You are on page 1of 76

January-February 2011

HAPPY NEW YEAR


L i n k i n g C h i n a w i t h E u r o p e

THE TEN MOST POWERFUL IN THE WORLD


1
President of People's Republic of China

Hu Jintao

President of United States of Ameria

Barack Obama

King of Saudi Arabia

King Abdullah

Prime Minister of Russia

Vladimir Putin

Pope of Roman Catholic Church

Pope Benedict XVI

Chancellor of Germany

Angela Merkel

Prime Minister of United Kingdom

David Cameron

Chairman of US Federal Reserve

Ben Bernanke

President of India National Congress

Sonia Gandhi

10

Co-chair of Bill & Melinda Gates Foundation

Bill Gates

RMB 30 HK$ 45

US$ 6.00 EURO 4.00

INTERVIEW SONG ZHE China's Ambassador to EU

EURO CHINA BUSINESS

HAPPY NEW YEAR


*hegemony is no longer omnipotent and unilateralism is destined for an ash heap of history * multilateralism will steer the world int a more equitable and democratic future A more fundamental lesson from the past ten years is that the different nations sharing the same world are able to enjoy peaceful coexistence and common development. The path of the future is yet to be trod but the beacons are already lit: modernization is not Westernaization,operation outweighs confrontation and hunan civilization is heading for a more harmonious world with different nations coexisting in peace and prosperity.
STAVROS NIKOLAKOPOULOS / Executive Editor /

STAVROS NIKOLAKOPOULOS Executive Editor /

EDITORIAL

A new decade of promise and hope!
The first ten years of the 21st century have passed into history branded by many as "decade of hell". Time magazine branded it "The Worst Decade Ever". It was really a hellish decade or a troubled decade. However,the past ten years has been a decade of progress for many countries. China since joined the WTO in 2001,has become a stalwart supporter of the multilateral trade system and a leading contibutor to global economic growth. It is important to note that in 2009,when the world was struggling and the United States and Europe were faced with a serious financial crisis,the booming chinese economy accounted for over 50 percent of global economic growth. Now that China has become the greatest exporting and the biggest manufacturing country in the world, with foreign reserves approaching the 3 trillion mark,is called and is willing to help the Eurozone to come out of its doldrums. You need your opponent and competitor to be strong weak. not China strongly believes in the future of euro and the eurozone and that is why will help countries like Greece,Ireland,Portugal and Spain to come out of their big financial debt. Further: * the North-South gap is narrowing * South-South cooperation is booming * international relations are undergoing fundmental shifts

21 2001 2009 50% 3 * * * * *

EURO CHINA BUSINESS

January-2011

HAPPY NEW YEAR


L i n k i n g C h i n a w i t h E u r o p e

November-2010

THE TEN MOST POWERFUL IN THE WORLD


1
President of People's Republic of China

L i n k i n g

C h i n a

w i t h

E u r o p e

Hu Jintao

Linking China with Europe


4
Vladimir Putin

President of United States of Ameria

Barack Obama

King of Saudi Arabia

King Abdullah

Prime Minister of Russia

Under the auspices of Euro Chinese Center of Research & Development


5
Pope of Roman Catholic Church

Pope Benedict XVI

Chancellor of Germany

Angela Merkel

Prime Minister of United Kingdom

David Cameron

Wen Jiabao & George Papandreou Prime Ministers of China & Greece at the Parthenon on the sacred rock of Acropolis attaining the future with confidence!
8
Chairman of US Federal Reserve

Ben Bernanke

President of India National Congress

Sonia Gandhi

10

Co-chair of Bill & Melinda Gates Foundation

Bill Gates

With the support of: China Briefing EUPIC Our international licence: ISSN 1792 0027, listed in the International Catalogue of Publications in Paris FRANCE.

RMB 30 HK$ 45

US$ 6.00 EURO 4.00

RMB 30 HK$ 45

US$ 6.00 EURO 4.00

INTERVIEW SONG ZHE China's Ambassador to EU

September-2010

ANDREAS POTAMIANOS Ambassador of Friendship of China Shipowner * the king of cruises

May-2010

SPECIAL SUPPLEMENT

SPECIAL SUPPLEMENT The Greek Wine

The Greek Wine

Greek Wine The elixir of OlympusGods


L i n k i n g

C h i n a

w i t h

E u r o p e

L i n k i n g

C h i n a

w i t h

E u r o p e

Contest of the century China v India

CHINA GREECE A new deal to combat the Greek financial crisis

Hu Jintao

George Papandreou

Weng Jiabao

IMPACT

2010-1 January - February

Special Feature The Phenomenon of Dubai FINANCIAL CENTRE P28 TOURISM HUB P30 REAL ESTATE BOOM P32

2009-6 November-December

HAPPY NEW YEAR!


L i n k i n g C h i n a w i t h E u r o p e

L i n k i n g

C h i n a

w i t h

E u r o p e

Leaders to watch in 2010

IM

George Papandreou Prime Minister of Greece

CHINA TO SAVE GREECE Wen Jiabao's visit to Greece opens new ways and opportunities for tourism,investment and finance (port facilities & modern railways)

James Jao, the famous American-Chinese architect and city planner, is building a Greek village in China!
Wen Jiabao Prime Minister of China

PA

Executive Editor: Stavros Nikolakopoulos Creative Editor: Alexios Nikolakopoulos Chief Photographer Assistant to Editor:Rose Mao Chief Designer: Guo Yonghai Layout: Lei Jiaxing Special Advisor: Li Chenggui Legal Advisor: Jason Jiang Web Designer: Kevin Liu Published by: Eurasian Link International Consultant (Beijing) Co., Ltd. Address: L24, Tower 3, China Central Place 77 Jianguo Road, Chaoyang District Beijing 100025, China Tel86 10 8587 2470 Fax86 10 8587 2471 e-mail:eurasianlink@126.com Website: www.eurochinabusiness.com www.eurochinabusiness.com.cn

1 wenjiabao (China) 2 Barack Obama (US) 3 Ichiro Ozawa (Japan) 4 David Cameron (UK)

Herman Van Rompuy new President of EU Baroness Ashton Foreign Affairs Chief
A new and more effective cultural & tourism policy, to promote the treasures and natural beauties of Greece

Greek Minister of Culture & Tourism

China Briefing

5 Luiz Inacio Lula da Silva (Brazil)

6 Ali Akbar Hashemi Rafsanjani (Iran)

7 Ashfaq Kayani (Pakistan)

EXCLUSIVE INTERVIEW
8 Vladimir Putin (Russia) 9 Sheikh Khalifa bin 10 Olli Rehn Zayed al Nahyan (UAE) (EU)

GEORGE PAPANDREOU
THE GREEN PRIME MINISTER OF GREECE
Pavlos Geroulanos

.
--

Greek Dep. Minister for Tourism

Angela Gerekou

ISSN 1792 0027

2009-5 SEPTEMBER-OCTOBER

COVER STORY: Turning good intentions into joint actions INTERVIEW: China's engines of growth OPINION: Helping small firms is key to recovery

P4 P16 P28
Papandreou as President of Socialist International meets Hu Jintao

2009-4 JULY-AUGUST

COVER STORY Economic crisis: 'accelerates reform' OPINION Phantom of stagflation could be back INTERVIEW Lord Mayor of London

P4

: 77324 86 10 8587 2470 86 10 8587 2471 eurasianlink@126.com

P12

L i n k i n g

C h i n a

w i t h

E u r o p e

L i n k i n g

C h i n a

w i t h

E u r o p e

P32

GREEK PRIME MINISTER KARAMANLIS WELCOMES HE GUO QIANG AT THE OPENING OF NEW ACROPOLIS MUSEUM

G4 China - Brazil - Russia - India a platform but not a mechanism to combat the world's financial crisis

Jos Manuel BARROSO


President of European Commission 2009-2014 A new era in EU-China relations 2009-2014

George PAPANDREOU
New Prime Minister of Greece With plan & vision for the future

Fredrik Reinfeldt Sweden's Prime Minister President of European Union (1st July - 31st December 2009)
(2009714~20091231)

Jos Manuel Barroso President European Commission (most likely to be re-elected next September)

ga l

IM

IM

sin

Ne w

Ac

es

ro

po

www.eurochinabusiness.com www.eurochinabusiness.com.cn

rtu

PA

ith

Bu

EURO CHINA BUSINESS

Do

Th

EURO CHINA BUSINESS


e

in

lis

PA


M us

Po

eu

CONTENTS
cover story 7 Tacking Europe's debt's crisis 11 Exclusive interview on Sino-EU relationship 14 G20 Summit China Economy 18 Flexible measures needed 22 China set to lead the rest of the economies 24 Economy to expand by 10 per cent in 2011 25 China Mainland among most improved 27 Painting true portrait of a country 29 Two-track global economy EU-China relations 31 Mutual beneficial relations
Painting true portrait of a country

BEIJING is seeking world-city role in tourism

Shao Qiwei Chairman of China National Tourism Administration

32 Stronger China-EU ties vital 33 Fresh to EU-China relations 40 Made in China 44 China-France 46 China-Britain Climate change 48 Cancun climate deal holds out hope 50 Seeing Redd on climate change Life style 52 The mighty & the rich Tourism 57 Beijing is seeking world-city role in tourism 60 Hong Kong panorama 62 Macao panorama 64 Focus:EUPIC 69 Greek city to take shape in Miyun 70 Focus:Zhengzhou
EURO CHINA BUSINESS


32

China's rare earth policies


Deng Xiaoping famously,through perhaps apocryphally announced on his Southern Tour in 1992 that "the Middle East has oil (but) China has rare earths."It is not the catchiest of catch-phrases in either English or Chinese ,but it has been widely quoted in recent months as rare earth metals-elements like neodymium,gadolinium and lanthanum used in lasers,computer memories,batteriesand electric motors-have seized the new cycle. It is of course misleading.While China commands 95% of the world's production of rare earths,it is home to just 37% of global reserves.In comparison,the Middle East contains about 80% of easily exploitable global crude oil reserves. China's dominance in rare earths is not a stroke of geological fate and neither it is an accidentof history.Recognising the importance of the rare earth industry early on,Beijing aggressively developed it,undercutting pricesof foreign producers and ultimatelypushing most countries to suspend production. Most estimates now suggest that even if the US and Australia were to restart rare earth production, it would not be feasible on a commercial level for five to ten years. China Economic Review

EURO CHINA BUSINESS

cover story

Tackling Europe's debt crisis


By Wolfgang Schuble

worse, some also spent more than they could easily repay, given their economies' declining long-ter m growth potential because of the aging of their populations. Such profligacy has led to levels of debt that will become unsustainable if we do not act. T his is why Ger many decided in 2009 to enshrine strict fiscal r ules in its constitution. The Schuldenbremse, or "debt brake", requires the federal government to run a structural deficit of no more than 0.35 percent of GDP by 2016, while Germany's Lnder (federal states) will be banned from running structural deficits at all as of 2020. The current federal government will certainly abide by these rules, which implies reducing the structural deficit to about 10 billion by 2016 a reduction of about 7 billion a year. Welfare benefits account for more than half of Ger many's federal spending this year. So there is little choice but to cut welfare spending, at least moderately. But this sort of fiscal consolidation can be achieved only if a majority perceives it as being socially equitable. Recipients of social and corporate welfare alike, as well as civil servants, must share the sacrifice. T h u s, G e r m a n c o r p o r a t i o n s will have to contribute to fiscal consolidation through reductions in subsidies and additional taxes on major energy companies, airlines, and financial institutions. Similarly, civil servants must forego promised pay increases, and the government EURO CHINA BUSINESS


Wolfgang Schuble

he International Monetary Fund estimates that the crisis-induced net cost of financial-sector support provided by G20 countries in 2009 amounted to 1.7 percent of GDP ($905 billion), while discretionary fiscal stimulus amounted to 2 percent of GDP in 2009 and 2010 both. All the eurozone countries, except Luxembourg and Finland, reported fiscal deficits in excess of 3 percent of GDP in 2009, while Greece, Spain and Ireland ran deficits of more than 10 percent. Within a single year, eurozone governments' general debt increased by almost 10 percentage points (78.7 percent of GDP in 2009, compared with 69.3 percent in 2008). As for Germany, the 2010 federal budget features a record-high deficit

of well above 50 billion ($66.50 billion). Public-sector debt will surpass 1.7 trillion, approaching 80 percent of GDP. Interest payments, which consume more than 10 percent of Ger many's federal budget, will grow along with the mounting debt burden - and even faster if interest rates rise. Ye t t he financial crisis and the ensuing recession go only so far toward explaining these high levels of indebtedness. The truth is that many European and G20 countries have lived far beyond their means - including Germany, despite its reputation as a paragon of fiscal rectitude. Even in good times, governments have for too long been spending more than they received. Perhaps

cover story

of the Stability and Growth Pact, whose fiscal rules lack substantive and formal bite both. This is why we need a more effective crisisprevention and crisis-resolution f r a m e wo r k f o r t h e e u r o z o n e, one that strengthens the pact's preventive and corrective provisions. Sanctions for eurozone countries that seriously infringe EMU rules should take effect more quickly and with less political discretion, and also should be tougher. Germany and France have proposed stricter rules on borrowing and spending, backed by tough, semi-automatic sanctions for governments that do not comply. Countries that repeatedly ignore recommendations for reducing excessive deficits - and those that manipulate official statistics - should have their EU funds frozen and their voting rights suspended. Monetary union was intended to be neither a panacea for eurozone countries nor a get-rich scheme for financial speculators. Nor was it meant to be a system of redistribution from richer to poorer countries via cheaper borrowing for governments by means of common Eurobonds or outright fiscal transfers. It won't succeed if some countries persistently run deficits and weaken their competitiveness at the expense of the euro's stability. EMU was designed to encourage str uctural refor m. Profligate members were supposed to be forced by the Stability and Growth Pact, as well as by their peers, to live within their means and thus strengthen their competitiveness. Instead, Germany's former socialdemocratic government weakened the pact when doing so was politically convenient, while less competitive eurozone countries allowed wages to rise and the public sector to become bloated, and then

is looking for annual savings in the federal armed forces of up to 3 billion through structural reforms. Ger many's binding fiscal r ules set a positive example for other eurozone countries. But all eurozone governments need to demonstrate their own commitment to fiscal consolidation in order to restore the confidence of markets - and of their own citizens. Recent studies show that once a government's debt burden reaches a threshold perceived to be unsustainable, more debt will only stunt, not stimulate, economic growth. Greece's debt crisis was a clear warning that European policymakers must not allow public debt to pile


up indefinitely. The European Union was right to react decisively to ensure the euro's stability by providing short-term assistance to Greece and establishing the European Financial Stabilization Mechanism. But, while the European Financial Stability Facility is a necessary step toward restoring confidence, the Greek crisis has revealed structural weaknesses of the European Monetary Union's (EMU) fiscal-policy framework that cannot, and should not, be fixed by routinely throwing other countries' money at the problem. Indeed, I consider the European Financial Stability Facility to be a stopgap measure while we remedy the fundamental shortcomings

EURO CHINA BUSINESS

cover story

looked away as easy credit fueled debt and asset bubbles. We cannot foster sustainable growth or pre-empt a sovereign-debt crisis in Europe (or anywhere else) by piling up more debt. European countries need to reduce their deficits in a growth-friendly fashion, but reduce them they must. It can be done: Germany is reducing its debt burden to sustainable levels while strengthening its longterm growth prospects. Its course of pro-growth deficit reduction, together with its suggestions for s t r e n g thening Eur ope's fiscal f r a m e wo r k , c o u l d s e r ve a s a blueprint for European economic governance. The author is Germany's Federal Minister of Finance.

Wolfgang Schuble EMU EMU

EURO CHINA BUSINESS

10 EURO CHINA BUSINESS

EXCLUSIVE INTERVIEW SONG ZHE Ambassador of China to EU On Sino-EU relationship


Song, who took his current job six months before the global financial tur moil unfolded in 2008, said bilateral trade has gradually shaken off the adverse influence of the international financial crisis and exceeded the pre-crisis level. T he following is his exclusive interview: First, what impresses me most are robust bilateral trade and investment, frequent high-ranking visits and more people-to-people exchanges this year, which have already boosted Beijing-Brussels relations to a record level of amity. Recapping the impressive achievements, I'm encouraged to see that China-EU relations are at their best moment. I estimate that the bilateral trade is likely to total $470 billion (357 billion euros) this year after it hit $433.8 billion during the first 11 months, increasing by 33.1 percent year-on-year. Europe remains China's largest trading partner and export market. China is the second-largest and fastest-g rowing expor t market among the EU's top five export destinations. From Januar y to October, the EU had invested $5.5 billion in China, 10.5 percent higher than the previous year. More European companies are shifting their investment from manufacturing to the service sector and more mergers, acquisitions and risk investments have been carried out. Chinese enterprises have also begun to invest in Europe on a large scale. Song said that in the first three quarters, Chinese direct investment to Europe grew more than fivefold and created thousands of jobs for European countries. These investments have brought hope to a lot of European enterprises faced with difficulties. Many European economists and media agree that China's soaring demand for mechanical equipment and luxury goods have also become an important driving force for the economic recovery of many European countries. Some people may take a simplistic approach to interpret the trade imbalance between China and Europe as China gains more from cooperation while Europe suffers. But if we take a comprehensive perspective to analyze both trade and investment, we will find that China-EU business ties are balanced, win-win and mutually beneficial. The fast-growing Chinese market has provided European companies with impressive investment returns. Song cited some scholars from Europe who calculated that from 2004 to 2008, EU investment in China recorded an average 10.1 percent profit ratio annually, higher than its 6 percent annual investment return EURO CHINA BUSINESS
11

ratio in Organization for Economic Cooperation and Development countries. In 2009, European enterprises in China earned $341.3 billion in sales. This is 1.4 times of Chinese exports to Europe and 2.7 times European exports to China. During the financial crisis, investment returns in China also became the fundamental support for many European multinationals to stay in the black or simply to stay afloat. The stor y of Volkswagen as a typical example. The Chinese auto market absorbed 14 percent of the company's total global sales but contributed 80 percent of its total profit in 2009. What I want to emphasize is that China always supports mutually beneficial and win-win business relations. We will never sacrifice the interest of others for our own good.

However, misconceptions among the European public toward China remain. I still feel there is a "dark cloud" hanging over the prospect of ChinaEU relations, though he said he is indeed impressed by the sustained and steady progress the two sides have made so far. It is unsettling to find that the European public seems to be increasingly interested in the differences and disputes between China and Europe. For these problems, competing interests are a factor, but more often than not, I find troubled perceptions the most fundamental cause. I attributed the misperceptions of the European public to the differences in histor y, culture, development stage, and to the social systems and ideologies of China and the EU.

As for development, China still has 150 million people who make less than $1 every day - which is a United Nations benchmark of poverty. That's more than the total population of Germany and France combined. Due to harsh natural conditions, a low level of economic development and a fragile ecological environment, many people in the central and western parts of China are living in poverty. Similarly, more than 10 million Chinese people still do not have access to electricity. And the per capita GDP of Shanghai is eight times that of Guizhou province. I think the Chinese people are in the best position to understand the complications of our own challenges and problems, citing a survey suggesting that 80 percent of Chinese people do not think of China as a strong power.

1 EURO CHINA BUSINESS

The two sides should continue to deepen political mutual trust. Next year, China will begin to implement its 12th Five-Year Plan (2011-2015) and the EU will follow through the EU 2020 Strategy. Our similarities and best practices in social and economic development could offer us enormous opportunities to deepen cooperation. In the next five years, the Chinese government will also work hard to build an energ y-saving and environmentally-friendly society, and efforts will be made to address climate change, conserve resources and protect the environment. It is estimated that 3 trillion yuan (341 billion euros) will be spent in China for environmental protection between 2011 and 2015, accounting for 1.5 percent of total GDP. There is no doubt that Europe's world-renowned clean energy and environment protection companies will find themselves a substantial market in China.


50.510.5 5

EURO CHINA BUSINESS

1

G20 Summit promotes innovative finance models for SMEs


The G0 Seoul Summit and Ashoka, a working community of social entrepreneurs, introduced 1 innovative finance models dedicated to unleashing the potential of small and medium-sized enterprises (SMEs) in emerging markets. Ashoka Vice President Bill Carter said the impact of the finance models covers a wide range of strategies including training, risk management, visibility and access to new markets during the summit. 80 percent of SMEs in low income economies are caught in a finance trap and their needs to grow exceed the capability of most micro finance institutions. At the same time, these SMEs are not yet significant enough to access major financing from commercial banks. Carter said the G0, through the Rockefeller foundation, asked Ashoka to seek solutions to this challenge by using their open- source and transparent online platform. The 14 winning finance models were selected through independent judges from over 300 candidates in more than 0 countries in the world. Carter pointed out, there are many insights and useful examples in the work of these 14 winners. Their solutions are on track to direct billions and billions of dollars to small enterprises in low income economies around the world. They offer new ways of linking enterprises to prospective investors, changing the rules to simplify and standardize loans, and new ways to evaluate the ongoing ability of the enterprise to service a loan. The SME sector is vital to the world economy and the role of SME businesses is increasingly viewed as that of a powerhouse of employment, innovation and entrepreneurial spirit, as well as a large source of investment, particularly in emerging markets, according to a discussion report on "nurturing SME sector" for the G0 Business Summit. The G20 summit was launched two years ago in the wake of the financial crisis with an aim to save the world from falling into a prolonged recession and preventing a recurrence of worldwide downturns in the future.
1 EURO CHINA BUSINESS

The G0's role irreplaceable


By Jin Canrong and Liu Shiqiang

Mechanism is becoming increasingly important for the advancement of international relations and world economy In the post-crisis period full of complexity and uncertainty, the Group of 20 (G20) can undoubtedly serve as a key to understanding the transition and development of the world economic pattern. Since the outbreak of the global financial crisis, there have been four successful meetings of the G20 heads of g over nment, in which leaders not only positively coordinated stimulus measures and policies in dealing with the crisis, but also reached a comprehensive consensus on issues including sustained economic g rowth in the future and refor m of the international financial system. The G20 has become a major platform for global macroeconomic policy coordination. The G20 Seoul Summit in the Republic of Korea (ROK), the first ever in a non-G8 nation, was of great significance to the rebalance of the decision-making power in the world economy, and is also an important opportunity for the promotion of Sino-ROK ties. As it is becoming the world's macroeconomic coordination

mechanism, the G20 is of great significance for the advancement of international relations and the world economy. The outbreak of the global financial crisis indicated that the current West-led international system has limitations and is unable to reflect the demands of emerging economies. The development of the G20 would help balance the over-centralized world economic power structure. The evolution of the G20 has benefited from three major driving forces: The first being the international financial crisis. In the face of the financial turmoil, the response of both the United Statesled G8 and the United Nations was barely satisfactory. Thanks to its policy-making efficiency and more balanced representation, the G20 quickly emerged as the leading forum to cope with the crisis. The second factor is the changing world economic pattern. During the past two decades, emerging economies, with those of BRIC (Brazil, Russia, India and China) at the forefront, have become important forces in helping the world weather the crisis, which in turn highlighted the status of the G20.


Jin Canrong Liu Shiqiang

BRIC EURO CHINA BUSINESS


1

The third driving force comes from major powers, especially the US. In view of the inherent drawbacks of other international governance mechanisms, the G20 became Washington's preference when seeking international cooperation. The growing openness and flexibility of the G20 could have a complex inf luence on the inter national relations. However, the inter national community has not yet reached a consensus on whether the G20 mechanism will become permanent. There is still a long way to go for a genuine reordering of the global order. In this sense, the Seoul Summit is an important window to observe the participants' efforts to institutionalize the G20. Furthermore, the future prospects of the G20 depend on it resolving three problems. The first is whether it can balance the influence between the developed world and emerging economies. The US, Japan and the EU will endure long-term feeble growth, with gradually weakening superiority over a long period. The relatively f a s t e c o n o m i c g r ow t h o f t h e emerging economies will continue to reduce the gap between them and developed countries. Whether the West-dominated world economic str ucture can realize a smooth transformation will be a major test for the future development of the G20.
1 EURO CHINA BUSINESS

The second problem is whether it can properly manage its relationship with the UN. For the present, economic issues remain the focus of the G20, while the UN still focuses on political and security affairs, with both global mechanisms coexisting and complementing the other. But any progress will inevitably mean that the G20 will cover more issues, such as global climate change and sea-route security, and this might cause difficulties between the two. The third problem is whether it can

G20's growing status has raised China's voice and influence in inter national economic affairs and it provides another important platform for Beijing to participate i n t h e f o r mu l a t i o n o f g l o b a l economic r ules. In the future, while strengthening effor ts to institutionalize the G20, China can promote progressive adjustment of the international economic order. The summit will also be a chance for China and the ROK to restore ties and promote cooperation after the Cheonan incident. The G20 Seoul Summit provides an important platform for China and the ROK to conduct cooperation on bilateral, regional and global levels. Leaders from both states can take advantage of the multilateral arena to exchange views on problems of common concern, enhance mutual understanding and build up political mutual trust. Sino-ROK cooperation will also favor the raising of Asia's voices and influence in the G20. Meanwhile, their support in the institutionalization of the G20 and contribution to global economic recover y and sustained g rowth are of vital importance. So, both states should seize the opportunity, conform to the trend of the times and jointly promote Sino-ROK strategic partnership to a new and higher level. The authors are researchers at the School of International Studies, Renmin University of China.

properly handle its relationship with non-G20 countries. Among more than 200 states and regions that engage in global economic activities, the G20 member countries only account for 10 percent. So, the G20 needs to properly handle its relationship with other countries, listen to their claims and respect their interest demands. China has been keeping a positive a t t i t u d e o n t h e e vo l u t i o n o f the G20, partly because the

G20 summit

he G20 countries agreed at the Seoul Summit they would enhance multilateral cooperation to promote external sustainility and pursue policies conducive to reducing trade imbalances and maintaining trade imbalances at sustainable level. The G20 countries agreed to develop indicative guidelines composed of a range of indicators, which would serve as a mechanism to facilitate identification of large imbalances that required preventive and corrective actions, it said.

G0 summit agrees on trade, currencies

Leaders of the G20 countries pose during a family photo session at the G20 Summit in Seoul Under the G20 leadership, would be responsible for developing these indicative guidelines, with progress to be discussed by G20 finance ministers and central bank governors in the first half of 2011. The G20 countries have also agreed to move toward more marketdetermined exchange rate systems and enhance exchange rate flexibility, according to the joint communique. The G20 countries agreed also to refrain from competitive devaluation of currencies. According to a joint communiqu: when G20 countries are facing undue burden of adjustment, policy responses in emerging market economies with adequate reserves and increasingly overvalued flexible exchange rates may also include carefully designed macroprudential measures. Advanced economies, including those with reserve currencies, will be vigilant against excess volatility and disorderly movements in exchange rates. Together these actions will help mitigate the risk of excessive volatility in capital flows facing some emerging market economies. Over the monetary and exchange rate policies, we affir m the importance of central banks' commitment to price stability, thereby contributing to the recovery and sustainable growth. The G20 Seoul Summit has confirmed the 6-percent shift of quota shares to emerging economies in the International Monetary Fund. T hey welcomed the ambitious a ch i e ve m e n t s by t h e F i n a n c e Ministers and Central Bank Governors at the Gyeongju Meeting and subsequent decision by the IMF, on a comprehensive package of IMF quota and governance reforms. The reform are an important step toward a more legitimate, credible and effective IMF, by ensuring that quotas and Executive Board composition are more reflective of new global economic realities. The IMF reform, would continue the dynamic process aimed at enhancing the voice and representing of emerging market and developing countries, including the poorest, through a review of the quota formula by January 2013. The next general review of quotas would be completed by January 2014. EURO CHINA BUSINESS
1

China economy

Flexible measures needed

By Xiao Gang

1 EURO CHINA BUSINESS

China economy

There has been much chatter about bank loans to local governments' financing vehicles, widely regarded as one of the main risks facing the Chinese economy. Set up by local governments to borrow money for infrastructure investments, these vehicles are rather like Western companies' special purpose vehicles. They have played an important role in stimulating the Chinese economy and helping it to recover from the global financial crisis. But they face a problem, too: The bank loans they have received have increased extraordinarily. Local governments at all levels have set up their investment companies, some of which are directly controlled by the leaders responsible for fundraising for their pet projects. These companies take a variety of forms depending on the industries and sectors they belong to.

infrastructure. Local governments have accumulated outsized economic resources - land, equities in State-owned enterprises and local banks, licenses for exploring natural resources, and influence in the allocation of economic resources among other things. Most of these "assets", operating or non-operating, cannot be translated into cash immediately. And the current Budget Law prohibits local governments from issuing bonds, cutting off the channel for direct fundraising. This business model is unique. The local governments' vehicles borrow money from banks and invest it in infrastructure and public utilities, and finally repay the debt from the revenue generated by the transfer of land-rights use. Bank loans are used as a substitute for fiscal spending, enabling the local governments to access tomorrow's money today. This model has been operating quite smoothly over the past few years. The ratio of nonperforming loans to the total loans to the vehicles has usually been less than 1 percent on the banks' balance sheets, which means there is little possibility of defaults on the loans.

There are thousands of such companies across the country, which sometimes are even irregular. Some of them, particularly those operating at the county-level, will not be able to service their debts. It is thus reasonable to be alarmed. But it The banks have been is still too early enthusiastic about to say that the acquiring such good level of nonassets by marketing performing to and establishing bank loans strategic partnerships will increase with the local drastically even g o ve r n m e n t s. T h e i f we c a n n o t competition among estimate the banks is intense, precise number because by entering and amount this business they Local governments borrowing o f l o a n s can capitalize on an money for infrastucture investments given to local even wider range of have played an important role g o ve r n m e n t s opportunities and tap in stimulating the chinese economy until the formal into other profitable and helping to recover from the assessment is projects, fee-based global financial crisis co mp leted at businesses and fiscal the end of this deposits, all of which year. bring about a lot of comprehensive benefits to the banks. To generalize the special vehicles' business model we have to go back in history. In a way, this model looks like giving large "mortgage" loans, but only to local governments, not individuals. Local governments' financing vehicles started in the In China, mortgage loans extended to individuals are 1980s and became popular in the 1990s. After the very good assets. Banks not only hold the homes as Chinese government began reforming the fixed asset collateral, but also have recourse to the future income investment and taxation systems, local governments of the borrowers even after default. took the responsibility of constr ucting some The financing vehicle of a province or a city is usually EURO CHINA BUSINESS
1

China economy

a big company with the governor or mayor as its CEO. Unlike average CEOs, such leaders are almost always powerful enough to cope with difficulties, and the government as a whole assumes de facto unlimited responsibilities for their debt. Obviously, the repayment of these loans is not mainly based on the cash flow of the infrastructure projects in question, but on the rapid growth of transfer of land-use rights and fiscal revenue. Last year, the local governments raised 1.59 trillion yuan ($239.92 billion) through transfer of land-use rights, accounting for 4.7 percent of GDP, the majority of which was not included in fiscal budgets. Apart from receiving 2.46 trillion yuan in tax revenue, the local governments also got 2.9 trillion yuan through transfer of funds from the central government. The central government has a healthy and strong fiscal capability. It is true that its debt-to-GDP ratio could be much higher than the official figures, if a lot of hidden liabilities, such as the loans to the local government-backed vehicles, were included. But the debt-to-GDP ratio is well below the international warning level. Many people complain about the local government's opacity in liabilities. In practice, surprisingly, they own significant amounts of valuable assets, both tangible

and intangible, which they obtained pretty cheaply, and they have always had much room to work on different solutions to financial difficulties. Some measures taken by the local governments to virtually guarantee loans from the banking sector seem to be really effective. Several local governments leave a sum of fiscal revenue as an unallocated item, or set up a debt service reserve account, sometimes approved by the local people congress, to make preparations for repay their debt. There is a heated debate on whether the local governments should be allowed to issue bonds. If local governments are allowed to issue bonds, it may be an option to replace some of new bank loans or swap some old loans with bonds, a move which may mitigate the fear of defaults further. As some readers have no doubt guessed, real estate property prices are the key issue. It has been reported that the money some local governments earned record sums from the transfer of land-use rights in the fist eight months of this year. The measures launched by the central government recently might cool the real estate property market, but there is little possibility of it curbing the transfer of land-use rights. The governments should take a series of steps to improve its debt management. The local governments have begun to re-clarify and re-evaluate their liabilities and assets in order to create real consolidated balance sheets. Other active measures would be welcome. Some local governments have reined in debt according to the conservative fiscal revenue expectations, rather than overrelying on revenue from future landsales. Some have also improved their debt transparency. The local governments' financing vehicles need a soft landing. Any harsh measures or "one-size-fits-all" policies will harm rapid urbanization, economic growth and the banking sector. Such complex situations cannot be solved overnight. The problem could be solved gradually, but for that we need a flexible and considerate plan. Time is precious, and sometimes time is the best way out of problems. So we can be confident of overcoming the problem. The author is chairman of the Board of Directors of Bank of China.

0 EURO CHINA BUSINESS

China economy

In the past, developing countries depended on the growth of the advanced economies. Today, they depend on the growth of China. Threats to China's growth are also threats to the developing world, the rise of Asia and the global recovery. The global financial crisis has seen Asia emerge as a global economic powerhouse. In another half a decade, Asia's economy could be as large as that of the United States and the European Union combined. The rise of Asia is predicated on the sustained growth of China, which is helping support growth and poverty reduction in much of the developing world, as well as the fragile global recovery in the advanced world. But nothing in economic development is inevitable. The growth of China depends on a stable and peaceful international environment. Despite the slow and fragile economic recover y, the global financial system remains in a period of significant uncertainty. Advanced economies are facing the difficult challenge of managing a smooth transition to self-sustaining growth, while stabilizing debt burdens under low and uncertain economic prospects. In contrast, emerging economies have proven resilient to recent turbulences, but are vulnerable to a slowdown in mature markets and face risks in managing sizable and potentially volatile capital inflows. As the leading economies in the advanced world are drifting into a "liquidity trap", many central banks are opting for new rounds of quantitative easing (QE). But since increased liquidity seeks for high returns, QE will drive "hot money" (short-term portfolio flows) into the high-yield emerging economies, which can inflate dangerous asset bubbles in the emerging Asia and elsewhere.
 EURO CHINA BUSINESS

Despite the "strong dollar" rhetoric in the US, the dollar fell by one-third against major currencies between early 2002 and this summer. During the two months before the Federal Reserve's (Fed) QE decision, the dollar dropped an additional 7 percent. For all practical purposes, new waves of QE would mean further decline in the dollar's value, which would penalize the major holders of US Treasury securities. As a result, massive US debts would be inflated. In contrast to the developed world, recover y has proved relatively solid in the emerging world. While

by 50 basis points - the fifth such increase this year and the second this month. Today, a deepening global divide sets the slow-g rowing US and other advanced economies against many emerging economies and commodity producing nations. The former are coping with deflation; the latter are struggling with inflation. The worldwide impact of the QE is only aggravating the chasm, as indicated by Germany's critique of US monetary policies and other rifts among the G20 nations. After their gains in the US midterm election, leading Republicans have expressed "deep concerns" over the Fed's moves to stimulate the economy. The European Union is struggling to contain the debt crisis and sustain the euro. In Japan, public debt already accounts for more than 200 percent of GDP. Only a decade ago, the advanced economies of Nor th America, Western Europe and Japan drove the global g rowth. Today, the G7 nations are navigating into u n ch a r t e r e d wa t e r s, w i t h t h e potential of unpredictable outcomes and unprecedented collateral damage. I n th e 199 0s, em er gi n g a n d developing economies were still dependent on the growth of the G7 economies. Global g rowth was predicated on the growing prosperity of the leading Western nations. In the past decade, this relationship went through a reversal. Today, the developing countries are dependent on the growth of China that, along with a handful of other large emerging economies, drives global growth. Consequently, the emerging and developing economies - and especially those that have lower

China set to lead the rest of the economies


the leading advanced economies have exhausted the traditional instruments of monetary policy, the major emerging economies are only beginning to use them. Recently, People's Bank of China (PBOC) raised its one-year deposit and lending rates to 2.5 percent and 5.56 percent. The Reserve Bank of India raised its benchmark shortterm interest rate to 6.25 percent. Brazil's interest rates are already close to 11 percent. Soon PBOC will raise the deposit reserve requirement ratio for banks

China economy

export similarities with China have a vested interest in the gradual evolution of China's exchange rate, as noted by the Organization for Economic Cooperation and Development. It is not in the interest of the d e ve l o p i n g wo r l d t h a t C h i n a would be pushed into a disruptive, deflationary currency appreciation which is what happened to Japan. Between 1971 and the mid-1980s, the yen more than quadr upled relative to the US dollar. Then, the leading advanced economies agreed to allow the US dollar to depreciate in relation to the Japanese yen by

intervening in the currency markets. A few years later, Japan drifted into a long deflationary slump, a near-zero interest rate and heavily impaired bank balance sheets. It is still struggling to overcome the liquidity trap. Such a future is not in the interest of China, or in the interest of the poorincome countries, which have greatly benefited from China as an engine of their recent growth. If anything, the decline of China's growth would significantly undermine poverty reduction in the emerging world. T h e b est way C h i n a c a n h e l p suppor t the world economy is

through efforts to strengthen its own sustained growth. What is at stake in China's growth is not just national prosperity, but the future of poverty reduction in the developing world and the continued well-being in the advanced world. The rest of the world of the world will take the same road that China takes. The author is research director of International Business at the India, China and America Institute (US) and visiting fellow at Shanghai Institutes for International Studies.

EURO CHINA BUSINESS



China economy

China Academy of Social Sciences predicts double-digit increase, and a 'moderate' inflation rate BEIJING - China's economy will expand by 10 percent in 2011, and inflation will remain moderate with the consumer price index (CPI) rising 3.3 percent, a top think tank predicted on Tuesday. The Chinese Academy of Social Sciences (CASS) said in its annual Blue Book of China's Economy report that the economy will grow by 9.9 percent in 2010 and will retain relatively rapid growth, with the GDP growth rate reaching 10 percent in 2011. The think tank also said that the intensity of the g over nment's macroeconomic policies will remain stable, while the country's fixedasset investment growth is likely to slow to 20 percent in 2011 from an estimated 23.5 percent pace this year. However, some economists disputed the conclusions of the CASS report, predicting that the national economy may face a modest deceleration next

year while inflation is likely to rise faster than expected. " T h e g r ow t h r a t e o f C h i n a ' s economy in 2011 will probably slow to 9.6 percent," said Liu Yuanchun, de puty director of Renmin University's School of Economics. The World Bank in November said that China's economic growth may slow to 8.7 percent next year, and will see further easing in the medium term.

growth. But they r uled out the downside risk of a policy overshoot triggering a hard landing with the annual GDP growth rate coming in below 6 percent. Goldman Sachs has forecast that the nation's inflation rate will grow 4.3 percent next year, higher than the 3.3 percent predicted by CASS. China shifted its monetary policy stance from a moderately loose one to a prudent one last week amid the central government's effort to contain inflation. T he countr y's consumer price index rose 4.4 percent year-onyear in October, well above the government's full-year target of 3 percent. The People's Bank of China hiked the benchmark interest rate by 25 basis points in October for the first time in nearly three years. It also twice told banks to set aside more deposits as reserves to limit their capacity to lend.

Economy to expand by 10 percent in 2011


Some analysts said that the Chinese economy may face headwinds next year due to the likely policy tightening measures to curb inflation and asset bubbles. But the risk of a significant growth downturn from the policy is limited. "The impact of policy tightening on g rowth will likely sta r t to emerge in March 2011 and become more pronounced in the second quarter of 2011," Goldman Sachs economists, Helen Qiao and Yu Song, said in a report. They expected the government's tightening measures to expand in scale and intensify in implementation in the coming months to help cool

2011 10
, (CASS) 20109.9 2011 10 2011 23.5 20

 EURO CHINA BUSINESS

China economy

Workers at a medium-sized textile company in Nantong, Jiangsu province. Economy stays in top 15 with help from regulatory changes: Report According to a report released by t h e I n t e r n a t i o n a l F i n a n c e Corporation (IFC) and the World Bank (WB) the Chinese mainland has been one of the 15 mostimproved economies in the past five years for local companies to conduct business. Fourteen regulatory changes have been introduced to make it easier to conduct business on the mainland, according to the report Doing Business 2011: Making a Difference for Entrepreneurs. According to Karim Belayachi, coauthor of the report, China's overall ranking in the report slid to 79th from 78th because of the relatively better improvements in other economies. China has made improvements in the indicator of paying taxes. But many countries are reforming and in East Asia and the Pacific area 75 percent of the countries have improved. across borders, paying taxes, and closing a business. It does not measure security, macroeconomic stability, corruption, the skill levels, or the strength of financial systems. The results were mainly based on nine indicators - starting a business, paying taxes, trading across borders, registering property, dealing with c o n s t r u c t i o n p e r m i t s, g e t t i n g credit, closing a business, enforcing contracts and protecting investors. From June 2009 to June 2010, China made it easier for companies to pay taxes by clarifying the calculation of taxable income for corporate income tax purposes. The time for tax compliance was also cut by more than 20 percent from 504 to 398 hours per year. Chinas unified criteria for corporate income tax deduction and shifted from a production-oriented valueadded system to a consumptionoriented one, the IFC said in the EURO CHINA BUSINESS


China Mainland among 'most improved'


The report analyzes regulations that apply to an economy's businesses during their life circle, including start-up and operations, trading

China economy

report. But the process of star ting a business in the mainland has some room for improvement. Countries around the world are establishing one-stop shops in which they are taking away burdens on potential owners of small and medium-sized enterprises so that they can set up companies more easily. China ranked 151th globally in ter ms of the ease of starting a business, with 14 procedures for an entrepreneur to undergo with government agencies, 4.5 percent of income per capita as cost and 118.3 percent of income per capita as minimum capital. It ranked 15th in enforcing contracts, 38th in trading across borders, 114th in paying taxes and 181st for dealing with construction permits. Singapore, Hong Kong and New Zealand lead the world in the ease of doing business for local firmsd. Globally, conducting business remains easiest in the high-income economies of the Organization for Economic Cooperation and Development. For the first time in the eight years of the Doing Business reports, economies in East Asia and the Pacific were among the most active in making it easier for local firms to do business, the report said. Entrepreneurs in Sub-Saharan Africa and South Asia have it hardest and property protection was weakest across the nine areas of business regulations that were considered in this year's ranking.


15 (IFC) (WB) 5 5 15

151 14 4.5 118.3 15 38 114 181

 EURO CHINA BUSINESS

China economy

China's Census Painting true portrait of a country

Six million census takers have fanned out across China to conduct the country's sixth national census, the world's largest. For the first time, foreigners who live and work in China, as well as the populations of Hong Kong, Macao and Taiwan, will be included in the count. The last census, conducted in 2000, reported a total population of 1.3 billion people. Other countries such as the United States have also conducted a census this year, while Canada, the United Kingdom and Australia will conduct their next census in 2011. Since

China continues its rise as a world power, it is not surprising that its census has attracted media attention around the world. In Canada, home to a significant number of residents who are of Chinese descent or were born in China, the national media have published a series of articles on China's latest census initiative. A major change in China's current census is that, for the first time, the population will be counted on the basis of where people live rather than on their hukou (house registration), or registration, status. The census will collect information

EURO CHINA BUSINESS



China economy

on the size, geographic location and socioeconomic characteristics of China's population, including their education, family histor y, employment and resident status. Although there are other national surveys and local sources of data on the Chinese population, the census is unique in that it provides complete and comparable data for all parts of China, and the data will be available at the local neighborhood, or community, level. At a time of rapid economic growth and social change, the census will provide a much needed, up-todate portrait of China's diverse population and how it is changing. An accurate and complete count will provide a benchmark for measuring change over time using future censuses. Census information is very useful to all segments of a society. First and foremost, it provides citizens with a portrait of their country and how it is evolving during a time of rapid social and economic change. Data will be useful to the national, regional and local governments as they plan for new health and social service programs and infrastructure projects or modify existing ones. For example, census information provides detailed data on the size and location of the child population to help deter mine the need for new schools and other educational facilities. Data also will be available on the rapidly aging Chinese population to support the development of senior services for this population group. Updated information on workers will support its rapid economic expansion. National and international businesses, too, will be eag er
 EURO CHINA BUSINESS

to study the Chinese census data. These companies need to understand the size, geographical location and socio-demographic make-up of the Chinese population in order to decide where to locate facilities and how to deliver goods and services. Finally, census data can be used as an educational tool, allowing students to compare their local communities with others in their country and with other parts of the world. Census data Although census data are ver y useful for a modern society, all countries, including China, face major challenges when conducting a modern-day census. In addition to the logistical planning for what in many countries is their largest peacetime mobilization of a temporary workforce, a successful census depends on the cooperation of every household to provide complete and accurate information. One challenge is simply to find people at home who will provide the required information. This may be a particular challenge in large Chinese urban areas where, in some cases, citizens may be reluctant to provide certain information for fear it might be used against them. China's census is also complicated because of the presence of migrant workers - those tens of millions of undocumented workers who have left the countryside for jobs in urban areas and now live on the outskirts of large cities. This information is very sensitive because of the traditional hukou system and the implications it has for residents' entitlement to services. China's family planning policy might be another point of concern for those families reporting more than

one child. Although these issues are very sensitive from a respondent's point of view, it's crucial to obtain an accurate count of the migrant population and number of children for future planning purposes. As with any countries' census efforts, China's statistical agency and government must stress that the census information will be used at an aggregate level for research purposes only. They have to ensure that personal information collected in the census will not be used at the individual level to track or question an individual's circumstances. The first results from the Chinese census are expected in April 2011. There is no doubt that the new data on China's population will be of interest to all parts of the world. Along with the business community and demographic researchers, They await the portrait of China that will emerge from this extraordinary undertaking.

China economy

Two-track global economy


By Joseph E. Stiglitz

it's not wanted - causing further increases in asset and commodity prices, especially in emerging markets. Given the high levels of excess capacity and unemployment in Europe and America, quantitative easing is unlikely to trigger a bout of inflation. It could, however, increase anxieties about future inflation, leading to higher long-term interest rates - precisely the opposite of the Fed's goal. This is not the only, or even the most important, downside risk facing the global economy. The gravest threat comes from the wave of austerity sweeping the world, as governments, particularly in Europe, confront the large deficits brought on by the Great Recession, and as anxieties about some countries' ability to meet their debt payments contributes to financial-market instability. The outcome of premature fiscal consolidation is all but foretold: growth will slow, tax revenues will diminish, and the reduction in deficits will be disappointing. And, in our globally integrated world, the slowdown in Europe will exacerbate the slowdown in the US, and vice versa. A large-scale public-investment prog ram would stimulates employment With the US able to borrow at record-low interest rates, and with the promise of high returns on public investments after a decade of neglect, it is clear what it should do. A large-scale public-investment

prog ram would stimulates employment in the short term, and growth in the long term, leading in the end to a lower national debt. But financial markets demonstrated their shortsightedness in the years preceding the crisis, and are doing so once again, by applying pressure for spending cuts, even if that implies reducing badly needed public investments. Moreover, political gridlock will ensure that little is done about the other festering problems confronting the US economy: mortgage foreclosures are likely to continue unabated (legal complications aside); small and medium-sized enterprises are likely to continue to be starved of funds; and the small and mediumsized banks that traditionally provide them with credit are likely to continue to struggle to survive.

Politics will continue to stall recovery in both US and Europe in 2011 and quantitative easing may go against the Fed's goal The global economy ends 2010 more divided than it was at the beginning of the year. On one side, emergingmarket countries like India, China, and the Southeast Asian economies, are experiencing robust growth. On the other side, Europe and the United States face stagnation - a Japanese-style malaise - and stubbornly high unemployment. The problem in the advanced countries is not a jobless recovery, but an anemic recovery - or worse, the possibility of a double-dip recession. Two-track world poses some unusual risks. While Asia's economic output is too small to pull up growth in the rest of the world, it may be enough to push up commodity prices. Meanwhile, US efforts to stimulate its economy through the Federal Reserve's policy of "quantitative easing" may backfire. After all, in globalized financial markets, money looks for the best prospects around the world, and these prospects are in Asia, not the US. So the money won't go where it's needed, and much of it will wind up where

In Greece, as in the US, a new government was left to clean up the mess. The Irish government that encouraged reckless bank lending and the creation of a property bubble was, perhaps not surprisingly, no more adept in managing the economy after the crisis than it was before.

In Europe, meanwhile, matters are unlikely to be any better. Europe has finally managed to come to the rescue of Greece and Ireland. In the run up to the crisis, both were governed by right-wing governments marked by crony capitalism or worse, demonstrating once again that freemarket economics didn't work in Europe any better than it did in the US. EURO CHINA BUSINESS


China economy

Politics aside, property bubbles leave in their wake a legacy of debt and excess capacity in real estate that is not easily rectified - especially when politically connected banks resist restructuring mortgages. To me, attempting to discern the economic prospects for 2011 is not a particularly interesting question: the answer is bleak, with little upside potential and a lot of downside risk. More interesting and important are: how long will it take Europe and the US to recover, and can Asia's seemingly export-led economies continue to grow if their historical markets languish? My best bet is that these countries will maintain rapid growth as they shift their economic focus to their vast and untapped domestic markets. T his will require considerable restructuring of their economies, but China and India are both dynamic, and proved their resilience in their response to the Great Recession.

I am not so bullish on Europe and the US. In both cases, the underlying problem is insufficient aggregate demand. The ultimate irony is that there are simultaneously excess capacity and vast unmet needs - and policies that could restore growth by using the former to address the latter. Both the US and Europe, for instance, must retrofit their economies to address the challenges of global war ming. T here are feasible policies that would work within long-term budget constraints. The problem is politics: in the US, the Republican Party would rather see President Barack Obama fail than the economy succeed. In Europe, 27 countries with different interests and perspectives are pulling in different directions, without enough solidarity to compensate. The bailout packages are, in this light, impressive achievements. In both Europe and the US, the

free-market ideology that allowed asset bubbles to grow unfettered - markets always know best, so government must not intervene - now ties policymakers' hands in designing effective responses to the crisis. One might have thought that the crisis itself would undermine c o n f i d e n c e i n t h a t i d e o l o g y. Instead, it has resurfaced to drag governments and economies down the sinkhole of austerity. If politics is the problem in Europe and the US, only political changes a r e l i ke l y t o r e s t o r e t h e m t o growth. Or else they can wait until the overhang of excess capacity diminishes, capital goods become obsolete, and the economy's internal restorative forces work their gradual magic. Either way, victory is not around the corner. The author is University Professor at Columbia University and a Nobel laureate in Economics.

0 EURO CHINA BUSINESS

China - EU

Mutually beneficial relations


By Jiang Shixue

2011 10 2010

EU can benefit more by deepening cooperation with China because the two economies have many goals in common Against the backdrop of accelerating globalization, China and the European Union (EU) have become more interdependent. The 27-member EU is the world's largest economic bloc and China, as a country, has the second largest GDP. Bilateral trade and flow of funds are the two major channels of interaction between China and the EU. The higher one side's growth rate, the more economic exchanges it will have with the other, and vice versa. This is true of bilateral flow of funds, too. China will lent a helping hand to Greece to overcome its sovereign debt crisis. A similar crisis has erupted in Ireland, another EU member state, even before Greece could emerge from its sovereign debt. China is likely to offer a helping hand to Ireland, too, if the latter's crisis does not subside by end of 2011. But that will depend on whether the Chinese economy maintains its present strength till then. China's economic growth rate is expected to be 10 percent next year, a little below that of 2010, according to some economists. Such a high growth rate will undoubtedly help pull the world economy out of the lingering global financial crisis. A fast-growing China will also help the EU tackle its expanding sovereign debt crisis. The year 2011 will the first year of China's 12th Five-Year Plan (2011-2015) for economic and

social development. For the next five years, the Chinese government will focus more on transforming the country's economic development model. To facilitate the process, the government has vowed to boost domestic demand, promote scientific and technological innovations a n d t a ke f u r t h e r m e a s u r e s t o conserve resources and protect the environment. Boosting domestic demand, however, does not mean reducing the countr y's imports. Instead, it means China will promote coordinated and simultaneous development of consumption, investments and exports, the "three chariots" of a country's economy. The government has vowed to make greater efforts to boost domestic demand, which has long lag ged behind investments and exports. For this, the government will use its inherent economic advantages to the full and continue to value the enormous purchasing power of the European market. It will also continue to import capital goods, and intermediate and consumer products from global markets, including Europe's. It is still not clear whether the EU will recognize China's market economic status in 2011. But it is clear that the EU's non-recognition has served as a double-edge sword, for it not only affects China's export to Europe, but also compromises the bloc's foreign economic ties. A country's scientific and technological competitiveness, which is closely related with its technological innovations, will determine its position in the fierce international market. In the 12th Five-Year Plan, Beijing has paid

more attention to promoting scientific and technological innovation, a change that to some extent will create rare opportunities for the EU to increase its high-tech exports to China. The EU is a leader in many high-tech fields and should not let slip the chance of broader cooperation with a fast-growing China, an emerging market with enormous high-tech potential. China and the EU will create broader cooperation prospects in their bid to push forward energy conservation and environmental protection. The EU's huge technological advantage in energy conservation, emission reduction and the fight against climate change is likely to facilitate bilateral cooperation in these fields. At their 13th summit in Brussels in early October, Chinese and EU EURO CHINA BUSINESS
1

China - EU

leaders indeed agreed to make joint efforts to conserve energy, reduce emissions and develop low-carbon economies. Smooth China-EU cooperation in these fields will not only benefit Beijing, but will also help Brussels implement its "Europe 2020 Strateg y", a strateg y for smart, sustainable and inclusive growth. Under the plan, the EU is committed to developing an intellig ent economy, based on knowledge and

innovation, and raising its efficiency in the use of energy to increase its competitiveness and promote sustainable development. T he EU will make efforts to boost its employment rate and strengthen social cohesiveness, too. The many common elements in the EU's "Europe 2020 Strategy" and China's 12th Five-Year Plan will create more room for cooperation between the two economies. B u t we l l b e g u n i s h a l f d o n e.

The great importance China has attached to the 12th Five-Year Plan is expected to help it maintain a comparatively fast economic growth. That will benefit the EU greatly, if it takes concrete steps before other economies and carries out candid cooperation with a fast-growing China. The author is deputy director of the Institute of European Studies, affiliated to the Chinese Academy of Social Sciences.

Stronger China-EU ties vital: Mandelson


Mandelson
Lord Mandelson Mandelson 20112015 Mandelson ----Lord

only for the United States, but externally a s w e l l . We j u s t live together in a more unpredictable world," Mandelson said. The US government has unveiled plans to pump $600 billion into its slowing e c o n o m y. T h e announcement has sparked concer ns among other countries who see their exchange rates rising against the US dollar. Mandelson called for greater cooperation among countries to manage the hazards by coordinating their macroeconomic policies, and working under international institutions for the G20 summit. Mandelson said China has played an "important and substantial role" in fighting the financial crisis, and Europe and the rest of the world have benefited from the country's robust growth. China's g rowth does not mean Europe is in decline or pose a threat

Lord Mandelson, for mer EU trade commissioner and business secretary in the last UK Labour government strongly believes that China and the European Union (EU) need to become "even stronger partners for growth" in the context of a more unpredictable world economic situation. According to Mandelson he new round of monetary easing in the United States will bring more uncertainties for the global economy. "I have a lot of sympathy over this decision (the US measures). You can't predict what the consequences of such policies are going to be, not

 EURO CHINA BUSINESS

China - EU

to the West, instead it will provide more opportunities as the country becomes the engine for global growth. The EU is now China's largest partner in trade and investment, a h e a d o f t h e U S a n d Ja p a n . President Hu Jintao signed $20 billion worth of contracts with French President Nicolas Sarkozy in Paris. In the first nine months of 2010, China's exports to EU member states increased 35 percent to $349 billion, while imports increased 33.4 percent to $226 billion over the same period, according to Customs data. The fast-growing economies such as China and others have a legitimate expectation and entitlement to benefit from globalization and the EU will reap the benefits. Mandelson said that he saw changes in China, such as a steady rise in domestic demand rather than exclusive reliance on export-led growth, and a policy framework in which it is possible for China to make currency moves smoothly. As the Chinese g over nment is committed to improving its welfare and anti-poverty policies in the 12th Five-Year Plan (2011-2015), domestic consumption will increase and people will save less in the future, and that will bring huge opportunities for European companies. More business opportunities will come for European companies with advanced technologies, as China develops its low-carbon economy and moves to the upper ladder of the value chain. T h e c o u n t r y i s l i ke l y t o f a c e decreasing pressure for a change in the value of its currency.

Fresh start to EU-China relations

Chinese Vice-Premier Li Keqiang's visit to Europe from Jan 4 to 12 is important for several reasons. First, it demonstrates China's commitment to the European Union (EU), its largest trading partner. In 2009, China-EU trade reached about 300 billion, and China's exports to the EU accounted for almost 20 percent of its total. It is now seeking new investment opportunities across the EU. Opportunity for a fresh start to EUChina relations Second, it provides an opportunity for a fresh star t to EU-China relations that passed through a difficult period in the recent past. At the last EU-China summit in October, there was no progress on key Chinese demands for the EU to lift the arms embargo and grant it market economy status. Nor was there a meeting of minds on trade and foreign policy issues. As the largest market for its exports, China has an enormous stake in the stability and prosperity of the EU. The debt crisis that has plagued

Europe and affected the euro for most of the past 12 months has forced governments in EU member countries to announce strict austerity measures. But the governments find it difficult to implement these measures, mostly economic cuts, because of widespread protests from Greece and Spain to Ireland and Italy. The financial situation remains fragile as several countries still have very high debt ratios, which have raised the cost of borrowing. At a meeting in December, EU leaders agreed to introduce a permanent stabilization mechanism for the euro as an amendment to the Lisbon Treaty. This reflected the leaders' political commitment to ensuring the stability of the euro. It remains to be seen, however, how markets will react if a financial crisis breaks out in one or two more of the EU countries. The EU's external relations have been influenced by the budget cuts, too, and the rise in the number of anti-dumping cases ag ainst EURO CHINA BUSINESS


China - EU

China is a sign of the rising fear of unemployment in Europe. This is also reflected in recent opinion polls, which show more than 50 percent Europeans are concerned about the impact of Chinese trade policy on jobs. China shows its willingness to help EU countries On its part, China has already shows its willingness to help EU countries emerg e out of their financial

difficulties. After Chinese leaders made this commitment to Greece and Por tug al, Vice-Premier Li wrote in a commentary in a Spanish n e w s p a p e r t h a t C h i n a wo u l d continue to buy Spain's treasury debt. The EU is bog ged down in negotiations with China over a new strategic ag reement, with trade issues acting as the biggest stumbling block. Br ussels says Beijing is not fulfilling World Trade Organization commitments on protection of intellectual property rights and criticizes China for creating numerous non-tariff barriers that have made it difficult for European companies to enter the Chinese market. China accuses the EU of being too ready to resort to anti-dumping measures. At a stormy summit last October, the two sides disagreed not only on the arms embargo and market economy status, but also on the Korea Peninsula, Iran, Africa and human rights issues. December, however, saw a useful EU-China high-level dialogue, which discussed economic and trade disputes. Catherine Ashton, EU foreign policy chief, recognized the importance of improving EU-China relations in a report presented to the December summit. She said the continued existence of the arms embargo was "a major impediment for developing stronger EU-China cooperation on foreign policy and security matters", adding that EU lectures on democracy and human rights were unlikely to be well received in Beijing.

14 12 -- 2009 3 20

New EU Ambassador Markus Ederer confident that EU-China relations would improve New EU Ambassador Markus Ederer has arrived in Beijing. He told the European Parliament last month that he was confident that EU-China relations would improve steadily if both sides made greater efforts to understand each other. Li Keqiang's visit to the EU thus comes at an opportune moment, a time when both sides are reassessing their domestic and external situations. If the EU does not recover from its economic malaise then there could be more protectionism and more antid u m p i n g c a s e s. B u t h o p e f u l , though uneven, signs of renewed economic growth can already be seen in Europe. The Organization for Economic Cooperation and Development has forecast a 2.3 percent growth for 2011, better than the 2010. Perhaps the greatest contribution of Li's visit to EU-China relations will be the improvement in mutual understanding. For too long, the EU and China have talked past each other. High-level visits such as the one by Li, during which he will meet with Spanish Prime Minister Jose Luis Rodriguez Zapatero, German Chancellor Angela Merkel and British Prime Minister David Cameron, can only lead to greater understanding. This is a key element of improved EU-China relations. The author is a senior fellow at the Hertie School of Governance in Berlin.

 EURO CHINA BUSINESS

: , ; ,

: , : ,, feta,

: 200 , ,feta ,

: ,, feta, : ,

 EURO CHINA BUSINESS

TAGMATARCHI KOSTAKI 1 ELEOUSA IOANNINA451 10:+30 2651089700

,feta: 100% feta--, ATEbank Group,,

feta

EURO CHINA BUSINESS



 EURO CHINA BUSINESS

EURO CHINA BUSINESS



0 EURO CHINA BUSINESS

EURO CHINA BUSINESS

1

 EURO CHINA BUSINESS

EURO CHINA BUSINESS



China - France

President Hu Jintao shakes hands with French Ecology Minister Jean-Louis Borloo while French President Nicolas Sarkozy looks on during an agreement signing ceremony in Paris

Relations between China, France rebound to a new high

State visit generates massive deals

 EURO CHINA BUSINESS

China - France

Biggest ever deals China and France inked their biggest ever deals during President Hu Jintao's visit, right after the nations' leaders pledged to cooperate closely as Paris prepares to take over the G20 presidency. Hu, tog ether with his French counter par t, Nicolas Sarkozy, officiated at the signing ceremony for deals totaling 16 billion euros ($22.8 billion) on Thursday at the Elysee Palace. The Airbus deal alone - which will see three Chinese airlines buy 50 model A320, six model A330 and 10 model A350 airplanes from the European consortium, in addition to 36 planes ordered earlier - is worth around $14 billion, according to the company's catalogue price. China continues to choose Airbus aircraft for the further development of its fleet. The order for Airbus' eco-efficient aircraft underlines China's ambition to grow sustainably.

Airbus sold 150 aircraft to China in 2005, and 170 in 2006, both record transactions in each year. In 2007, China purchased some 160 aircraft. In the first half of 2010, France suffered a trade deficit of $14.7 billion. T he new deals would undoubtedly boost the French economy.

macroeconomic policies, fight volatility in commodity markets and look at reforming institutions such as the International Monetary Fund. China supports France in its efforts to host a successful G20 summit in 2011 and aims to keep close communication and coordination with France to prepare its success. Paris has announced its G20 agenda of diversifying global currency reserves away from the US dollar and stabilizing commodity markets. Support from the world's No 2 economy is ver y impor tant to Sarkozy who is ambitious about reshaping the global market. Hu reaffirmed that the path of SinoFrench ties shows that countries with different ideologies, political institutions and cultural backgrounds can coexist and cooperate for mutual benefit as long as they respect each other. French and Chinese companies i n k e d d e a l s wo r t h 1 6 b i l l i o n euros ($22.8 billion), including an agreement by Chinese companies to buy 102 aircraft from European consortium Airbus. EURO CHINA BUSINESS


The contracts included the purchase of 102 aircraft from Airbus, 1.18 billion euros of telecom equipment and the sale of 20,000 tons of uranium from France's Areva to China's Guangdong Nuclear Power Corp.
The purchase is the most significant deal since 2007 and the subsequent global financial crisis. The move is believed to meet the demand of the Chinese aviation industry, which is getting a boost by the country's fast recovery from the global financial crisis and rapidly expanding tourism industry.

Sar koz y reiterated t h at h e wa nte d to " tightly associate" with China. China should not be seen as a threat, but an opportunity.
Meanwhile, local authorities announced a new 500-million-euro French-Chinese business district in Chateauroux, central France, that will create 4,000 jobs - most of them in France - when it opens in 2012. The French government described the contracts as "by far the most important ever, either during visits by Chinese leaders to Europe or European leaders to China". The countries agreed in the statement to coordinate

China - Britain

Premier Wen Jiabao accompanies British Prime Minister David Cameron as they review a guard of honor at a welcome ceremony in the Great Hall of the People in Beijing on Tuesday. [Wu Zhiyi / China Daily]

Cameron leads high-profile British delegation in a bid to expand trade with China.

Putting great store in ties

 EURO CHINA BUSINESS

China - Britain

Prime Minister Cameron, accompanied by four ministers (Chancellor of the Exchequer George Osborne, Business Secretary Vince Cable, Secretary of State for Energy and Climate Change Chris Huhne and Education Secretary Michael Gove), was his first since he took office,and aims boost trade between the two nations. The prime minister has plans to more than double British exports to China over the next five years from their current level of 7.7 billion pounds to 18.5 billion pounds by 2015. A number of deals had already been announced, including measures to boost sales of Scotch whisky and allow the import of breeding pigs into China. But the highlight on Tuesday was a $1.2-billion tie-up inked by China Eastern Airlines and Rolls-Royce for 16 Airbus 330-200 jet engines. T he signing was witnessed by Cameron, who met Premier Wen Jiabao for afternoon talks at the Great Hall of the People and discuss ways to boost trade. Beijing is expecting London to expand cooperation in the fields of high-end manufacturing, innovation industry, finance service, energy saving and environmental protection, said Wen during the meeting. He also urged Britain to further release the restrictions on high-tech exports to China, a move that would be conducive to more balanced and sustainable bilateral trade growth. The Chinese premier reaffirmed his nation's commitment to intellectual property rights protection, vowing to provide a more transparent, regulated and convenient environment for investment. He also promised to encourage more Chinese investment in Britain, calling for a simple administrative

process, more targeted service and easier visa application. In response, Cameron said Britain views China's development as an opportunity and welcomed Chinese companies' participation in the UK's infrastructure construction. In 2009, UK exports to China increased by 6.2 percent yearon-year, despite trade with other countries dropping dramatically due to the global financial crisis. In the first three quarters of 2010, British investment in China also expanded by 43 percent year-onyear, according to Sun Yongfu, director-general of European affairs department for China's Ministry of Commerce. Overall, the Sino-UK relationship has been stable, especially compared to relationships with (other nations in) Europe. It has always been very practical. A perfect fit Vice-premier Wang Qishan and Osborne jointly chaired the third China-UK Economic and Financial Dialogue and announced a slew of cooperative programs for the coming years, including in the areas of trade, finance, high-technology, infrastructure, low-carbon economy

and cutting emissions. China is the world's largest exporter of goods while Britain is the second largest exporter of services, which means the two have promising cooperative oppor tunities in a wide range of fields, Osborne told the media after the meeting. "Our economies are complementary," he said. The dialogue also achieved 41 policy outcomes, with both sides agreeing, among others, to promote bilateral trade and investment. The UK said it would welcome more Chinese investment, including from sovereign wealth funds. That could be a positive signal for China's $200-billion sovereign wealth fund, China Investment Corporation (CIC), said analysts. Britain also affirmed that it would support China's full market economy status "as early as possible" and will continue to "play a constructive role to encourage EU recognition", according to a statement released following the dialogue. China and Britain will also strengthen cooperation in taxation policies, statistics, energy, finance and civil aviation, reads the statement.

Premier Wen Jiabao welcomes members of the United Kingdom's largest-ever delegation to China ahead of talks at the Great Hall of the People in Beijing on Tuesday. [Xu Jingxing / China Daily]

EURO CHINA BUSINESS



climate change

Cancun climate deal holds out hope


By Connie Hedegaard



 EURO CHINA BUSINESS

lthough Christmas and a cold winter are upon us, there is good reason to reflect on global warming and the recent climate change conference in Cancun, Mexico. It may seem unreal in Europe now when our teeth are chattering, but 2010 was actually one of the hottest years on record. Weather-related catastrophes, from fires in Moscow to floods in Pakistan and Venezuela are a forewarning of things to come, unless we deal with the challenge of climate change. That's why the package of decisions that came out of the conference in Cancun may well be this year's most important present. What is in the package? Quite a bit. And Europe can be proud of having contributed significantly to the content.

in developing countries that are financed with European taxpayers' money. In Cancun, all countries except for Bolivia - agreed to what was agreed in Copenhagen. But Cancun also took new steps. Besides tightened rules on transparency, the agreement contains detailed decisions for improved cooperation on technology between North and South, an agreement on climate adaptation in developing countries and a mechanism to reverse deforestation in the Tropics. These are substantial decisions that will lead to concrete action, and decisions with a clear European fingerprint. For example, Andreas Carlgren, Swedish environment minister, and his counterpart from Grenada were appointed to fine-tune the wording of the agreement's overarching shared vision. Along with Algeria, Spanish State Secretar y Teresa Ribera forged the compromise on adaptation. In cooperation with Brazil, Chris Huhne, British secretary of state for energy and climate change, was asked to handle the delicate issue of the future of the Kyoto Protocol and find out how to anchor the reduction pledges from Copenhag en in the new agreement. And the newly appointed environment minister of France led the consultations on technology. In other words, Europe played a key role in the political stage of the negotiations. We have strived to push things forward at the technical level with a steady stream of analyses, text input and suggestions, and in relation to the strategy.

The key points of the agreement concluded in Cancun are based on the results we achieved in Copenhagen in 2009, including the 2 C target and the pledges that countries made in the run-up to Copenhagen. It comprises the commitment of developed nations to provide finance for developing countries - $30 billion in the short term (2010-2012) and $100 billion annually by 2020. And it includes the rules for transparency - how countries measure and report their emissions. The last point may sound a bit technical, but in fact it is very political, as the rules are key to ensuring that countries deliver on their promises. We also need the rules to be able to assess the impact of climate projects

climate change

You don't have to take my word for that. Mexican Foreign Minister Patricia Espinosa explicitly said at a meeting with the European Union (EU) on the last day of negotiations that without the constructive work of Europe it would have been impossible to bring the process back on track. A key reason why Europe has been able to make its mark on the agreement and help strengthen its ambition is that in Cancun, we managed to collaborate constructively and communicate in a clear and coordinated manner. It has long been said that Europe must speak with one voice, but there cannot be only one voice. Rather, we should decide on the messages together and then communicate them clearly and consistently to the outside world. That's what we did in Cancun. And that's what we should be doing in the future to ensure that Europe's word has an influence wor thy of the world's larg est economy. Cancun did not solve everything. The reduction commitments are not enough to keep the temperature increase below 2 degrees. There are

other outstanding issues, too, such as the legal form of the agreement and how to provide the long-term finance. But Cancun proved that the multilateral process could deliver results. Without an agreement the UN process would have been in imminent danger. Politicians and the public may have lost faith in the process and discarded it - with nothing to put in its place. Now we have a deal. But there is still much work ahead of us. Both internationally, where we must still deal with the outstanding issues, and domestically where we now have to deliver on what has been decided. In Europe we are already working on it. Next year we present a road map for how we can create an intelligent, innovative low-carbon economy by 2050. We do this for the environment, but we also do it for the sake of competitiveness and energy security. In a world with ever

more people and fewer fossil energy resources, it goes without saying that the winners will be the ones who are independent of oscillating oil prices, and who can provide energy efficient and innovative solutions. If there is a task that the EU should take time to address, it is the task of getting energy security, economic growth and climate conservation to work in unison. The very core of our community is to take on the challenges together, with which EU member states cannot deal on their own. That's why it was so encouraging that the EU acted in a constructive and coordinated way in Cancun, and that's why the agreement in Cancun is a victory. Not only for the skillful Mexican presidency and for the multilateral process, but cer tainly also for Europe. The author is European commissioner for climate action.

EURO CHINA BUSINESS



climate change

Seeing REDD on climate change


By George Soros

he official communiqu from the United Nations climate change conference in Cancun, Mexico, cannot disguise the fact that there will be no successor to the Kyoto Protocol when it expires at the end of 2012. Japan, among others, has withdrawn its support for efforts to extend the Kyoto Protocol. This sounds like bad news, because it means that there will be no inter national price on carbon, and, without a market price, it is difficult to see how the reduction of carbon emissions can be efficiently organized. But appearances can be deceiving. Even as the top-down approach to tackling climate change is breaking down, a new bottom-up approach is emerging. It holds out better prospects for success than the cumbersome UN negotiations. Instead of a single price for carbon, this bottom-up approach is likely to produce a multiplicity of prices for carbon emissions. This is more

appropriate to the task of reducing carbon emissions than a single price, because there is a multiplicity of sectors and methods, each of which produces a different cost curve. The market price of anything is always equal to the marginal cost. When there is a single price, all the various cost curves are merged into one and low-cost projects enjoy large rents. This makes the cost of reducing carbon emissions much larger than it needs to be. This was amply demonstrated by the working of the Kyoto Protocol in practice. The carbon-trading scheme that it established gave rise to many abuses. The same applies to the protracted negotiations between developed and developing nations. The developed nations promised to pay reparations for their past sins at the Rio de Janeiro summit in Brazil in 1992 but kept deferring their obligations by negotiating.

REDD

V not for victory

0 EURO CHINA BUSINESS

climate change

The negotiations have taken on an increasingly unreal air. Currently, the dispute revolves around how g over nments will deliver $100 billion annually by 2020 to help developing countries confront climate change, given that even the $10 billion Fast Track Fund cannot be cobbled together without using smoke and mirrors. By failing to make any progress beyond keeping the talks alive, the Cancun climate conference has given the impression that nothing is happening, and that the situation is hopeless. That is not the case. Individual countries like Germany are making binding unilateral commitments that are not conditional on what other countries do, and "coalitions of the willing" are being formed to tackle particular sectors. The REDD-plus partnership (Reducing Emissions from Deforestation and Forest Degradation), an effort to create financial value for the carbon stored in forests, is the prime example here. Indeed, the greatest progress is now being made where the problem is the most urgent: It is much easier to preserve forests than to restore them. The case of Indonesia deserves special attention. Indonesia's forest g rows on peatlands. When the trees are cut and peatlands drained, t h e c a r b o n a c c u mu l a t e d ove r millenniums is exposed and oxidized - often in the form of fires that envelope neighboring Singapore and Malaysia in smoke. Today, half of Indonesia's peatlands remain intact; if they were exposed, emissions would double. Indonesian President Susilo Bambang Yudhoyono is determined to prevent this, and he has received financial support for his efforts from Norway. Their partnership has already been joined by Australia, and others are expected to follow soon.

The partnership is path-breaking in several ways. Yudhoyono is introducing a moratorium on the exploitation of peatlands and virgin forests. A REDD-plus agency will be charged with treating rain forests as a natural resource that is to be preserved and restored rather than exploited and destroyed. This will also transform governance and the delivery of official development assistance (ODA). The REDD-plus agency will have a domestic governing board that will coordinate the activities of all governmental units associated with rain forests, and an international board that will authorize and monitor the spending of ODA funds. This means that ODA will support homegrown institutions instead of administering projects introduced from the outside. T h e s e e f f o r t s c a n s e r ve a s a prototype for assisting other countries such as Guyana, where the current forest-preservation scheme does not work so well. Eventually,

it should lead to the establishment of a global fund for rain forests and agricultural adaptation because the benefits of carbon abatement accrue to mankind as a whole, not to individual countries. The global fund would introduce two prices, one for carbon saving by restoring forests and one for avoiding carbon emissions by preserving them. This in turn sets an example for other sectors. In this way, carbon pricing will be introduced and international cooperation established from the bottom up, on a sectoral basis rooted in demonstrated results. T h u s, d e s p i t e t h e w i d e s p r e a d impression that the climate change agenda has stalled, there are grounds for hope. But realizing that hope requires keeping pace with global warming, and that means speeding up the process of putting a price or prices - on carbon emissions. The author is chairman of Soros Fund Management and of Open Society Institute.

EURO CHINA BUSINESS

1

mighty & rich

Forbes magazine has named President Hu Jintao as the world's most powerful person, a move that analysts say shows global acknowledgement of China's contribution to the world's economic recovery. United States President Barack Obama slipped to second place on the annual list. Obama had previously been considered the world's most powerful person but his party's defeat in the midterm elections may have had some influence on the latest rankings. China's peaceful rise on the world stage is also likely to have been a decisive factor. China's remarkable contribution to the world's economy helped it gain a strong international reputation and raised Hu to first position. Yuan Peng, a researcher with China Institutes of Contemporary International Relations, said other nations have been struggling with the economic recession while China has impressed the world with its economic development. "It has not only achieved rapid economic growth in the shadow of the financial crisis but it has also helped other nations by providing capital and markets that are badly needed," Yuan said. Fan Jishe, an analyst with the Chinese
 EURO CHINA BUSINESS

Academy of Social Sciences, said another significant factor in Hu's ranking was China's stable social development and its ability to overcome natural disasters in recent years. "The effective measures taken by the government also earned credits for Hu," Fan said. Fu Mengzi, another researcher with China Institutes of Contemporary International Relations, said the Shanghai Expo also served as a good opportunity to promote China and raise Hu's profile. Forbes magazine said it used four criteria to define power - whether the person has influence over a lot of people; whether the person controls significant wealth compared to their peers; whether the person is powerful in more than one sphere and whether they actively wield that power. Third place went to King Abdullah of Saudi Arabia, a country with one-fifth of the world's oil reserves. The value of crude oil owned by his country is estimated at $22 trillion. The magazine claimed Abdullah consolidated his power by pursuing conservative Islamic values while maintaining close ties with the US.

mighty & rich

Good and bad things about the rich


By William Daniel Garst

in the lives of Chinese women. Though many people may think women still lag behind men, women are now not only expected to work, but can also be ambitious in their career choices. In fact, a study done by the Center for Work-Life Policy in New York shows that China's women are the world's most ambitious, with 76 percent aspiring to get top jobs, compared to 52 percent in the United States. Thanks to the family planning policy and inexpensive child-care provided by grandparents - four grandparents for one grandchild - these women are better able to put in the long work hours needed to realize their dreams. While most really wealthy people in the US have made their money the old fashioned way, namely inheriting it, China's billionaires are self-made

most ordinary Chinese continue to believe that they too can aspire to be wealthy and the country's economy enables large numbers of them to do so. The Chinese government must play its part, too, to help the less affluent achieve upward mobility. Although a good start has been made in easing healthcare burdens on less affluent families, especially in rural areas, this safety net is still inadequate. Educational opportunities for poorer children need to be increased. Plus, the hukou (household registration) system has to be reformed to ensure that China's high labor mobility doesn't separate working parents from their young children (Beijing will have to help localities financially to cope with hukou reform). Finally, the recent flap over the visit of Warren Buffet and Bill Gates, two of the world's leading billionaires, to encourage philanthropy illustrated that most of the superrich Chinese lack a sense of benevolence. Tax policies, particularly estate taxes, need to be devised to stimulate charitable activity among China's super-rich. Such policies will help prevent China's wealthy class from turning into a self-perpetuating oligarchy. Many Chinese have followed Deng Xiaoping's famous call: "To get rich is glorious." Now China must ensure that humble people, too, could aspire to become rich and no one wields excessive power. The author is an American corporate trainer in China.

China has the highest number of billionaires in the world, according to the just released 2010 "Hurun Rich List". T he repor t details interesting and positive trends regarding Chinese billionaires. Unlike previous years, a majority of China's 10 richest people made their fortunes outside of real estate. Flavored drinks magnate Zong Qinghou, of Wahaha, tops the list, followed by pharmaceutical tycoon Li Li and China's richest woman, "Paper Queen" Zhang Yin, of Nine Dragons Paper. Just two of this year's 10 richest people made their money solely in real estate. Moreover, 95 percent of the billionaires on Hurun's list got rich by carrying out their business in the domestic market. This fact, coupled with the new trend, in which property magnates are being re placed by consumer g oods producers, may herald the start of the much needed rebalancing of China's economy toward greater reliance on consumer spending. According to the Hurun report, Zhang Yin is the world's wealthiest woman. T he second and third richest women are Chinese too, as are 11 of the global top 20. These numbers reflect the huge difference New China has made

individuals. Just 1 percent of them inherited their fortunes, while many of them such as Zhang Yin grew up as poor children. As the number of billionaires in China increases, so does its socioeconomic inequality. Does this inequality threaten China's stability? I suspect that it will not, as long as

EURO CHINA BUSINESS



mighty & rich

attributed the figures to Chinese women being among the most ambitious on the planet.
Zhang Yin, founder and chairwoman of the company Nine Dragons Paper

Chinese women are often provided cheap childcare by grandparents four for every only child. While the achievements of Chinese women are impressive, they still lag behind their male counterparts.

Chinese women top self-made rich list


According to Hurun Rich list, China has the most self-made female entrepreneurs in the world and 11 of the top 20 wealthiest self-made women in the world are Chinese. Zhang, 53, founder and chairwoman of the company Nine Dragons Paper, has topped the list as the wealthiest self-made woman in the world with an estimated personal fortune of $5.6 billion. Wu Yajun, 46, of Longfor Property, comes in second with $4.1 billion and Chen Lihua, 69, of Fu Wah International, ranks third with $4 billion. The US talk show host Oprah Winfrey ranked ninth on the list with $2.3 billion in assets and the British author J.K. Rowling placed 20th with a fortune of $1 billion. Rupert Hoogewerf, the British founder and complier of the Hurun Rich List states, China is clearly the leader for women in business. A growing number of Chinese women are climbing the corporate ladder. According to the magazine China Entrepreneur, there are currently more than 29 million female entrepreneurs in China, who account for over 20 percent of the total number of entrepreneurs in the country. It also said that 1,107 A-share listed companies, which represent 67 percent of such companies in the country, employ 1,980 female board members or senior executives. The London-based Financial Times

The Hurun Rich List on China's wealthiest showed that only 11 percent of the richest people in China are women. The complete Hurun Rich List ranks 1,363 individuals in China with personal wealth of at least 1 billion yuan ($150 million), an increase of 363 over last year's wealthiest. C h i n e s e b e ve r a g e k i n g Z o n g Qinghou, 65, chair man of the Wahaha Group, topped this year's list with a personal fortune of $12 billion. No 1 on last year's list, Wang Chuanfu, 44, founder and chairman of Chinese battery and car manufacturer BYD, has seen his wealth decrease 10 percent, placing him 12th on the list with $4.6 billion in wealth. In second place on this year's list is 36-year-old Li Li, founder and chair man of Hepalink Pharmaceutical, with a personal fortune of $6 billion. Along with doubling his wealth, Baidu president Li Yanhong surged up the list from 21st place last year to fifth with a fortune of $5.3 billion. Hoogewerf said this year's list reflects a trend in the Chinese economy, where medicine and IT, along with the retail and clothing industries, are among those that are the fastest growing in terms of creating wealth.

 EURO CHINA BUSINESS

mighty & rich

China's millionaires multiply


Capital markets, private firms help fuel growth in nation's rich According to Boston Consulting Group (BCG), China boasts the third-largest population of millionaires in the world, behind the United States and Japan. According to BCG at the end of 2009, China had 670,000 households with more than $1 million wealth, up 60 percent from the same period in 2008. And the country's composite wealth grew by some 28 percent from the end of 2008 to the end of 2009, to $5.4 trillion. The fast increase is driven by China's strong economic growth, the rise of private-sector enterprises and the development of capital markets. According to BCG's research, entrepreneurs account for the majority of China's high-net-worth population (those with assets under management exceeding $1 million), but there are growing numbers of wealthy Chinese who have different sources of wealth, such as executives, professional investors, and the independently wealthy. In addition, the mix of entrepreneurs is diversifying beyond real estate, manufacturing and commodities into industries such as the phar maceutical and high technology. Meanwhile, wealth is spreading beyond coastal regions to secondand third-tier cities throughout the nation. In 2009, Guangdong, Zhejiang, Jiangsu and Shandong provinces, and Beijing and Shanghai accounted for more than half of millionaire households' wealth. But the central and western regions are expected to attract more investment during China's 12th Five-Year Plan (2011-2015), thus laying the groundwork for wealth to spread across the nation, and, more specifically, to cities away from the coast. Despite its remarkable growth, China's composite wealth still has tremendous room to expand. China accounts for only 5 percent of global wealth, less than its share of the global GDP (7 percent). And millionaire households account for only about 0.2 percent of all Chinese households, a far lower concentration than in the United States (4.1 percent) and Switzerland (8.4 percent).

"The sheer volume of new wealth presents an attractive opportunity for growth, but wealth managers should focus on the nuances of how and where this wealth will be created," Leung said. Hong Kong is a popular investment destination and place to take up residence for wealthy mainlanders, many of whom have homes there. The city has become an increasingly important offshore wealth center for the mainland's wealthy. China's onshore market may not contribute significantly to the growth and profitability of overseas wealth managers in the near future, due to strict regulatory constraints on products that can be sold. Wealthy Chinese prefer to keep most of their assets onshore, due to the appreciation potential of renminbi.

A golden fountain at a high-end residential complex in Beijing. At the end of 2009, China had 670,000 households with more than $1 million wealth. Stephen Shaver / Bloomberg

EURO CHINA BUSINESS



www.china-briefing.com

China

www.india-briefing.com

India

www.vietnam-briefing.com

Vietnam

www.2point6billion.com

Emerging Asia

 EURO CHINA BUSINESS

tourism

BEIJING is seeking world-city role in tourism


Shao Qiwei
will later be selected to be the permanent members," said Zhang. The creation of the organization signals a significant step in Beijing's push to become known as an international city on a par with such places as London and Tokyo. "We hope the organization will help the city become a hub for the tourism industry to grow the city into a first-class tourist destination," Zhang said. According to Shao Qiwei, chairman of the China National Tourism Administration, the nation's tourism industry is entering a golden time. In 2010, the volume of inbound and outbound travel increased by 10 percent and 17 percent respectively. And the overall revenue from tourism this year has increased by more than 20 percent. "In 2015, China will receive the most inbound tourists worldwide and have the fourth-largest number of outbound tourists," Shao said. "To build a cohesive, open market for tourism is the trend." He said more cooperation will boost the integration of resources, brand building and offer a solution to tourist complaints. Beijing initiated the idea of the "9+10" regional tourism cooperation organization in 2008. The "9" refers to the nine provinces surrounding Beijing and the economic circle around the Bohai Sea. "10" refers to the 10 domestic tourist cities that are also taking part. EURO CHINA BUSINESS


s part of its drive to become a world city, Beijing is championing the setting up of an organization to promote tourism cooperation around the globe. World Tourist City Organization (WTCO) will be made up of representatives from the world's most popular tourist cities, travelrelated companies and travel associations. It is expected to start operation in September as a nonprofit international cooperation venture, said Zhang Huiguang, director of the Beijing Municipal Administration of Tourism. Zhang spoke about the plan for the new organization earlier this week at the "9+10" regional tourism cooperation and communication conference in Taiyuan, Shanxi province.

The 9+10 organization is a platform for regional cooperation that offers information exchanges, solutions to travel problems in remote areas, standardization of the area's tourism industry and the release of annual travel trends. We have received positive responses from cities such as Tokyo, London and Paris. Domestic tourism cities also are showing great interest in joining the group, Zhang said. The participating cities at the "9+10" conference were the first to sign up and seek to join the WTCO. They included Shanghai, Tianjin, Taiyuan, Chongqing and Hangzhou. "Beijing will be the headquarters of the institution and several cities from both home and abroad

BEIJING is seeking world


Tiananmen

Great Wall

Palace of Heaven

Shanghai
 EURO CHINA BUSINESS

Hangzhou

d-city role in tourism

Athens

Paris

Tianjin

London EURO CHINA BUSINESS




Hong Kong Panorama

0 EURO CHINA BUSINESS

EURO CHINA BUSINESS

1

Macao Panorama

 EURO CHINA BUSINESS

EURO CHINA BUSINESS



1018 320108 915 272 6.904.65 20

On the morning of October 18th, the op Business & Technology Cooperation Fair International Convention Centre. Mr. Wei H CPC Sichuan Provincial Committee, the Fir Mr.Li Chuncheng, Member of Standing Com Provincial Committee, Party Secretary of CP Committee, Mr. Ge Honglin, Deputy Party Municipal Committee, Mayor of Chengdu M Government, Ms. Xiu Xiaoping, Vice Direc the Ministry of Science and Technology of Vice Minister of Industry of France, and M Counsellor, Head of Science, Technology an Delegation of the European Union to Chin ceremony.

 EURO CHINA BUSINESS

Government leaders, organizations, institutions as well as enterprise representatives from eighteen EU countries including France, UK, Germany, Sweden, the Netherlands, along with leaders from Ministry of Commerce of China, China Council For the Promotion of International Trade (CCPIT), Sichuan Provincial Peoples Government and Chengdu Municipal Peoples Government attended this Fair. Up to one thousand people from more than 400 Chinese enterprises and 163 EU enterprises participated the opening ceremony. EU-China Business & Technology Cooperation Fair V (hereinafter referred to as ECBF), jointly hosted by the Ministry of Commerce of China, China Council For the Promotion of International Trade (CCPIT) and Sichuan Provincial Government, supported by Chengdu Municipal Government, Chengdu Hi-Tech Zone and European Commission, and organized by EU Project Innovation Center, is a grand international fair in the field of economic cooperation. It functions as the important diplomatic platform, the cooperation & trade platform of science & technology, and the investment promotion platform between Western China and the members of European Union, works as the vital window of the enterprises in the Western China orientating to international cooperation, and plays a more and more important role in facilitating the industrialization and internalization of the enterprises in Western China, as well as enhancing the economic and technological exchange and cooperation among countries and regions. The EU-China Business & Technology Cooperation Fair V was held at Chengdu New Century Exhibition Center from Oct. 17th to 21st, 2010. The fifth ECBF, themed as Green Connects to the World, Innovation Leads to Development, set up three segments, namely, product exhibition, forum and special activity concerning new energies, bio-pharmaceuticals, information technology, emerging industry and other high-tech industries. It aimed at complying with international economic development trend and transformation of China's economic development way, embodying the spirits of EUChina Summit and Copenhagen Climate Conference, emphasizing new energies, low-carbon economy and biological development, and highlighting cooperation and communication in new energies, electronic information, bio-pharmaceuticals and emerging industry. EURO CHINA BUSINESS


pening ceremony for the Fifth EU-China r was successfully held in Chengdu Pride Hong, Member of Standing Committee of rst Deputy Governor of Sichuan Province, mmittee of CPC Sichuan PC Chengdu Municipal Sectary of CPC Chengdu Municipal Peoples ctor of the Torch Centre of China, Mr. Luc Rousseau, Mr. Philippe Vialatte, First nd Environment Section, na, ect., attended the opening

Belgian Former Prime Minister paid a Visit to EUPIC


On September 20th, 2010, Mr. Jean-Luc Dehaene, Belgian Former Prime Minister, along with Belgian entrepreneurs, leaders from chambers of commerce as well as university professors, paid an official visit to EUPIC. During the seminar with representatives from all sides, Mr. Jean-Luc Dehaene, Mr. Bart Hendrickx, Dean of International Department of University of Leuven, Belgium, and professors from the Free University of Brussels gave a detailed introduction on the investment environment in Belgium, foreign trade conditions and science achievements respectively. All sides agreed that as the bilateral relationship between China and Belgium strengthens, the trade between the two countries has also made great efforts. China, especially the western China, has great potentials in the fields of economy trade and markets; Belgium will make good use of EUPIC, the perfect platform, to bring in more SMEs to western China, especially Chengdu, to expand the communication and cooperation between the two sides.
2010920Jean-Luc Dehaene Jean-Luc DehaeneBart Hendrickx

 EURO CHINA BUSINESS

The Unveiling Ceremony of Sichuan Branch of China Innovation Relay Centre Held in Chengdu
From October 22nd to 23rd, 2010, during the 11th Western China International Fair, the training conference for the unveiling ceremony of Sichuan Branch of China Innovation Relay Centre was held in Chengdu Pride International Convention Centre. It was sponsored by Science & Technology Department of Sichuan Province, and jointly hosted by Institute of Information of Sichuan Province, Chengdu Productivity Promotion Center and Chengdu Hi-tech Zone Innovation Centre. On the afternoon of October 22nd, Mr. Du Zhanyuan, Vice Minister of Science and Technology of China, Mr. Li Chengyun, Deputy Governor of Sichuan Provincial Government, and Ms. Xiu Xiaoping, Deputy Director of Torch Centre of the Ministry of Science and Technology of China, unveiled and witnessed the ceremony. As one of the first pilot units, Chengdu Productivity Promotion Centre glamorously received the plate. On October 23rd, above 40 organizations from universities and institutions participated the training conference. Speeches were delivered by representatives from Institute of Information of Sichuan Province and Chengdu Productivity Promotion Center; and the first 13 pilot units signed agreements.
2010102223 22 23 40 13

EURO CHINA BUSINESS



GEOSYS GEOSYS Seeks Cooperation in Chengdu


On December 17th, a French delegation of five people including Mr. Damien Lepoutre, President of GEOSYS, Miss Chloe Dimeglio, Doctor from Institute of Mathematics of University of Toulouse, Mr. Thierry Veronese, Project Manager of French Agricultural Competitive Cluster Projects and Project Commissioners from Technology Services Division of the French Embassy, arrived in Chengdu on a field trip, seeking opportunities for cooperation. GEOSYS is an international leader that helps professionals in agriculture, agronomy and natural resources to make better decisions, with Remote Sensing, Agronomy and Geographic Information Systems. A field survey in Pu Jiang Kiwi Fruit Planting Base followed by contacts with New Agricultural Science and Technology Co., Ltd., Sichuan has been arranged by EUPIC with the great support of Chengdu Municipal Agricultural Commission. Seeing the extensive market and bright cooperation prospects, Mr. Damien Lepoutre describled this field trip to Chengdu fruitful and expressed his willingness to provide hi-tech service for agriculture industrialization in Chengdu. In particular, he emphasized that he must attend the EU-China Business & Technology Cooperation Fair VI in 2011.

1217GEOSYSDamien Lepoutre Chloe DimeglioThierry Veronese GEOSYS EUPICGEOSYS DamienLepoutreGEOSYS

 EURO CHINA BUSINESS

Zhengzhou


1000 8000 400 201012
0 EURO CHINA BUSINESS

1219 30 :

Zhengzhou

1 2. 3. 4.

EURO CHINA BUSINESS

1

Zhengzhou

 EURO CHINA BUSINESS

Zhengzhou

EURO CHINA BUSINESS



Andreas Potamianos President Epirotiki

 EURO CHINA BUSINESS

EURO CHINA BUSINESS



Visit fabulous

MAGNIFICENT CRETE

 EURO CHINA BUSINESS