McCreevy seeks to bolster economic ties with China

Internal Market Commissioner Charlie McCreevy will make a bid to boost economic relations between the EU and China next month, with talks in Beijing aimed at improving co-operation on regulatory issues, market access and intellectual property rights (IPR).

McCreevy wants to develop the kind of ongoing regulatory dialogue that already exists between the EU and US. McCreevy told European Voice: "We’re further down the road with the US, but we’re getting on nicely with China as well. We’re broadening our horizons. The important thing is that the Chinese know we’re treating them with importance."

The EU’s high-level talks will follow closely on the heels of talks this week (22-23 May) in Washington between the US and Chinese governments. The second meeting of the US-China strategic economic dialogue, co-chaired by Chinese Vice-Prime Minister Wu Yi and US Treasury Secretary Henry Paulson, was soured by US criticism of China’s undervalued yuan.

McCreevy will meet Yi, Finance Minister Jin Renqing and Commerce Minister Bo Xilai, among other high-ranking officials.

Yi strongly criticised the ‘politicisation’ of US negotiating tactics this week - US lawmakers threatened to impose sanctions on Beijing if currency reform is not carried out - but is thought likely to warm to the EU’s less combative tactics.

"We welcome the EU approach," said a Chinese expert close to the negotiations. "The best way to reach agreement is through consultation and dialogue where openly we try to understand the other side. We shouldn’t politicise trade and economic issues. Of course we dislike threats and blackmail."

As well as pushing for stricter IPR enforcement and greater access to Chinese markets, particularly for financial services, one of McCreevy’s major priorities will be to ensure that China follows international standards on accountancy. According to a Commission official, the EU wants to dissuade China from taking a US-based approach to rules.

"We believe in a multilateral approach. What the EU has is a principles-based approach to these kinds of issues, whereas the US has a rules-based approach," he said.

McCreevy will be delivering a strong political message to China during his visit, which precedes a two-day trip to Japan. "We’d like to make it clear to China that they are part of this world and that we don’t see them as a threat, but as an opportunity," said the official. "We don’t go with the attitude that they are dangerous because we have to compete with them. It is a win-win situation."

Sijin Cheng, a New York-based China analyst at risk consultancy firm Eurasia Group, said that the EU was better placed for fruitful dialogue with China than the US. "China has traditionally tried to play up the strategic interest between China and Europe and the fact that the economic relationship is freer from political constraints," she said. Cheng warned, however, that EU support for the US in World Trade Organization disputes could "put China on alert".

A Commission official indicated that, although IPR is still considered an important issue in EU-China relations, the focus of talks would shift somewhat given China’s move "up the quality chain".

China made a striking foray into global capital markets this week, announcing a $3 billion (€2.2bn) investment in US private equity firm Blackstone. With foreign exchange reserves worth more than a trillion dollars, its influence on global capital flows is expected to rise considerably in the near future.

"China is definitely changing in the world economy in ways that hadn’t been anticipated before. The urgency is now growing in China to expand capital outflows. This is bound to have an effect on global asset prices," said Cheng.

Internal Market Commissioner Charlie McCreevy will make a bid to boost economic relations between the EU and China next month, with talks in Beijing aimed at improving co-operation on regulatory issues, market access and intellectual property rights (IPR).