By : KEITH BRADSHER
Source : http://www.nytimes.com
Category : Small Business Grant
The European Union has stepped up discussions with Beijing on a potentially important change in China’s favor to trade rules covering China’s exports, but China still needs to curb subsidies to the nation’s exporters, a senior European official said here Thursday.
The trade issue is important because it is widely seen in China as linked to Beijing’s willingness to help finance the European debt bailout fund.
The question is whether the European Union should grant “market economy” status to China — a designation that would make it much harder for European companies to win international trade disputes in which they accuse China of dumping goods in Europe at prices below their cost.
Karel De Gucht, the European Union trade commissioner, said in a speech and interview Thursday that the designation was discussed in talks between European and Chinese leaders in Beijing earlier this week but that he had seen no sign yet that China was actually undertaking the free-market measures that would be needed for it to qualify.
Asked in an interview what single step China could take that would make the biggest difference in qualifying it for market economy status, Mr. De Gucht replied that China should give greater independence to the state-controlled banking sector to issue loans based on what businesses could pay them back.
Many Chinese banks now allocate credit on the basis of government policies, providing large loans to government-endorsed sectors like the manufacture of solar panels and wind turbines.
“You have a lot of concessionary loans,” he said, adding that with an overhaul, “interest rates would reflect business conditions, and much less political decisions.”
Ben Simpfendorfer, an economist based in Hong Kong specializing in China’s international investment decisions, expressed skepticism that the European Union would reach a deal any time soon on market economy status for China — despite the interest in persuading China to increase its purchases of European bonds as a way to enhance the economic bailout fund.
“Europe isn’t likely to offer market status to China, given worries about what that means for imports and employment in Europe’s own manufacturing sector,” he said.
Chinese banks have emerged in the last several years as the world’s largest providers of export loans, offering multibillion-dollar loans at extremely low interest rates to a long list of big Chinese corporations seeking to expand their shares in foreign markets. Western companies have struggled to compete for contracts against well-financed Chinese rivals.
“That effectively takes European and American bidders out of the market,” Mr. De Gucht said.
In a question-and-answer column last week in China Daily, the government’s official newspaper, Commerce Minister Chen Deming said the Chinese government was prepared to step up its export insurance and adjust taxes to help Chinese trading companies.
Mr. De Gucht said Thursday he was concerned about Mr. Chen’s remarks to the newspaper and whether they might signal a Chinese decision to provide even more — not less — assistance to exporters.
He was cautious about making any public prediction on when and whether China might step up its purchases of European government bonds, except to say that Chinese officials were “ready to cooperate with us.”
Zhou Xiaochuan, the governor of the People’s Bank of China, the central bank, said this week that China had not changed the share of its foreign exchange reserves that are allocated to Europe.
Analysts and financial executives say that China keeps about a quarter of its $3.18 trillion in foreign exchange reserves in euro-denominated assets, particularly German government bonds.
Mr. Zhou also reiterated recent comments by Prime Minister Wen Jiabao that any Chinese investment to help the European Union would be made through investments in securities issued by the International Monetary Fund or new, multilateral entities like the European Financial Stability Facility.
Market analysts say that while the Chinese government enforces strict secrecy on its foreign exchange management operations, there have already been some hints that China has been buying relatively small sums of securities from the financial stability fund.
Progress on expanding the I.M.F.’s financial base has been slowed by Chinese demands that the United States give up its unique veto over I.M.F. decisions — a power the United States holds because it has the world’s largest economy and controls more than 15 percent of the institution’s shares. I.M.F. decisions require 85 percent support from member countries to take effect.
Source : http://www.nytimes.com/2012/02/17/business/global/europe-steps-up-talks-with-china-on-its-market-status.html
Source : http://www.nytimes.com
Category : Small Business Grant
The European Union has stepped up discussions with Beijing on a potentially important change in China’s favor to trade rules covering China’s exports, but China still needs to curb subsidies to the nation’s exporters, a senior European official said here Thursday.
The trade issue is important because it is widely seen in China as linked to Beijing’s willingness to help finance the European debt bailout fund.
The question is whether the European Union should grant “market economy” status to China — a designation that would make it much harder for European companies to win international trade disputes in which they accuse China of dumping goods in Europe at prices below their cost.
Karel De Gucht, the European Union trade commissioner, said in a speech and interview Thursday that the designation was discussed in talks between European and Chinese leaders in Beijing earlier this week but that he had seen no sign yet that China was actually undertaking the free-market measures that would be needed for it to qualify.
Asked in an interview what single step China could take that would make the biggest difference in qualifying it for market economy status, Mr. De Gucht replied that China should give greater independence to the state-controlled banking sector to issue loans based on what businesses could pay them back.
Many Chinese banks now allocate credit on the basis of government policies, providing large loans to government-endorsed sectors like the manufacture of solar panels and wind turbines.
“You have a lot of concessionary loans,” he said, adding that with an overhaul, “interest rates would reflect business conditions, and much less political decisions.”
Ben Simpfendorfer, an economist based in Hong Kong specializing in China’s international investment decisions, expressed skepticism that the European Union would reach a deal any time soon on market economy status for China — despite the interest in persuading China to increase its purchases of European bonds as a way to enhance the economic bailout fund.
“Europe isn’t likely to offer market status to China, given worries about what that means for imports and employment in Europe’s own manufacturing sector,” he said.
Chinese banks have emerged in the last several years as the world’s largest providers of export loans, offering multibillion-dollar loans at extremely low interest rates to a long list of big Chinese corporations seeking to expand their shares in foreign markets. Western companies have struggled to compete for contracts against well-financed Chinese rivals.
“That effectively takes European and American bidders out of the market,” Mr. De Gucht said.
In a question-and-answer column last week in China Daily, the government’s official newspaper, Commerce Minister Chen Deming said the Chinese government was prepared to step up its export insurance and adjust taxes to help Chinese trading companies.
Mr. De Gucht said Thursday he was concerned about Mr. Chen’s remarks to the newspaper and whether they might signal a Chinese decision to provide even more — not less — assistance to exporters.
He was cautious about making any public prediction on when and whether China might step up its purchases of European government bonds, except to say that Chinese officials were “ready to cooperate with us.”
Zhou Xiaochuan, the governor of the People’s Bank of China, the central bank, said this week that China had not changed the share of its foreign exchange reserves that are allocated to Europe.
Analysts and financial executives say that China keeps about a quarter of its $3.18 trillion in foreign exchange reserves in euro-denominated assets, particularly German government bonds.
Mr. Zhou also reiterated recent comments by Prime Minister Wen Jiabao that any Chinese investment to help the European Union would be made through investments in securities issued by the International Monetary Fund or new, multilateral entities like the European Financial Stability Facility.
Market analysts say that while the Chinese government enforces strict secrecy on its foreign exchange management operations, there have already been some hints that China has been buying relatively small sums of securities from the financial stability fund.
Progress on expanding the I.M.F.’s financial base has been slowed by Chinese demands that the United States give up its unique veto over I.M.F. decisions — a power the United States holds because it has the world’s largest economy and controls more than 15 percent of the institution’s shares. I.M.F. decisions require 85 percent support from member countries to take effect.
Source : http://www.nytimes.com/2012/02/17/business/global/europe-steps-up-talks-with-china-on-its-market-status.html
