China signs $7.5b deals with Spain

08:14, January 06, 2011      

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Full coverage: Chinese vice premier visits Spain, Germany, Britain

China and Spain signed $7.5 billion worth of agreements on Wednesday, a welcome boost for Spain's recession-hit economy.

Visiting Vice-Premier Li Keqiang also vowed to help Europe beat its debt crisis, as he started his three-nation European tour.

Li told a breakfast meeting of Spanish and Chinese business leaders in Madrid that the signed agreements and contracts cover 16 programs.

The deals reportedly involve the banking, energy, transport and telecommunications sectors. According to the Spanish daily El Mundo, they include Spanish flight simulator manufacturer Indra, and the Spanish branch of Vodafone. It was not clear whether the deals included the purchase of Spanish bonds.

Li said prior to the trip China will buy more of the country's treasury bonds "depending on market conditions".

Spain's finance minister told Li on Tuesday that Chinese investors played an important role in stabilizing financial markets and suggested the two countries join in developing markets in Latin America.

"For Spain, $7.5 billion of deals is a large number, and that will serve as a timely boost for the country's economy," Zhang Min, a deputy researcher on European studies at the China Institute of International Studies, told China Daily.

The Spanish economy, the EU's fifth largest, slumped into recession during the second half of 2008 as the global financial meltdown compounded the collapse of the once-booming property market.

It emerged with 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 in the third.

Li on Wednesday also met Spanish Prime Minister Jose Luis Rodriguez Zapatero, King Juan Carlos and Foreign Minister Trinidad Jimenez.

During the breakfast meeting Li said that the economies of China and the EU are complementary, with closely interwoven interests at bilateral and global levels.

Li also said that China hopes the EU will recognize his country's full market economy status as soon as possible and expressed his hopes that the EU will ease its high-tech export limitations on China. He also urged the EU to resist protectionism and handle bilateral disputes via dialogue.

Li arrived in Spain on Tuesday, the first leg of his European trip, which will later bring him to Germany and Britain.

Analysts believe that China's help could be important for the EU's recovery.

"I think it's very significant for Europe at large, not just for Spain. I think it sends a very important signal to the financial markets as well," Beat Lenherr, chief global strategist at LGT Capital Management, told CNBC television.

China has previously announced multibillion-dollar accords with Greece and Portugal, the two worst performing economies in the EU.

"China's support for the EU's financial stabilization measures and its help to certain countries in coping with the sovereign debt crisis are all conducive to promoting full economic recovery and steady growth,"

Li said in a comment piece published in the German daily Sueddeutsche Zeitung on Wednesday.

China is now the EU's second largest trading partner and export market and China's imports from the EU rebounded rapidly in 2010.

Chinese analysts said that the visit may also help China explore possibilities of new cooperation in technology transfer, especially green technology, to help ensure China restructures its energy-reliant economy, said Jin Ling, an expert on EU studies at the China Institute of International Studies.

European countries have a traditional advantage in high-tech and clean energy industries, which serve China's needs if it is to transform its growth model.

Yet Jin cautioned that both China and the EU have to do more to build political confidence in each other.

Yang Jing, AFP and Xinhua contributed to this story.

By Wu Jiao and Ai Yang, China Daily
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