The highly frequent bilateral visits between China and European Union at top government level has been an integral part of China’s foreign relations. Compared with the past situations, the striking character in the recent development of Sino-European relation is the fact that two parties promote the bilateral relations across all area with the farsighted intention towards the 21st century while continuing their efforts on the growth of economic and trade relationship.
Potential emerging, trade focusing on technology
As is known to all, the largest developing country-China and developed country club-European Union have great potential to complement mutually in economic terms. During the period from 1990 to 1997, the transaction value rocketed up to 43 billion US dollars from 20.66 billion US dollars. By the end of 1997, the contractual value of foreign direct investment of EU in China amounted to 31.54 US dollars, 13.1 billion US dollars of which have been in place. Britain and Germany are the two largest foreign investors in mainland China without including the investment from Taiwan province and Hongkong SAR.
The content of technology is prominent in Sino-European economic and trade relations, which is higher compared with Sino-US and Sino-Japanese relations. In the composition of German exports to China, for example, the capital goods among its total investment account for a larger percentage, 80 percent of which are technical equipment. Since the adoption of open and reform policy, 44.9 percent of China’s introduced technology are from European Union. The satisfactory result is largely for two points:
1.European Union and its members believe the technology transfer to China does not bring great negative impact on its internal market of European Union.
2.European Union is geologically far from China, which makes EU give up its colonization and establishment of military base in Asia Pacific region.
On the strategic view, EU has no such intensive vigilance as other countries do. With respect to this point, the transfer of dual-purpose and military-purpose technology has been relatively easy. With the rising confidence in China’s market, the core members of EU including Germany, Britain and France are carrying out or to carry out their own large-scale investment projects in China. Leaders in Germany business circle have reiterated that the future of German industry is in Asia, particularly in China being of blooming economy and great market potential.
Euro trigger financial cooperation
Owing to the impact of Asian financial and economic crisis, China has been encountering difficulties in export to Asian trade partners over past several years. The exports to EU, however, maintain increasing momentum at the rate of 21.7 percent. Meanwhile, the significance of the cooperation between China and EU in financial aspect has been emerging. Public opinion believes that the Euro is expected to be a kind of stable currency and conducive to the stability of international finance and growth of world economy as a whole. Member countries in EU have accumulated rich experience annexing to the cooperation in monetary area, which will be the reliable guarantee mechanism for the take-off of Euro at the beginning of 1999. Due to the probably increasing role of Euro dollar in the world, EU expects positive support from China. When general secretary of the committee of European Union visited China in November, his major task was to persuade China change a part of foreign exchange reserve into Euro dollar in the near future. At present, the amount of foreign exchange reserve in Asian countries and regions account for one third of global stock. Particularly in China, foreign exchange reserve is skyrocketing and has been up to around 140 billion US dollars, among which Deutsche Mark is 15 percent. Western press hold the viewpoint that if China converts the Deutsche Mark and others currencies of EU into Euro, it is bound to gear up the pace of adopting such like measures in other Asian countries and regions. It is of utmost importance to raise Europe status in international financial field. On the other hand, China’s top leaders have posed positive gesture for EU and reiterated stand welcoming and supporting Single Monetary System as well.
Muscular currency favorable to world peace
The implementation of Euro dollar will not only be conducive to raise EU status in international financial field and push the trend of global multi-polarization forward, but be of significance to China who has paid much attention on economic security after Asian crisis occurred as well. In China, most multinational corporations based in Europe believe that the economic and financial cooperation between China and EU is beneficial to global economic stability because there are only two economic peace area in the world. One is China who survived in Asia crisis and commits not to devalue its currency, another is the coming Euro area.
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