“China’s presence in Europe is visible across the board whether in
China’s recent purchase of several hundreds of millions of euros of
government bonds in the eurozone, particularly Spain or Greece, or in
other large-scale investments too, such as the acquisition of Volvo by
the car maker Geely,” European Trade Commissioner Karel De Gucht said.

Speaking at the Shanghai World Expo, he said he was confident Europe’s salvage
package for 860 billion euros ($1,097bn), has been very effective in
easing the sovereign debt crisis.

“I am quite confident that the euro is in good shape again.”

The trade chief added that the eurozone bonds China had been buying from
Spain and Greece were a good investment and would keep their value.

He estimated that China had spent around 420 million euros buying Spanish and Greek bonds, but could not confirm it.

“There is no risk at all to the Chinese treasury.”

Global concerns over China’s protection of intellectual property has flared up
in recent months and De Gucht said European companies were becoming
increasingly worried.

Indigenous innovation policies, where China
encourages government departments to buy locally made products from
Chinese companies, would force European firms to register as a Chinese
company in order to get access to the public procurement market.

However, De Gucht said China had already started to respond.

“Some changes were made to the indigenous innovation legislation that is
certainly accommodating to a certain extent some European worries,”

China has revised its offer to join the World Trade Organisation’s government
procurement agreement. De Gucht said the opening up of the public
procurement market would help resolve the ongoing Doha saga if a
substantial package was reached.

“The proposal that China has been putting on the table is largely insufficient, so we think
additional offers should come on the table,” he said, without specifying
what they should be.

Rare earths
Access to China’s raw materials is a hot topic in Europe and De Gucht said the
current case the EU had against China was a case they would win at the
WTO.

“We have a lot of understanding that a fast-growing economy
needs a lot of raw materials but it is not the right way because it
creates monopolies which distort the market.”

China holds about 90 percent of the world’s reserves of rare earth materials, which are
used in a number of electronic devices, digital displays and military
applications.

Foreign traders, manufacturers and military strategists have grown increasingly vocal about Chinese moves to reduce the volume of exports of rare earths.

However, China says export controls prevent wasteful exploitation, support volatile international prices and encourage high-tech manufacturers to shift operations to
China, where rare earth prices are cheaper.

China will not block exports of rare earth metals, premier Wen Jiabao told a German trade delegation earlier in July.