Tag: IMF

Expanding China-Europe Business Co-operation

It seems that growth in China are resulting in all sorts of developments for the region, vis-à-vis other countries.  According to Song Tao, China’s Vice Foreign Minister, one of these developments is increased co-operation with Europe.  Indeed, there has been such significant progress that Song is hopeful that the long-term future will witness a “China-EU free trade area.”  Currently the countries have plans in place to work together in the areas of finance, urbanization, sustainable development and trade and have already been united on a variety of global issues.

China and Europe have had a comprehensive strategic partnership in place now for close to a decade.  While Europe was undergoing its substantial debt crisis, it was China which provided significant support, mainly through its $43bn IMF contribution.  As well, it helped Europe buy European bonds and escalated imports from the region.  China has also been supportive of Europe’s integration process.

Despite Europe’s assistance, China is still not completely out of the woods.  Naturally, its weakened position has impacted its relationship with China.  For example, according to China’s Ministry of Commerce, there was a reduction in foreign direct investment (FDI) from the EU to China by 6.3 percent year-on-year from January to September to $4.83bn. In addition, China’s exports to Europe plummeted 30.3 percent over the same time period.

Thus, according to Haitong Securities Co. Ltd.’s Deputy GM and Chief Economist, Li Xunlei, China’s general FDI situation is decline as inflation has rendered its environment for FDI somewhat less attractive than it has been in recent years. The fact that China’s economic growth has slowed in recent years hasn’t helped the situation much either.

So while Europe has been instrumental in assisting China’s development, there is still much to be done on the east’s end to really get it back in an attractive investment environment for foreigners.

Europe Versus China

Are Europe’s Financial Woes Hurting China?

It’s bad enough that Europe is in a huge financial crisis, but when it starts impacting countries halfway around the world, then something has to be done. This is exactly what is happening right now.  Still, it’s not all bad news since China recently had some good results vis-à-vis its stocks rising.  There are many factors that will affect a country’s stock and it seems that currently, the focus is on inflation which is getting better.  With this in mind, the country’s policymakers could be set to reduce its tight grip on monetary policies.  This will definitely be helpful.  Nonetheless, there is a great amount of recovery in Europe that is needed for the citizens living there and for its impact on Asia and the whole of the eastern region.

China’s Power Producers

According to the 21st Century Business Herald, the cabinet in China is reviewing the possibility of raising the price of electricity that is paid to power plants.  This resulted in a rally led by Huaneng Power International Inc.  But the International Monetary Fund (IMF) has asked for there to be an increase in banking supervision as there are now greater risks with lending along with a jump in property prices.

China’s Presence in the West

Still, China is not being put off and is developing a true presence in the west.  The country currently  holds 25 percent of US Treasury Bonds (reserved for foreigners) and is busy pushing its way into Europe as well. It is exercising caution though.  While at one time it was the main capitals like Frankfurt, London, Paris and Washington which were taking  the main role, it now seems China is stepping on these financial centers’ toes.  So when Europe and other parts of the west start encountering issues that are too problematic to solve alone, it might just be the case that it will be China to come to its rescue.