2010.

The overall payment performancegradually improved after Q1 2009,said Richard Burton. However,this did not result from enterprisestightening credit to customers:indeed, 6.67% of respondents haveextended credit terms to customersin the past six months, more thantwice the figure of 3.1% in theprevious quarter. This implies thatcompanies really are paying betterand earlier.

Electronics industry ranks highest

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for default payments.Among major industries, enterprisesselling to the electronics industrysuffered the highest percentages ofdefault payments. There was thesecond consecutive sharp increase indefault payments, reported by 18.6%of respondents for in Q2 2010, upfrom 14.9% the previous quarter,and 11.8% in Q4 2009.

Electronics products are notnecessities. This means that duringeconomic downturns, the electronicsindustry is more likely to sufferfrom poor business performanceand cash ow problems. Moreover,the keen competition, coupled withcontinuously rising costs of rawmaterials and labour, especially inMainland China, has further shrunkprofit margins in the electronicsindustry. Local businesses tradingin this industry should be cautiousregard ing c red i t contro l s , tosafeguard their payments, saidBurton.

Improvement in confidence ofHong Kong enterprisesThere were signs of improvements

in the confidence and business

performance and of Hong Kongenterprises: 81.1% of respondentsthink that by the end of 2010, theirbusiness performance will returnto levels typical of those before thefinancial turmoil, and 56.1 percenthave increased revenue growth inthe past six months. Additionally,84.5 percent of respondents thinkthere will not be an increase indelayed payments in their industryduring the next six months 7.2percent higher than in the previousquarter (78.8%).

These gures tally with the growthof Hong Kongs GDP recordedin Q2 2010, which increased by6.5% from same quarter last yearand by 1.4% in real terms from thefirst quarter of 2010. In June, weupgraded Hong Kong to A2 positivewatchlist, and a further upgrade isquite possible before the end of2010, said Burton.

Though Hong Kong enterprisesare mainly optimistic regardingthe economic situation and thecon t inuous l ow- in t e r e s t r a t eenv i ronmen t i s f avo r ab l e to

the overall recovery , the slow

recovery of the global markea n d i n c r e as i n g c o s t o f r amaterials may impact Hong Konmanufacturers and exporterTherefore, local businesses astrongly recommended to continclosely monitoring buyers paymerecords and financial situations, avoid unnecessary harm to theprofitability and cash flow. Burtoadded.

The survey of 1,425 Hong Kocompanies was conducted fro Apri l to June 2010, by CofaGrea te r Ch ina Serv ices thbusiness information and credmanagement services subsidiaof Coface. The survey considert r e n d s i n l a t e p a y m e n t s a ndefaults, as well as credit terms fmanufacturing, trading services ancontracting companies.

For further information, pleacontact:

Coface ShanghaiChloe YaoTEL: +86 21 6171 8100

E-mail: [email protected]

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2010

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+ 1 11 100

[email protected]

EUROCHINABUSINESS 9



hina will strengthen practicalcooperation with the World

Bank while marking 30 years oftogethernessThis year marks the 30th anniversaryof China resuming its legitimate seatin the World Bank. While constantlydeepening its reform and opening-up process, China has cooperated very successfully with the Bank inproject loans, knowledge sharingand international development. This has contributed to China'ssoc ioeconomic deve lopmen t

and enabled the Bank to play agreater role in fighting poverty andpromoting development in theworld.P r o m o t i n g s o c i o e c o n o m i cdevelopment through loan projectsC h a n n e l f o r f u n d i n g a n dtechnology: Over the last threedecades, the Bank has accumulativecommitted over $47.8 billion toChina and supported 326 projects.

Besides the inflow of funding, theprojects have helped China importinternational technologies, improveproductivity, and promote economicdevelopment.Contributing to poverty reduction:Since the end of the last century,China and the Bank have intensiedcooperation and implemented manylarge poverty alleviation projects.These projects have developed newconcepts, such as development-oriented poverty reduction andparticipatory poverty reduction. They also launched many newpractices, such as transferr ingmigrant labor from poor areas, andproviding micro nancing for poorfarmers. Accelerating growth in majorindust r i e s : The Bank ' s loanshave supported a number of keyprojects directly related to national welfare and people's livelihood. Transport, rural development,energy, and urban developmentand environmental protection arethe top four sectors financed bythe Bank, with loan util izationaccounting for 29.97, 23.35, 15.69,and 15.52 percent respectively ofthe Bank's total commitment inChina.H e l p i n g b a l a n c e r e g i o n a ldeve lopment : Along with theimplementation of strategies to

balance regional development,including the "western developmentstrategy", "strategy of revitalizingNortheast China's old industrialbase" and "strategy of boostingCentra l China deve lopment" ,the country has actively divertedBank financing toward Central,West and Northeast China in theprioritized areas of infrastructureconstruction and improvement

of people's livelihood. At presenmore than 70 percent of the Bankannual loan commitments to Chinare uti l ized for economic ansocial development of the abovregions to harmonize developmenthroughout the country.Supporting Chinese enterprises t"go global": China has carried oueffective cooperation with two othe Bank's afliated institutions, thInternational Financial Corporatioand the Multilateral InvestmenGuarantee Agency, and conductejoint studies on overseas investmenpolicies and business patterns thhave achieved preliminary effectMeanwhile, Chinese enterprisehave also made full use of thecomparative advantage in productiofactors and secured a great deal othe Bank's project procuremencontracts around the world.Strengthening knowledge sharinfor the benefit of innovation anhuman capital buildingActively promoting joint studieOver the past 30 years, the Banhas conducted many joint economstudies with China and producemore than 200 reports. Thesreports have objectively recorded thsuccessful practice and developmenroute China now follows in ireform and opening-up, and havenabled the world to understan

China's development better.In addi t ion, the reports havalso raised many valuable policrecommendations in response tkey issues on China's reform andevelopment.Ushering in advanced managemenconcepts and operation mechanismChina has ushered in advancem a n a g e m e n t c o n c e p t s a nstandardized operation mechanism

Mutual benefts, all-win results

By Xie XurenMinister of Finance of China



through loan-project cooperation with the Bank. The internationalcompe t i t i ve b idd ing sy s t em ,disbursement and reimbursementsystem, project supervision systemand project owner's responsibilitysystem introduced through theprojects have become prevailingp r a c t i c e s i n C h i n a ' s m a j o rengineering projects.Training professionals to meeturgent needs: By organizing variouskinds of training, study tours,seminars and workshops over thepast 30 years China has cultivateda large talent pool with a soundunderstanding of market rules,profound professional knowledgea n d e n o r m o u s i n t e r n a t i o n a le x p o s u r e , p r o v i d i n g s t r o n g intellectual support to the country'sendeavor to enhance its internationalnancial and economic cooperation.D e e p e n i n g i n t e r n a t i o n a ldeve lopment cooperat ion andsharing knowledge on harmoniousdevelopmentS t r e n g t h e n i n g S o u t h - S o u t hCooperation: With the Bank as a

platform, China shows the worldits development route marked withChinese characteristics, reiteratesthe importance of respect ingcountry ownership of developmentin developing countries, and callsfor diversification in developmentroads and modalities. This has notonly enriched the Bank's knowledgeof development, but also activelycontributed to the fulfillment ofits mandate to fight poverty andpromote global development.Improving the Bank's governances t ruc ture : To he lp fu l f i l l theconsensus of the G20 PittsburghSummit and ensure the Bank'stransfer of 3.13 percent votingpower from its developed membersto developing members, Chinaactively participated in internationalconsultations on the Bank's votingpower r e fo rm, s t r eng thenedcommunications and coordinationwith other developing members,and actively called on the Bank toraise the voice and representation ofdeveloping countries as a whole inits reform. China's efforts played an

important role in pushing forwardthe reform. W h i l e t h e p a s t s h i n e s w i t hremarkable achievements, the futureis lled with long and arduous tasks:China is a developing country witha large number of people still livingin poverty. The economy is stillfacing many long-term developmentchallenges. The World Bank, as the biggestmultilateral development institutionin the world, rich in financial andintellectual resources, is expectedto continue to play an active rolein China's economic developmentpattern and economic restructuringand in scal ing up South-SouthCooperation.In the foreseeable period, Chinawill continue to follow its scientificapproach to development, stick tocountry ownership in developmentand strengthen practical cooperation with the World Bank for mutualbenets and all-win results.

The author is the Minister of Finance of

China.

Xie Xuren, Minister of Finance of China and Robert B. Zoellick, President of World Bank



CHINA to surpass JAPAN to become the second

largest world economy in terms of GDP this year

he World Bank has agreed toincrease the voting power of

China and other major developingcountries in a move that analystssaid marks the start of a gradualbut new change in global economicgovernance.

China's stake at the bank, in termsof voting power, has gone up to 4.42percent from 2.78 percent, liftingit to the third spot behind UnitedStates and Japan in the 186-nationlending organization. The ranking is above a host of Western countries, like Germany,France and the UK, all having theirvoting power cut to a varied level.

The US' share, however, remainedunchanged a t 15 .85 percent ,effectively still giving it the vetopower. Japan is in the second placewith a 6.84 percent stake, downfrom 7.62 percent.China's Minister of Finance Xie

Xuren welcomed the move and saidit increases the rationality of theWorld Bank governance structureand lays foundation for furtherreforms aimed at equalizing votingpower between the developed andthe developing nations."It is the first time in the historyof the World Bank that a reformof governance structure is mainly

targeted at promoting representatioand voices of developing countrieshe told reporters on Sunday."Today was a very good day fomult i la tera l i sm," World BanPresident Robert Zoellick said aftthe conclusion of the bi-annu

meeting of the bank's developmencommit tee in Wash ington oSunday.

China's gross domestic produ(GDP) expanded by an impressiv8.7 percent year-on-year in 200when it contributed to more thahalf of world economic growt while many developed economiregistered negative growth thanks tthe global nancial crisis.I t i s a s i gna l th a t deve lopecountries' dominance of worleconomic order i s star t ing tweaken, said Yang Mian, researchat Communication University oChina. "China is rising."But analysts said given the de factveto held by the US in the WorBank, there is a long way to gbefore the developing countries cahave a voting power that matchetheir actual economic clout.T h e Wo r l d B a n k a n d t hInternational Monetary Fund requi85 percent of overall votes to maka decision. But the US failed to givup any share of its voting powe"There's no substantial change sfar.China should at least be above Japain terms of voting power in thWorld Bank given their changineconomic status.

A subway tunnel under construction in Daxing district, Beijing.

China now third in terms of voting power at multilateral organization



Social innovators' contribution hailed

Three outstanding social innovatorsthat work at the grassroots level w e r e g r a n t e d A s i a ' s " S o c i a lEntrepreneur of the Year" award bythe Schwab Foundation for SocialEntrepreneurship at the SummerDavos Forum.They are Gemma Bulos, who set upthe A Single Drop for Safe Waterin 2006 in the Philippines; AndySchroeter , who runs SunlabobRenewable Energy in Laos andseveral other countries; and Sakena

Yacoobi, who led the AfghanInstitute of Learning to providehealth and education services toAfghan women and children.Bulos told China Daily that she feelsincredible to meet people who sharesimilar ideas and experiences at theforum."It's not easy to be in the socialsector and do it in a sustainableway," she said.

"It's really exciting to have thiskind of forum to recognize thesepeople."Established in 1998, the SchwabFoundation has so far awardednearly 200 social entrepreneursacross the world.The winners should have innovativeideas and solutions to deal withsocial problems and their activitiesmust directly benet people's lives. Also, their enterprises should beself-sustaining instead of relying on

government subsidies, she said.The most ideal situation is that theirmodels and experiences could bereplicated in other countries andregions that encounter the sameproblems.With years of experience workingwith social entrepreneurs, Schwabnoticed that people from developedand developing countries facedifferent social problems.

Social innovators' contribution hailed

Developed countries' problems aremore about taking care of elderlypeople and children, and providingemployment for young people;while in developing countries, majorsocial issues include clean water,basic education, and ghting againstpoverty.Last year, Hong Kong resident Timothy Ma was awarded by thefoundation for his contribution tothe local Senior Citizen Home Safety Association, becoming the only

Chinese winner so far.Schwab said she would be happy tosee more prizewinners from Chinain the future."I am sure that there is big potentialfor social entrepreneurs to grow inChina," she said."I am also sure that there are socialentrepreneurs around (in China),and it's our job to nd them."

Hilde Schwab (left), co-founder of the Schwab Foundation for Social Entrepreneurship, honors this year's award winnersSakena Yacoobi (second left), Andy Schroeter (second right) and Gemma Bulos.



Andreas PotamianosPresident Epirotiki



The 5th International Education Conference of Xuzhou

The 13th China Xuzhou Investment Fair

The 4th Tourism Festival of Han Dynasty Culture



Confucius

Chairman Stavros with Chief executive Vice President Duan Yijun


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Building Senior Financial Business AreaLaoshan Financial Business Area under planning andconstruction is located in the central area of LaoshanDistrict, with the planning area of 10 square kilometers, will be a modern beautiful multi-functional FinancialBusiness Area, combined function of business,commerce, clture, conference & exhibition, hotel, foodand beverage, entertainment, and fitness, besides thefinancial function, which is the main usage. Amongwhich, its central area is 1.45 square kilometers, will bethe Financial Accumulation Area.

Laoshan



Corporate Establishment, Tax, Accounting & Payroll roughout Asia


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Co-organiser of an exhibition of costumes Ancient Drama.

Agreement to establish an Information Center with CCPIT

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Obama

Dmitry Medvedev

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Sarkozy

Taso Aso

2009-3MAY-JUNE

The World in Recession

collective action the only solution!

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EUROCHINA BUSINESS

200712


GreekAmbassadortoChina:

Cambanis

CAMBANIS

GreekMinisterofCulture:Liapis

LIAPIS

GreekMinisterofTourism:Spiliotopoulos

SPILIOTOPOULOS


20082


JoseManuelBarrosoPresidentofEuropean

Commission

Dr.MarjanCencenAmbassadorofRepublicofSlovenia

SPECIAL SUPPLEMENT ON SLOVENIA

EU-CHINA BUSINESS SUMMIT

OIL PRICES AND THE DECLINE OF THE DOLLAR

LUXURY BRANDS:THE BUSINESS OF SELLING DREAMS

SPECIAL SUPPLEMENT ON GREEK CULTURAL YEAR IN CHINA

BeautifulSlovenia

SergeAbouAmbassadorofEuropeanUnion

SpiliotopoulosGreekMinister

ofTourism

anewerainGreece-Chinatourismties

20084

BeautifulSloven ia

OneWorld OneDream

HARVESTING TOP FOREIGN STOCKS

DOING BUSINESS WITH CZECH REPUBLIC

WORLD TOURISM BAROMETER

CHINA-EU A THRASHING PARTNERSHIP -

UPHOLDING THESACRED INSTITUTIONS OF THE GAMES

CHINA'S PR ECI OUS GI F T TO EUROPE

ON LI NE TRAD I NG B LOOMS IN EUR OPE

GeorgePatoulisMayorofOlympicCityof AthensBridgebetweenChaoyang&Maroussi


L iuQiSecretaryoftheBeijingMunicipal

CommitteeoftheCP C

BeautifulSlovenia


OneWorld OneDream

TRUCE

EKEXEIPIA

HAPPY NEW YEAR


Hu JintaoM A N O F T H E Y E A R 2 0 0 8

STRIVINGFORPEACE &THEWELFAREOF HISPEOPLE

BAROSSOW e l c om e s W e n J i a b ao i n E U

Brusselsheadquarters.

EU-CHINA:Acomprehensive

strategicpartnership.

Vaclav KlausPresidentofCzech Republic

andPresidentof EU

( J u n .1 t o J u n e 3 1 , 2 0 0 9 )

Costas MakropoulosGreekMinisterfor tourism

development


Obama

Dmitry Medvedev

Barroso

Kevin Rudd

Gordon Brown

Berlusconi

Sarkozy

Taso Aso

2009-3MAY-JUNE

The World in Recessioncollective action the only solution!

!EURO CHINA BUSINESS


2009- 4JULY-AUGUST

GREEK PRIME MINISTERKARAMANLIS WELCOMES HE GUOQIANGATTHE OPENINGOF NEWACROPOLIS MUSEUM

G4China - Brazil - Russia - Indiaa platform but not a mechanism to combat

the world's financial crisis

Jos Manuel BarrosoPresident

European Commission(most likely to be re-elected

next September)

Fredrik ReinfeldtSweden's Prime MinisterPresident of European Union(1st July - 31st December 2009)

(2009714~20091231)

COVER STORY Economiccrisis: 'accelerates reform'

OPINION Phantomof stagflation could be back

INTERVIEW Lord Mayorof London

P4

P12

P32

IMPA

CT

TheNe

wAc

ropolisMu

seum


2009-5

SE P TEMBE R-OCTOBE R

George PAPANDREOUNew Prime Minister of Greece

With plan & vision for the future

COVER STORY:Turning goodintentions into joint actions

INTERVIEW:China's enginesof growth

OPINION:Helping small firmsis key to recovery

P4

P16

P28

IMPA

CT

Doing

Busine

sswi

thPortug

al

Papandreou asPresident ofSocialist InternationalmeetsHu Jintao

Jos Manuel BARROSOPresident of European Commission2009-2014A new era in EU-China r elations 2009-2014


2009-6

Nov ember-December

HAPPY NEW YEAR!

PavlosGeroulanosGreekMinisterofCulture& Tourism

Angela GerekouGreekDep.MinisterforTourism

HermanVan Rompuynew President ofEUBaronessAshtonForeign AairsChief

Anewand more

effectivecultural&tourismpolicy,to

promotethe treasures

andnatural beautiesofGreece

L i n k i n g C h

Euro China Business - Issue 14

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