By Li Hongmei
In his first overseas trip since being sworn into office, China's premier Li Keqiang chooses to visit, among other nations, India and Germany, a move which carries substantial economic weight, remarked Xu Hongcai, director of the department of information, China Center for International Economic Exchanges, in his article published on May 16.
What follows is the English translation of Mr. Xu's article:
China and India are both populous developing nations and have many similarities. India exceeds China in the development of its information technology and financial system sectors, but India's traditional agriculture is relatively outdated. Presently, trade exchange between China and India is relatively limited in scale and competitive in some respects.
Despite friction along the China-India border not long ago, both are members of BRIC bloc and have many common interests. The two nations can complement each other in such areas as resources and certain hi-tech fields, and can share their respective experience in financial reform. In their fifth gathering in March this year, BRIC leaders issued the Durban Declaration, putting forth a series of proposals for economic and financial cooperation among BRIC nations, which need China and India to realize the new cooperative effort.
During his trip to India, Li Keqiang has signaled the plan to strengthen cooperation with other BRIC nations and emerging nations. In addition, learning from India's experience in financial development and the intensification of cooperation in hi-tech industrial and infrastructural investments will be on the agenda of Li's talk with Indian leaders.
Germany lies at the core of Europe and is a key developed economy, boasting advanced manufacturing and electronics industries, as well as cutting-edge technology. Although the EU is in a trade deficit with China, Germany singularly enjoys a surplus. Possessing a leading role in the eurozone, Germany is central to dealing with China-Europe trade and economic problems and developing China-Europe economic relations. Despite some tension over the EU's investments in and trade with China, leaders from both sides are aware of the importance of upholding a symbiotic relationship and strengthening ties.
During his visit to Germany, Li Keqiang is likely to discuss a number of economic issues, including the intensification of mutual investments, the internationalization of the renminbi, the breaking of the technological blockade, and the sharing of urbanization expertise.
Europe needs to solicit Chinese capital, since Chinese investments in Europe are still few, in sharp contrast to their huge trading volume. Chinese capital can combine with Germany technology in making investments in various European nations, such as Cyprus, Greek, Italy, and Spain, thereby inducing these countries' economic development and boosting their employment.
Financial cooperation will also be a key item, notably the internationalization of the renminbi, for which the EU, pivoting on Germany, must have a more active stance. The UK has been active in pushing for the internationalization of the renminbi, not only welcoming Chinese investments but also vying to make London an offshore renminbi center.
Frankfurt should catch up with the effort. China and Germany can join hands in developing Frankfurt into the second offshore renminbi center in Europe, which should be put on the agenda of Li during his visit.
In the hi-tech sector, Germany should cut its restrictions on exports to China. China needs technology to help achieve its goals for urbanization, information development and the industrialization of its rural areas. Germany technology would be beneficial for both sides in these fields.
Germany's experience urbanizing its more rural areas can also prove valuable to Li. The urbanization of big Chinese cities has brought on serious side effects, and aid can be brought to mending problems in the fields of environmental protection, service industries, and humanistic care.
Li Keqiang is also pondering a free trade agreement with Switzerland, following China's FTA with Iceland, the first such agreement with a European nation. The roadmap of "from small to big nations" and "from easy to difficult ones" can lead to the gradual establishment of more free trade zones, with successful precedents paving the way. Tariffs and cost cuts can induce trade liberalization and investment convenience, thereby deepening China-Europe economic and trade cooperation. It can be assumed that China's new leaders will persist in the direction of globalization and market reform, in order to achieve a win-win outcome and a common goal for development.
