Academic journal article Global Economic Observer

Windows of Opportunity in China - Cee Economic Relations *

Academic journal article Global Economic Observer

Windows of Opportunity in China - Cee Economic Relations *

Article excerpt

Introduction

The Central and Eastern European countries (CEE) share an old, constant and strong friendship relation with China. In spite of the huge geographic distance that separates them from China, in spite of the cultural differences, the languages barrier, or their distinct choices in terms of economic development models and policies, there have always existed many commonalities and complementarities between China and these countries, which helped strengthen their links and make their cooperation easier. After the CEE countries have integrated into the European Union, new opportunities appeared for their economic and trade relations with China, a major partner of the EU. Nevertheless, while the development potential of the relations between the two sides is impressive, it is still far from being harnessed properly.

1. Favourable traditional conditions for bilateral relations

Since 1978, China has started building a new future for itself by opening up to the world economy and pragmatically creating a development model tailored for its specific needs. The purpose of the comprehensive reforms brought about was that of attaining the country's rapid economic development and its repositioning into the world economy. For about three decades, the performance of the Chinese economic model proved outstanding in tenus of growth and development, technological modernization, poverty alleviation and improved living standards. China is now the second-largest economy in the world, the most important manufacturer, the number one exporter and the second- largest global importer of goods, as well as the dominant actor in many international markets. It also holds the largest foreign exchange reserve worldwide.

On the other hand, after 1989, the year when the communist system fell apart in Europe, tremendous changes took place in the CEE 10" countries, too. As they chose to switch to the market economy, these countries embarked on complex and painful reforms founded on the neo-liberal approach favouring liberalization and privatization. Their overriding priority was to adjust to, and to integrate into the European Union, with a view to catching up and bridging the development gap that separated them from Western Europe. The thorough restructuring process that followed impacted significantly on their economic structure and the CEE 10 countries became strongly integrated and, at the same time, strongly dependant on the EU Western economies (former EU15). For the new EU member states, these economies became the leading source of foreign investments, cross-border loans and imports, and their most important export markets. The EU integration brought efficiency advantages, technological and managerial know-how transfer, jobs, increased productivity and accelerated economic growth. The development gap between the CEE 10 countries and the EU Western economies was reduced, but it remained still far from being closed.

During the last two decades, in spite of the huge changes undergone by their own economies, by the world economy as a whole, and by their respective places in the new' global environment, the CEE 10 countries and China managed a smooth transition of their bilateral relations. However, as they were more focussed on their own reshaping and redefining processes, bilateral trade and economic cooperation lingered, and even in the most recent years, when trade and investments received a significant boost, important potential still remained untapped.

Maybe one of the most intriguing cases of untapped potential in CEE 10-China relationship is the one of China-Romania trade and economic cooperation. In spite of the fact that the two countries have a track of exceptional bilateral relations, although bilateral trade reached record-high levels right during the global financial crisis, although Chinese investments in Romania are quite significant, the economic connection of the tw?o countries is far from reaching its potential (see Box 3. …

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