Under-exploited assets

Global political power, under-exploited assets

China Industry

China Industry

For both China and Europe, there are only strategic opportunities. A much closer partnership is clearly the route to take.

For historical reasons, the European nations retain immense power in global politics, which could be very important in defending China against global trade protectionism and dismantling US-driven international controls on transfer of sophisticated technologies.

The great old companies of Europe such as Siemens, Rolls Royce and Royal Dutch Shell, and the high-tech midsized ones, are natural partners for China’s fast-expanding, capital-rich ones.

If the euro continues to be fuelled by Chinese support, instead of losing out to the dollar it can become a stronger and more credible rival for dominance in currency markets.

Europe has an enormous pool of under-exploited assets; China a huge and fast-growing pool of capital to invest. Europe is loaded with debt; China is burdened with excess savings.

“China and Europe are strategic partners,” says Li Keqiang, the Chinese vice-premier tipped to take the top job from Wen Jiabao in a few months’ time.

China’s imports from Europe are growing at 25 per cent a year, and it’s increasingly buying sovereign bonds to underpin the Eurozone.

Its direct investment in Europe doubled last year. Its first car factory inside the European Union has started production (in Bulgaria), it has bought a road machinery manufacturing plant in Poland and taken control of a chemicals plant in Hungary.

“When ‘designed in Europe’ is combined with ‘made in China,’ and when European technologies are applied to the Chinese market, there will be amazing results,” Li says.

It’s clear that a new major strategic alliance is now developing that will have important economic, political and investment consequences for everyone over the long term.

this article continues on from – New East-West Alliance

CopyRight – OnTarget 2012 by Martin Spring