Trade and Investment in China: The European Experience

Trade and Investment in China: The European Experience

Trade and Investment in China: The European Experience

Trade and Investment in China: The European Experience

Synopsis

This new study examines the importance of the economic relationship between China and Europe and how it is likely to evolve. It includes case studies of the automobile, toy, watch, telecommunications, banking and insurance industries.

Excerpt

How important is China as an economic partner for Europe? How important is Europe as an economic partner for China? How is the bilateral relationship likely to evolve? These are the key issues addressed in this book. the aggregate data provided by Roger Strange in Chapter 1 have suggested that European firms have not as yet engaged with China to the same extent as their us and Japanese counterparts. But there are two important caveats to this simple conclusion. the first is that the situation varies significantly by industrial sector and, in some sectors (e.g. automobiles), European firms are already playing a major role. and the second is that Sino-European relations are developing fast, and each partner is becoming more important for the other.

The chapters in this book are divided into three sections. the five chapters in the first section examine the policy framework for trade and investment relations between China and Europe, and the environment within which the relationship needs to develop. in Chapter 2 John Foster details the emerging policy framework within China with regard to foreign trade and foreign direct investment. He notes that the ‘open-door’ might perhaps be better categorised currently as a ‘door which is not closed’ but that, notwithstanding the plethora of detailed policies and attendant regulations, the underlying reality is that everything is ‘open to negotiation’. the bottom line for the Chinese authorities is that foreign trade is perceived as vital to the continued development of the Chinese economy, and that increased fdi is seen as vital to growth of foreign trade.

The European Union is China’s main economic partner within Europe, and eu firms have provided the overwhelming majority of European investment in China. in Chapter 3 Roger Strange traces the evolution of eu trade policy towards China from the early 1970s, through the establishment of official diplomatic relations in 1975 and the conclusion of the 1978 Trade Agreement, to the complex situation that exists in the mid-1990s. in so doing, he draws attention to the fact that the European Union is increasingly taking a much tougher stance on imports from China notwithstanding official rhetoric to the contrary, and to the confusion as to whether China should be classified as a developing economy or as a state-trading economy.

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