China’s Investment in EU Politically Charged, Say Experts

September 16, 2011 4:47 pm Last Updated: October 1, 2015 3:37 pm

China's Premier Wen Jiabao gestures as he delivers his address at the summer session of the World Economic Forum in the Chinese port city of Dalian, northeast China's Liaoning province on September 14. (STR/AFP/Getty Images)
China's Premier Wen Jiabao gestures as he delivers his address at the summer session of the World Economic Forum in the Chinese port city of Dalian, northeast China's Liaoning province on September 14. (STR/AFP/Getty Images)
Chinese Premier Wen Jiabao said Wednesday that China is willing to invest further in the EU, and in turn urged the EU to recognize China’s market economy status in exchange.

The United States and Europe have refused to accord China full market-economy status thus far, says Xia Ming, professor of political science at the City University of New York (CUNY). “In China’s market, there are state policies which interfere with the free market, like subsidies paid by the government, market-protecting polices, or increased customs duties on European imports. Anti-dumping measures are often enacted by Europe in response to China’s economic interference.”

In response to Wen’s statement at the World Economic Forum Wednesday, economic experts are saying that the regime’s investment in the eurozone is related to its political and strategic intentions, and that China’s strict control over its domestic economy may deter the EU from accepting any deals.

Beijing-based Caijing magazine cited Zhang Xiaoqiang, vice chairman of China’s National Development and Reform Commission, as saying that China is willing to lend a helping hand to some countries facing sovereign debt risks by buying some of their government debt, but that China has further hopes of turning government debt into tangible investments. He made no further mention of any of China’s concrete plans to buy more European debt.

Professor Xia said China has hidden political intentions when it releases information about buying more Eurobonds.

“Greece plays an important strategic role in the Mediterranean in terms of politics, economics and its military position. As an EU member, Greece offers access to the eurozone, and is also a member of NATO,” Xia said.

“Greece borders some countries whose boundaries lie within the Balkan Peninsula and it offers access to the Middle East and Western Europe. Many activities of great strategic importance, like collaboration between air forces and navy forces, have been launched there. Other than that, human traffickers and drug smugglers can gain access via the Balkan peninsula through Greece and into Europe.”

Xia said Italy is the same, but has even more influence than Greece. “If China has access to Italy, it is of significant strategic importance. The Chinese regime desires to have access to and influence on Western countries, hoping that countries in the eurozone will be estranged from the U.S., further weakening America’s global influence.”

The Chinese regime pays subsidies to support their domestic enterprises, crippling foreign companies, Xia said. He gives as an example the bankruptcy of California’s solar energy companies. Because of price subsidies paid by the Chinese regime and low labor costs, Solyndra could not sustain its operations, and announced bankruptcy on Aug. 31.

Xia added that some of China’s foreign investment is actually controlled by the state. The financial sources are the regime or state-owned companies.

“Although China pursues ‘dollar diplomacy,’ it is still very hard for the regime to have its full market-economy status recognized.”

Frank Xie, assistant professor of marketing at the University of South Carolina Aiken, said China bought government debt of Portugal and Ireland in 2009, so that they would lobby the EU to recognize China’s market-economy status.

“China is seeking to have the EU remove its ban on arms sales to China, and intends to purchase advanced weapons from Europe, in the hope of posing a threat to Taiwan, the South China Sea, and Guam, and acquire a stronger global influence. Given these intentions, it will not be easy for Europe to consent to China’s proposal,” Xie said.

Read the original Chinese Article.

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