UK, China expected to expand trade relations
By Dai Yan (China Daily)
Updated: 2005-11-09 06:16

China and Britain are well-equipped to concentrate trade and investment co-operation in four areas in a bid to forge comprehensive economic and trade ties, Bo Xilai, China's Minister of Commerce, said yesterday in a written interview.

Bo identified these four areas as trade in services, co-operation in high and new technologies, British investment in China's newly-developing regions and China's investment in Britain.

Bo, who is accompanying Chinese President Hu Jintao on a visit to Britain, said he believes Hu's trip will generate new impetus to bilateral trade and economic co-operation.

Hu, who arrived in London yesterday for the first state visit to the UK by a Chinese leader since 1999, also will travel to Germany and Spain later this week.

Economic issues are likely to be a major aspect of this trip.

The room for increased trade in services is obvious for China and Britain, said Bo. Britain is the world's second largest trading country in services, while China's service market is predicted to see fast growth in the near future.

Many service industries in Britain, including finance, distribution, design, consultancy, law and accountancy are well-positioned to tap into China's markets, Bo added.

In the field of high technology development, Bo said the two sides should be more open about co-operation. Biotechnology, information, energy and new materials are areas of interest identified by the minister.

"I believe British investors will be interested in the news that China is drafting a series of policies to encourage foreign-backed R&D centres," Bo said.

And Bo recommended China's middle, west and northeast as good locations for British investment.

They will find many new opportunities in these areas, which are less developed but have good infrastructure and education, Bo said.

"We also noted that China's outbound investment to Britain has quickly picked up in recent years and we will give more support to this trend," Bo said.

The British Government is keen to attract Chinese investment, which currently is small, but is believed to have big growth potential.

Trade and economic co-operation between China and Britain has experienced rapid development in recent years. In 2004, bilateral trade reached US$19.7 billion, an increase of 37 per cent over the previous year.

The figure in the first half of this year grew by 30 per cent over the same period last year.

Britain is China's third largest trading partner and No 1 investing country in the European Union. By the end of June, Britain's direct investment in China had exceeded US$12.7 billion.

British companies, led by Rolls-Royce Plc, BP Plc, Royal Dutch Shell Group and Tesco Plc, have pledged investment worth US$10.4 billion in China.

"But trade and economic co-operation between China and Britain still has much room for improvement and the two sides are a good match," said Bo.

China has had sound economic development and has a huge and attractive market. Its manufacturing sector is strengthening its power in electronics, telecoms and textiles. Britain is a big economic power with a strong capacity in services and technology development.

Xia Youfu, a professor from the University of International Business and Economics, said deeper co-operation between China and Britain, a major economy in the European Union, will help China's trade and economic ties with the trading bloc.

Hu's visit to Briatin, Germany and Spain is part of an increasing number of bilateral visits in recent years, which has intensified Sino-EU co-operation, Xia said.

China and the European Union have just successfully resolved the "bra wars" dispute, and Sino-EU trade volume is expected to top 200 billion euros (US$240 billion) this year, Xia said.

Since the EU and China first established relations in 1975, bilateral trade had risen 74-fold.

In a recent joint economic meeting between China and the EU, EU Trade Commissioner Peter Mandelson said the European Commission, the EU's executive arm, plans to bring out a communique on Europe's trade and investment relationship with China early next year.

The commission and China will look at ways in which a new framework agreement between them can better reflect economic and strategic changes in Europe's relationship with China over the last two decades.

(China Daily 11/09/2005 page9)