Wen in Europe to boost trade and ensure bond purchase
China wants closer economic ties with Europe, and clear doubts about its high inflation and harsh clampdown on human rights. Europe wants to sell securities to guarantee liquidity. Human rights and jailed dissidents are on the sidelines.
Beijing (AsiaNews/Agencies) – Chinese Premier Wen Jiabao began his visit in Great Britain. His goal is to boost trade and improve China’s image, which has been negatively affected by its high inflation, widespread unrest and harsh repression against dissidents and human rights activists.
Mr Wen today met British Prime Minister David Cameron to discuss trade. The British government said it wants to increase trade with China to US$ 100 billion by 2015, Cameron’s office said in a statement.
Bilateral trade agreements were signed worth £ 1.4 billion (US$ 2.2 billion), especially in the areas of architecture, civil engineering and research and development. Chinese exports to Europe are slowing down and Beijing is hoping that opening its domestic markets to foreign goods will bolster its economy, especially in terms of research and development.
In an interview with the BBC, Wen said that China would keep investing in Europe’s sovereign bond market. These acts “show our confidence in the economies of Europe and the euro-zone.”
China has US$ 3 trillion of currency reserves; buying securities from countries like Greece, Ireland and Spain, which are in a crisis, would provide fresh capital and inject confidence into investors.
On Saturday, Wen had already expressed Beijing’s desire “to work with Europe to [. . .] achieve common development, [. . .] stable development of the world economy and an in-depth development of China-Europe ties.”
Buying Eurobonds is key to refurbishing China’s image, dented recently by its high inflation.
Chinese media quoted the premier acknowledging for the first time that it would be hard to keep inflation below 4 per cent this year. Still, growth should be around 8-9 per cent, he said.
Many analysts expect inflation to be much higher. In May, it was 5.5 per cent and should hit 6 per cent this month. However, Wen’s statement was the first time the authorities admitted they might not meet their target.
The British want Chinese capital. Wen visited the General Motors plant in Birmingham, bought by the Shanghai Automobile Industry Corporation (SAIC), and praised Sino-British cooperation.
However, China has been criticised for its systematic violation of human rights and the arrest of hundreds of dissident since mid-February. It is expected that Wen will hear the same criticism during his trip.
For this reason, Beijing recently released artist Ai Weiwei and dissident Hu Jia, whose cases are closely followed in Europe.
Similarly, Cameron said that the development of civil society and freedom of expression and respect for human rights "underpins stability and prosperity for us all".
In Hungary, Wen promised to buy a “certain amount” of Hungarian bonds and to extend a 1 billion-euro (US$ 1.4 billion) loan to finance projects in Hungary. After Great Britain, Wen is set to travel to Germany.