EU-China Newsletter
October(2) 2013
Editor - James Holland
james.holland@europarl.europa.eu
ECB and the People’s Bank of China
establish a bilateral currency swap
agreement
China and the European Union signed a
currency swap agreement to boost trade
and financial stability in a move that also
marks a landmark step for the yuan's
internationalization.
The three-year swap line with a maximum
value of 350 billion yuan ($57 billion) is the
largest the People's Bank of China has
signed with a foreign central bank outside
of Asia, higher than the 200 billion yuan
agreement with the Bank of England.
The People's Bank of China said in a
statement on Thursday that the deal can
help provide liquidity support for the yuan
market in Europe and promote overseas
use of the renminbi. It is also beneficial for
facilitating trade and investment.
Experts said that the agreement with the
European Central Bank is a significant step
forward for the internationalization of the
yuan and is a reflection of the increasing
demand for the Chinese currency in
financial transactions in the eurozone.
agreement as France has been keen on
developing its capital into a major yuan
trading center.
Yuan deposits in Paris amount to 10 billion
yuan, making the French capital the secondlargest pool for the Chinese currency in
Europe after London. Nearly 10 percent of
Sino-French trade is settled in yuan,
according to the French central bank.
"The amount of the currency swap is
significant, and it is an important step to
develop the renminbi transactions in the
euro area," said Philippe Mongars, deputy
director of the market operation
department at the Bank of France.
Michael Moore, a professor of Finance at
Warwick Business School in the UK, said
that the swap reflects China's ambition to
raise the international profile of its
currency.
"All the banks based in the euro area will
benefit from it and we see it as a backstop
to maintain confidence in the Chinese
currency in the euro area," he said.
"If China's aim is to make the yuan an
international currency of choice, this is a
good start," he said, noting that both sides
need to replenish the deal to meet market
demand.
"What is also important to bear in mind is
that the arrangement is bilateral so it is also
a reassurance for banks in China when they
need to access the euro," he added.
Since 2008, China has signed currency swap
agreements with 23 regions and countries
with the total value reaching 2.48 trillion
yuan, according to the People's Bank of
China.
The European Central Bank said in a
statement that the agreement has been
established in the context of rapidly
growing trade and investment between the
eurozone and China. The swap is intended
to serve as a backstop facility to ensure the
yuan's liquidity and financial stability in the
eurozone.
EU-CHINA NEWS
"The agreement showed that the ECB is
very interested in contributing strongly to
the internationalization of the renminbi,"
said Arnaud de Bresson, chief executive of
Paris Europlace, a professional association
that promotes Paris as an international
financial center.
National Day Reception
On September 25th, the Chinese Mission to
the EU and the Embassy of China to
Belgium cohosted a reception in celebration
of the 64thanniversary of the People’s
Republic of China. More than 800 guests
attended the event, including visiting Vice
Chairman Ji Bingxuan of the Standing
Committee of Chinese National People’s
Congress, Chief Operating officer David
O’Sullivan of the EEAS, President Andre
Flahaut of Chamber of Representatives and
Belgian Deputy Prime Minister Alexander
De Croo.
De Bresson said that the swap is likely to
significantly boost the yuan-denominated
bond market in Europe and will help
consolidate Paris' position as a major
platform for yuan trading and transactions
in the eurozone.
Paris played a leading role in pushing the
European Central Bank to sign the
-2-
EU-China Friendship Association
relationship has matured and become more
sustainable. We have boosted our win-win
cooperation and put it on a much more
solid footing. Cultural exchanges between
China and EU have strengthened mutual
understanding between our peoples. We
are encouraged by Europe's nascent
economic recovery, which will provide ever
more opportunities for future cooperation. I
am fully confident that we can continue to
enhance our cooperation in a spirit of
mutual respect and benefit, as we recently
did in our joint efforts to overcome friction
relating to solar panels.
Address by H.E. Ambassador Wu Hailong at the
Reception for the 64th Anniversary of the
People's Republic of China
Your Excellencies,
Ladies and Gentlemen,
It is my pleasure to welcome you all to the
Chinese Mission to celebrate our National
Day with us. This evening we are honored
to have with us H.E. Ji Bingxuan, Vice
Chairman of the Standing Committee of
Chinese National People's Congress, H.E.
Andre Flahaut, President of Chamber of
Representatives of Belgium and H.E. ,
Deputy Prime Minister of Belgium. I would
like to extend our special thanks to them for
their presence.
Ladies and Gentlemen,
Over the next few months, there will be a
number of important events for our
bilateral relations, including the High-Level
Economic and Trade Dialogue, the Strategic
Dialogue and the China-EU Summit. Our
leaders will work together to chart the
course
for
future
cooperation
in
urbanization, environmental protection,
green growth and many other important
areas. They will identify synergies between
China's "12th five year plan" and Europe's
"2020 strategy" and hopefully launch
negotiations on a China-EU investment
agreement. Looking forward, I am confident
that our strategic partnership will grow
ever stronger and more resilient in the
upcoming decade. I also trust that our
friends, present here this evening, will
continue to help us in this venture, and I
thank you warmly for all of your support.
Let me conclude by proposing a toast,
In March this year, a new leadership took
office in China, which has continued to
advance reforms and opening up in China,
rallying the people in pursuit of the
"Chinese Dream" – a dream of national
renewal and better lives for the Chinese
people.
Our economy has performed well over this
period, with GDP growing by 7.6% in the
first two quarters. We are confident to meet
our 2013 growth target. At the same time,
the Chinese government is prioritizing
transforming the country's growth model
and restructuring the economy. These
innovative reforms will help unlock the
potential of domestic demand, re-energize
our market and upgrade China's economy.
Although China remains a developing
country, as its economy continues to grow,
it will contribute more and more to global
peace and prosperity. We are more than
willing
to
share
the
enormous
opportunities that China's development
represents, with the rest of the world.
To the 64th Anniversary of the People's
Republic of China,
To the prosperity of China,Belgium and the
EU,
To the happiness of our peoples, and
This year marks the 10th anniversary of
China-EU
comprehensive
strategic
partnership. Over the past decade, our
To the health of our guests here.
Cheers!
-3-
EU-China Friendship Association
Ambassador
Wu
Hailong’s
Interview with the Diplomatic
World
Now, our relations are well positioned to
achieve even greater development. Over the
next decade, we should think creatively, set
new goals for our relations and unleash the
full potential of our cooperation for global
peace and development.
Q: This year marks the tenth
anniversary of the establishment of a
Comprehensive Strategic Partnership
between China and the EU. What have
been the main highlights of the
partnership over the past ten years? And
what are your expectations for the next
decade?
I believe we should prioritize the following
three aspects:
Firstly, providing mutual support. China
and the EU should seek to understand and
support
each
other’s
respective
development paths, accommodate the
differences in political and social systems
and respect each other’s major concerns
and interests. If we can complement each
other, we can better contribute to world
peace and development.
A: A decade ago, China and the EU
established the Comprehensive Strategic
Partnership. Since then, the two parties
have gone beyond their differences in
history, culture and social systems,
overcome the challenges of an everchanging world and substantially deepened
their relations. As a result, bilateral
relations have grown more mature. We
have set up a multi-tiered cooperation
framework, with an annual Summit, highlevel strategic, economic and people-topeople dialogues and over 60 other
mechanisms. Both sides have put their
mutually beneficial relations on more solid
footing and scaled up cooperation. The EU
has been China’s biggest trading partner for
the past 9 years. Defying the sluggish world
economy last year, bilateral trade reached
US$546 billion, a four-fold increase as
compared to a decade ago. Our people-topeople exchanges have helped mutual
understanding. The two sides have hosted a
series of cultural events around “thematic
years”. Last year, over 1.5 million Chinese
chose EU countries as the first stop in their
overseas travel. There are over 70 flights
between China and Europe every day. We
have enhanced mutual understanding and
coordination in an effort to address climate
change, improve global governance,
promote sustainable development and
manage regional hotspots.
Secondly, intensifying our comprehensive
cooperation. We should be thinking out of
the box, to upgrade economic cooperation
and expand mutual investment, with a focus
on urbanization, energy, environmental
protection, science, technology and
innovation. We should also deepen
cooperation on multilateral and bilateral
platforms, through governmental and nongovernmental channels as well as regional
and sub-regional mechanisms.
Thirdly, striving for mutual growth and
prosperity. China and the EU are
increasingly inter-dependent. It is essential
to deepen and expand cooperation, making
concerted efforts to boost growth and
further our common interests so that our
people can benefit from our common
development and prosperity.
Q: Trade between China and the EU is on
the decline this year. Is this a
consequence of trade friction between
the two over solar panels, which has
aroused global attention? What is the
future for China-EU trade?
A: Trade underpins our comprehensive
strategic partnership and is the most
-4-
EU-China Friendship Association
dynamic and promising aspect of bilateral
relations. Amid global economic downturn,
the volume of China-EU trade declined. Yet
it remains so large that trade frictions will
perhaps inevitably arise. The key is to
upgrade our cooperation in a constructive
manner, settle trade disputes through
dialogue and consultation and refrain from
resorting to trade remedy measures, which
in the end only harm both sides. The
European Commission and Chinese solar
exporters have reached a settlement of
solar panels dispute, and China welcomes
this agreement. I hope we will continue to
resolve any trade frictions in a positive,
amicable, practical and flexible way so as to
create positive conditions for our further
economic cooperation.
modernization, and thus to take our
economic ties to a higher level.
Q: China and the EU have differences of
opinion on human rights and various
other issues. Does this affect mutual
trust between the two? You have written
an article, calling on the EU to enhance
mutual trust with China. Do you believe
that the lack of trust undermines this
relationship?
A: Mutual trust is the foundation of ChinaEU relations. I once wrote in an article that
a high level of mutual trust is essential for
steady and sustained bilateral relations.
Leaders of both sides share the same
aspiration of strengthening mutual trust.
Our bilateral relations cannot develop
smoothly without sufficient trust. China and
the EU differ in histories, cultures and in the
stage and path of development, so it is
natural for us to have different views and
perceptions on certain issues. We should
handle these differences in a spirit of
mutual
respect,
equality
and
understanding. We cannot make progress
on
our
comprehensive
strategic
partnership unless we take an objective,
comprehensive and sensible approach and
dispel mutual suspicion and misgivings
through dialogue and cooperation.
Given
the
fast-changing
economic
landscape, China and the EU are advancing
their cooperation within a complex
international context. As the most
important emerging economy and the
biggest grouping of developed countries,
China and the EU are both at important
stages of development. Both have huge
markets and great potential. With
comparative advantages, the two sides have
much to offer each other in the fields of
science, technology, investment and
urbanization. As long as China and the EU
can seize these opportunities in a spirit of
mutual respect and expand cooperation,
our economic ties will make new strides.
Over the next five years, China is estimated
to import US$10 trillion worth of goods and
invest US$500 billion overseas. Over 400
million Chinese will travel abroad. This
represents immense opportunity for
Europe. I hope that the EU and China will
work together to launch as soon as possible
negotiations on an investment agreement
and agree a long-term plan for our strategic
cooperation. China is ready to extend
cooperation with the EU to the fields of new
industrialization,
IT
application,
urbanization
and
agricultural
Q: People-to-people exchanges have
become the third pillar of China-EU
relations. Can you share with us the
achievements that have come from these
cultural,
educational
and
youth
exchanges?
A: China and Europe, both ancient
civilizations, have so much to offer each
other by means of cultural exchanges. In
2012, the two sides launched the HighLevel People-to-People Dialogue, giving
strong impetus to the exchanges.
In the field of culture, the Chinese Ministry
of Culture alone has sponsored almost one
hundred cultural exchange programmes in
-5-
EU-China Friendship Association
Europe. In recent years, China has been
invited as guest of honour to the wellknown Europalia International Arts Festival
in Brussels and the Frankfurt Book Fair in
Germany. The China-EU High-Level Cultural
Forum has become a regular feature of our
cultural exchanges. Last year’s China-EU
Year of Intercultural Dialogue launched
nearly 300 cooperation programmes.
Bilateral cultural centers are flourishing.
negotiation processes. They have worked
together in the G20 and IMF to help
progress reforms to the international
financial system and global governance.
China and the EU have intensified dialogue
and consultation on safeguarding energy
and food security and achieving the MDGs,
and have helped promote mutual NorthSouth understanding and development. The
two sides also consult regularly on the
Middle East affairs and the Iranian nuclear
issue, and are working together to fight
piracy and ensure safe navigation through
the Gulf of Aden and the seas off the Somali
coast.
In the field of education, the EU member
states represent a major destination for
Chinese students and scholars studying
abroad. There are 200,000 Chinese
studying in Europe and 30,000 Europeans
studying in China. China has academic
mutual recognition agreements with 14 EU
member states, including the UK, France,
Germany, Italy and the Netherlands.
Chinese universities have offered courses of
all of the 24 official EU languages. The
number of Confucius Institutes in Europe is
also increasing.
In today’s world, global challenges such as
financial crisis, strained resources, climate
change, nuclear security and terrorism,
cannot be resolved by any single country or
region. It is imperative for China and the EU
to
work
together,
strengthen
communication and support each other in
making
our
due
contribution
to
safeguarding and promoting world peace
and development.
In the field of youth exchange, activities of
the China-EU Year of Youth held in 2011
were attended in person by more than
10,000 young people from China and the
EU, while 160,000 more participated
through new media. The two sides have
maintained good cooperation in youth
entrepreneurship,
volunteer
services,
development and the protection of youth
rights.
Q: It is argued that the sovereign debt
crisis has weakened the EU’s position
and role in the world. How does China
see Europe today?
A: As one of the largest economies in the
world, the EU takes the lead in science and
technology, managerial expertise and
innovation. When Europe encountered
challenges in recent years, people became
pessimistic of its future. Some critics
exaggerated the risks of EU disintegration
and talked about the collapse of euro. But
China has remained confident in the EU and
supported the EU throughout the debt
crisis. China believes that the economic and
social development of the EU will be
reenergized following fiscal consolidation
and structural reform. Growth and jobs will
return. China also believes that the EU
remains an important player in the world
and is indispensable for battling global and
Q: Both China and the EU are important
players in the global arena. How can
China and the EU better cooperate in
global affairs and work together to
tackle regional hot spot issues?
A: China and the EU, as important global
players, share common interests and
similar views on many global and regional
issues and carry out extensive coordination
and cooperation in this field. The two sides
have enhanced consultation on climate
change and facilitated progress in relevant
-6-
EU-China Friendship Association
regional challenges. The EU plays an
important role in facilitating and
liberalizing global trade and investment,
resisting protectionism and improving
global governance.
years to build to meet international
standards.
The pilot zone is a crucial move in adapting
to global economic and trade development
and imposing a more proactive opening-up
strategy, said the statement, adding it will
help explore a new path for China's opening
up, speed up transformation of government
functions
and
promote
economic
restructuring.
China places great value on the EU and
regards it as an important “pole” in a multipolar world. China prioritizes its relations
with the EU in its foreign policy. To advance
industrialization,
IT
application,
urbanization
and
agricultural
modernization, China needs more European
products, investment, managerial expertise,
science and technology. The transformation
of development model will help to expand
China’s domestic consumption, boost its
imports from and investment in Europe,
which will translate into new opportunities
for European industries and contribute to
growth and jobs in Europe.
The zone will also help foster China's global
competitiveness and serve as a new
platform for the nation's cooperation with
other countries, and contribute to efforts in
building "an upgraded version of China's
economy," said the statement.
Besides, China will adopt a "negative list"
approach in the foreign investment
management in the zone, and innovate the
country's opening-up mode, said the
statement.
CHINA NEWS
Zhu Jianfang, chief economist at Citic
Securities, said the "negative list" approach,
which the zone will adopt, showed a
thinking of power delegation.
China builds pilot free trade zone
to further open up
"We can no longer rely on preferential
policies to improve business and the
investment environment. Rather, we should
attract investment with highly efficient and
transparent administrative services," said
Zhang Youwen, an economic researcher at
the Shanghai Academy of Social Sciences.
China's State Council has approved the
establishment of a pilot free trade zone in
Shanghai, according to a Ministry of
Commerce
statement.
The
general
development plan is to be decided in midSeptember and the zone will be formally set
up by the end of September.
In the free trade zone, the reforms featuring
power delegation will be deepened, and
financial, business, cultural, education and
medical services, which faced many
restrictions before, are expected to enjoy
more development opportunities, analysts
said.
Covering 28.78 square kilometers, The
Shanghai free trade zone will be built on the
basis of existing bonded zones -Waigaoqiao Free Trade Zone, Waigaoqiao
Free Trade Logistics Park, Yangshan Free
Trade Port Area and Pudong Airport
Comprehensive Free Trade Zone.
Experiments in the financial sector will be
the most important part, such as the
marketization of interest rates and
exchange rate, and offshore finance, said Xu
The zone will be the first of its kind on the
Chinese mainland. It will take about three
-7-
EU-China Friendship Association
Quan, deputy head of the Shanghai
Municipal Office of Finance Service.
Aside from Tianjing, other cities, such as
Guangzhou, Shenzhen, Chongqing, Xiamen,
Qingdao, and Zhoushan, were also planning
to apply for the establishment of free trade
zones.
Meanwhile, a State Council plan to suspend
some laws governing foreign investment in
the Shanghai pilot free trade zone will
break new ground in China's investment
management mechanism and boost foreign
capital inflow, said analysts.
As for this momentum, experts suggest that
the set up of any other free trade zone
should follow scientific planning and
rational overall arrangement, other than
advancing too quickly.
The aim is to cancel superfluous
administrative procedures and make it
easier for foreign firms to set up in the
zone. The plan conflicts with some existing
laws so the idea was mooted to simply
suspend the problematic regulations.
Have yuan, will travel far and wide
The rising value of the yuan has had a
curious side effect: It is often cheaper for
Chinese tourists to travel to exotic foreign
destinations than it is to travel to China's
popular resorts.
"The free trade zone is not a special zone or
new area. Its significance lies not in striving
for preferential policies but in establishing
a new system in line with international
standards and realizing highly efficient
management in sectors like investment and
trade," said Zhou Zhenhua, director of the
Shanghai
Municipal
Government
Development Research Center.
A Beijing resident looking for an island
break, for example, may find it more
economical to go to Sri Lanka than to
Hainan.
Over the next year, the number of outbound
trips from China will top the 100 million
mark for the first time in history. The rising
number of Chinese people traveling abroad
has grown even faster than predicted. The
UN World Tourism Organization (UNWTO)
had expected China to hit this particular
milestone in 2020. This growth will further
cement the position of Chinese tourists as
the biggest global spenders, ahead of
tourists from the US and Germany.
China has rapidly grown into a global
manufacturing power with its entry into the
World Trade Organization, but the country
remains relatively backward in service
industries
like
financing,
shipping,
commerce, trade and culture, compared
with developed nations, experts said.
Shanghai is leading the country in service
industry development and the further
opening up of the sector is the best choice
for the city, according to Chen Bo, an
economic and trade expert at Shanghai
University of Finance and Economics.
The main driver of this growth in spending
is the rising demand for international
travel, particularly self-organized trips to
destinations in places such as Africa and the
smaller European or Asian countries that
are increasingly reaching out to Chinese
tourists.
As Shanghai was announced to build
China's first free trade zone, more Chinese
cities are planning to pilot free trade zone
so as to enjoy the policy dividends.
"Barring
wild-card
events,
China's
outbound travel market will increase by 17
percent, the same rate as has been reported
for the first five months of 2013," said
Wolfgang Georg Arlt, director of the China
Northern China's port city Tianjin is
planning to set up a free trade port in its
Dongjiang bonded port.
-8-
EU-China Friendship Association
Outbound
(COTRI).
Tourism
Research
Institute
The China Outbound Tourism Index, which
is produced by COTRI monthly, dropped
slightly in August from a month earlier, but
the performance over the last year has been
higher than a year earlier.
Read more
Eu-China Friendship Association
info@eucfa.net
Do you want to stay updated? Subscribe to our
newsletter by sending us an email
Changed Your Mind? You can easily cancel
your free e–newsletter at any time. Just send
us an email to unsubscribe.
Do you know someone who would be
interested in reading this? Forward this page
to her/him!
-9-
EU-China Friendship Association