Wen Jiabao’s European Tour Focuses on Greater Cooperation, Business Opportunities

June 29, 2011 Posted by China Briefing Reading Time: 4 minutes

By Vivian Ni

Jun. 29 – After his five-day visit to Hungary, the United Kingdom and Germany, Chinese Premier Wen Jiabao wrapped up his tour of Europe yesterday and returned to Beijing this morning. During meetings with his counterparts, Wen stressed greater cooperation with these European countries across various fields, and signed a number of business deals.

Hungary: China interested in state bonds and ownership in Hungarian companies
Wen, with his entourage of politicians and more than 300 businessmen, chose Hungary – China’s most important trading partner in Central and Eastern Europe – as his first stop of the European tour. Called “a major diplomatic victory” by the Hungarian government in a recent report in the Budapest Business Journal, Wen’s visit marked the first time a Chinese premier had touched down in the country in the past 24 years.

While leaders of both sides discussed cooperation issues across several distinct fields, China – which may consider making Hungary a beachhead in its European Union (EU) expansion efforts – showed specific interest in investments into Hungary’s transport and logistics sectors. The 12 agreements the two countries inked this time around included two Memorandums of Understanding on aerial, naval and rail commerce, and three cooperation deals on logistics development. China is even interested in buying ownership in some troubled Hungarian transport companies, such as Malév, the Hungarian national airline, and the state rail firm MAV.

Wen also confirmed China is willing to invest in Hungarian state bonds, while the China Development Bank will make a special EUR1 billion-credit line available to promote joint business investments.

Witnessing a record bilateral trade volume of US$8.7 billion in 2010, China has grown into Hungary’s third largest trading partner and continues seeing a surge in the bilateral trade aggregate. Between January and April this year, the trade size between the two countries has grown 16.1 percent from a year earlier to US$2.97 billion. Both sides anticipate a series of new economic and financial cooperation will boost the total bilateral trade scale to US$20 billion by 2015.

The United Kingdom: Wen stresses common interests and pictures a free and democratic China
During his three-day visit to the United Kingdom, Wen emphasized the importance of strengthening bilateral ties between the two countries without major strategic conflicts, and promised democracy and human rights to the Chinese citizens in a speech about China’s future.

When meeting with his British counterpart David Cameron, Wen pointed out the two countries share a great deal of common interests, despite their differences.

Therefore, the Chinese premier urged both sides to advance cooperation, hoping closer business ties will help the two countries achieve the goal of US$100 billion in bilateral trade by 2015.

When recalling his previous three visits to the United Kingdom in his capacity, Wen highlighted the visit in 2009, during which he admired the United Kingdom’s efforts and achievements in tackling the Global Financial Crisis.

Wen also believes the different advantages of the two countries can be reciprocal. While the United Kingdom’s advanced technologies and managerial expertise in research, services, public health as well as the development of low-carbon economy can well meet China’s fast increasing demand, China’s enormous market size, rich human resources and significant development potential will bring a myriad of opportunities during the United Kingdom’s economic recovery.

The Chinese premier had actually already illustrated his point on the two countries’ reciprocal cooperation when he visited MG Motor UK – the first Chinese automobile company with batch production selling in the European and U.S. markets – one day before he met with Cameron. He highly praised MG Motor’s brand new business model of “designed in the United Kingdom, produced in China, and assembled in the United Kingdom,” saying it sets a good example of efficiently combining the strengths of both countries.

Chinese and western media were also attracted by Wen’s speech at the Royal Society in London, where he expounded the current Chinese policies and promised a truly democratic China with justice everywhere in the future. Wen also admitted China is still troubled by corruption, inequality and other social ills and pointed out “the best way to resolve these problems is to firmly advance political structural reform and build socialist democracy under the rule of law.”

A recent Reuters report displayed comments on Wen’s speech from different angles. While some skeptics question how far the “future” is, some other commentators believe the future direction Wen points at should be applauded even though his words may just be rhetoric.

Germany: Business contracts worth over US$15 billion signed to boost trade
At Wen’s last stop Germany, Europe’s largest economy, both countries say they want to increase their annual bilateral trade volume significantly in the next five years.

Seeing the total bilateral trade volume reaching US$187.1 billion last year, a 38.5 percent surge from 2009, German Chancellor Angela Merkel said at a joint economic forum that she hopes the trade figure between the two countries will reach US$284 billion by 2015. Wen, who spoke after Merkel, anticipates the trade volume can even double over the next five years.

According to a report by the Associated Press, China is now Germany’s third largest trading partner, only after France and the Netherlands. While China was the seventh biggest buyer of German exports last year, it was the No.1 importer to Germany.

In thirst for an industrial upgrade, which will not be realized without imports of advanced technologies, China hopes Germany will help loosen EU export restrictions and remove trade obstacles. Emphasizing China is “not forcing anyone into technology transfer,” Wen argued the trade restrictions will “significantly limit the export of Germany’s new technologies to China and the international competitiveness of German companies on the Chinese market.”

During Wen’s visit, the two countries signed almost 20 agreements, involving a contractual investment capital of over US$15 billion. These deals include China’s order of 80 A320 planes from Airbus, Volkswagen’s new factory presence in South China, an investment of US$2.9 billion into Daimler AG’s China joint venture, and an infrastructure project in China worth several billion Euros charged by Siemens.

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