Building bridges of growth together

Vice-Premier Li Keqiang’s trip reaffirms mutual trust and China's key role in European recovery

Vice-Premier Li Keqiang meets British Prime Minister David Cameron during his visit to London on Jan 10. [Photo/Xinhua]

Fostering strategic partnerships and inking major trade and investment deals were the key takeaways from Vice-Premier Li Keqiang's three-nation European tour that concluded this week.

During his trip Li stressed on Beijing's firm commitment to help Europe tackle the mounting debt crisis and also pledged to further bolster Sino-EU ties.

Li's trip was the first major diplomatic mission to Europe this year by a top Chinese official. About 120 business leaders accompanied Li on the nine-day tour to Spain, Germany and the United Kingdom.

According to analysts, the high-level discussions between the two sides highlighted the key role that China can play in an European recovery and the importance of further improving the mutual trust between the two regions.

Li's visit comes at a critical point for members in the euro zone, as they are grappling with a financial crisis that has dented investor confidence and put many nations in debt.

"Considering their current situation, Europe can no longer pursue its expansionary monetary policy," says Cui Hongjian, director of European Studies at the China Institute of International Studies.

"Li has played a vital role in China's economic development, and hence his visit to Europe is an opportunity to correct some imbalances," says Kerry Brown, senior fellow at the Royal Institute of International Affairs.

The flurry of deals that were signed during the visit, especially at a time when the trade deficit is in China's favor is indeed welcome, he says.

During his busy schedule in Europe, the vice-premier not only held constructive talks with leaders of the three countries, but also signed several multi-billion-euro trade and investment deals with local entrepreneurs.

Li also said that China would buy more Spanish government bonds to help the troubled European nation.

"China is a responsible long-term investor, both in the European financial market and in the Spanish financial market," Li wrote in an article published in the Spanish newspaper El Pas on Jan 4, in which he reaffirmed that China would buy Spanish government bonds depending on market conditions.

"To divide something by 1.3 billion may be discouraging. But it is definitely encouraging and even exciting to multiply something by 1.3 billion," Li said in the article.

During his meetings with a group of Chinese and Spanish entrepreneurs in Madrid, Li said the economies of China and the EU are complementary, with closely interwoven interests at bilateral and global levels.

But the current world economic recovery remains volatile and imbalanced due to the lingering impact of the financial crisis. Li stressed on the need to enhance bilateral dialogue and coordination between the nations while pursuing mutual benefits.

Besides the potential of buying more state bonds from Spain, Li and Spanish Prime Minister Jose Luis Rodriguez inked 16 deals amounting to 5.77 billion euros in sectors like banking, energy, transport, telecommunications and agriculture.

The vice-premier also said China was committed to assist Spain and the EU as a whole to overcome the current economic and fiscal difficulties through win-win partnerships.

Due to sluggish economic growth and high unemployment, the Spanish government's finances have been quite stretched. It clocked a tepid growth of just 0.1 percent in the first quarter of 2010 and 0.2 percent in the second, but then stalled with zero growth during the third quarter.

"For Spain, $7.5 billion of deals are enormous. It will serve as a timely boost for the country's economy," says Zhang Min, deputy researcher on European studies at the China Institute of International Studies.

Entrepreneurs and business leaders in Germany and UK also signed trade and investment deals during the vice-premier's visit.

In Germany, Chinese enterprises signed 11 agreements and procurement contracts worth 4.81 billion euros, including contracts of more than 3.85 billion euros with carmakers Volkswagen and Daimler.