I met the commercial counsellors of all 27 EU countries to discuss about doing business in China, plus some other top business people in private meetings.
The overall feeling is of concern for the near future. Both the EU and the USA are raising their voices and getting impatient.
Local Chinese government officials I recently met do seem clueless and feel all is well. Agreed, they cannot read the real story in their local newspaper.
On the other hand some figures and comments explain a lot.
The EU now is a total of 27 countries with a population of close to 480 million and a combined GNP exceeding 10 trillion euros.
According to Mofcom:

EU is now China’s largest trading partner according: in 2006 total trade stood at US$ 272.29 billion. Trade surplus for China was US$ 91.7 billion and in the first ten months of 2007 it climbed to US$ 102.8 billion. In 2006, the value of sales by EU companies with investment in China was US$ 206.6 billion “helping offset the disparity in the trade figures”.

But here is another version, of the EU Delegation in Beijing, ambassador Serge Abou:

“The EU trade deficit with China could reach 150 to 160 billion euro in 2007. The EU deficit growth of 30 to 35 billion euro per year is unsustainable.”

The visit of EU Trade Commissioner Peter Mandelson in late 2007 brought more EU comments:

The EU deficit is increasing at a pace of 15 million euro per hour.
Beijing is now the largest source of manufactured imports for Europe.
EU exports to China are less than to Switzerland.
EU companies lose 20 billion euro per year due to China’s non-tariff barriers and regulatory discrimination.

For the USA, much the same. During the China – USA talks in December 2007 – US Treasury Secretary Henry Paulson Jr. and US Commerce Secretary Carlos Gutierrez:

“Talks left the USA unfulfilled. Lingering concerns that China is increasingly using arcane regulations to keep out American products and wants to promote its own domestic economic “champions”. “In China there is an increasingly powerful domestic industry that is a strong lobby.” (IHT)”

Vice-Premier Wu Yi: “Some unharmonious notes” in the Sino-US trade ties this year: “It is marked by a sharp rise in the number of congressional legislation against China, evident politicization of economic and trade issues, strengthened control on exports to China and the purposeful exaggeration of China’s food and product safety.”
Then look at China Foreign Trade so far:

In the first eleven months of 2007: nearly US$ 2 trillion up 23.6% YoY.
Exports: US$ 1.1 trillion, up 26.1% – imports: US$ 865.5 billion, up 20.5% (no comments needed)
Trade surplus: US$ 238.1 billion up 52.2%

Now, that does not look so sustainable. I keep hearing from seasoned business people business is tough, less market access, rigged bidding, large-scale industrial IPR infringements. Yeah, yeah, read the wonderful success stories. Just talk frankly with people on the ground.
What the USA and EU need is not renminbi revaluation. They need reasonable market access, the consensus during a stiff drinking session in Centro, when the truth comes out. Not the one-way flow of goods and services. And the EU does want to export high-tech to China, businesses complain they can’t or don’t get paid (fairly).

Every year I join the conference to feel the pulse of the finance, investment and banking world in China. Usually many people turn up, like 1,000, as well as throngs of journalists. There are always some of the biggest shots in the industry to give a speech.
This year it took place in the Westin Hotel (Finance Street) under the title “Financing and Investing for Sustainable growth”.
Key speeches and presentations are mostly bland and say little or nothing that is worth mentioning. The Conference is mostly for me to hear what is NOT being said.
Some of my friends bankers get upset by the “empty talk, the B***S###”. Like when the Chinese bank officials talk about the need for innovation, the lack of expertise, etc. “Well, we foreign banks can do a lot but they just don’t let us”. Grumble grumble.
This year there was one remarkable message from nearly all Chinese key speakers: there is a serious risk for financial markets to drop considerably. “Markets do not always go up so we need to be prepared”. Not exactly an optimistic message. The subprime loan crisis is one of the factors mentioned. Not to talk about the totally crazy stock market in China. No more need to go to Macao, more and better here.
Some of the key speakers:
+ Zhou Xiaochuan, governor, PBOC
+ Lou Jiwei, chairman of the board, China Investment Corporation
+ NDRC vice chairman Zhang Xiaoqiang. In my opinion the best speaker:

– Switch from quantity to quality in foreign investment; new catalogue for investment; reduce export oriented and polluting industries for FDI; more focus on inland regions
– Chinese investments abroad going more global but still in its infancy; companies should be most involved, government to facilitate and lead the way; improve policies of forex and type of ownership abroad;. participation of large firms & SME.

+ Jiang Jianqing, chairman ICBC
+ Mike Moore, former PM of New Zealand (not exactly the highlight of the day)
+ Tianjin representative: Tianjin is an area of 11,000 km2 with over 11 million people. New Binhai Region covers 650 km2. New project of 10 million ton oil refining project.
See here the picture gallery with some pics of the key speakers – click on this link:
http://homepage.mac.com/bjprc/PhotoAlbum13.html