Monday, June 20, 2005

Don't step on my yellow suede shoes

In the aftermath of the Belgian King’s state visit and trade mission to China (see here for some original photos in Xi’an), Belgian federal Foreign Minister (Secretary of State) Karel De Gucht gave his China view in an interview (June 17) with the Flemish economic and financial quality newspaper "De Tijd". The article is in the pay section. His analysis of the Belgian (mostly Flemish)-Chinese trade relations is utterly correct, according to the reliable "Chinawatcher" in the comment section of this web log.

China is steadily becoming a first order global economic power, with persisting 2-digit yearly GNP percent growth rates. Conventional (like textile) and new (electronics) industries flee away from the Western industrial world with its high production cost to China and to the emerging South-East Asian low-cost countries in an alarming rate. As a result, China has a huge trade surplus with the West. That surplus will even grow higher with the imminent revaluation of the Yuan. The Western consumers profit from the lower price of imported Chinese consumer goods. But at the same time they suffer from job-loss, as their employers prefer the East as their production base. Toll barriers are not the answer, and have never been, although China is a steady target for unfair trade and piracy complaints by the Western and South American business community (see here and here). Mr. De Gucht’s analysis addresses the "Chinese" strategy that should be adopted by Belgium and by the "old" European countries with their huge and costly social security system and skyrocketing labor costs (see here).

"The time to start an exporting business to China", said mr. De Gucht, "is over. Those who aren’t there yet now won’t have a chance". But there is something else. Sitting on their pile of cash, many Chinese multinationals and private business-owners (that did extremely well during the past decade) are actively looking for investment opportunities in Europe, mr. De Gucht continued. They see the "old" continent as more benevolent to invest in than the USA.

Most of all, Chinese entrepreneurs and businessmen are looking into avenues for exporting their freshly earned capital to a "safe" political haven. They are afraid that a revival of the Communism in China might seize their bourgeois-capitalist assets. A less known fact is that many large Chinese state enterprises park their pension funds abroad in the Cayman Islands - an offshore fiscal paradise -, according to "Chinawatcher". "Ask Alcatell-Bell Shanghai", he adds with a wink.

Given this investment urge of the Chinese nouveaux riches, it is a shame that the Belgian government administration is very creative and stubbornly effective in frightening off potential Chinese investors. Many Chinese companies have evaded already to the nearby Netherlands, turned off by those manifold bureaucratic challenges the Belgian administration excels in with anything "foreign". And the Dutch, of course, welcome them with open arms. The smell of money has always been a powerful aphrodisiac to the Low Countrymen.

The Foreigners Administration ("Dienst Vreemdelingenzaken") tops it all. They just assume that every Chinese with deep pockets is a Mafiosi and connected with triads. "The Blue Lotus" with Tintin must be their main operations manual.

If Foreign Minister Karel De Gucht only could feed his correct analysis on China into the archaic federal administration and into the politicians narrow minds, he would accomplish much more than he supposedly spoiled by his "undiplomatic" language about the Dutch Prime Minister Balkenende ("he is a mix of Harry Potter and an old-fashioned bourgeois") and the Congolese leaders ("they are corrupt and waste development aid" ).

Belgium already screwed up when the Taiwanese started their investment odyssey years ago in Europe. The Dutch caught the fish then. This time, let’s not escape the whale. It’s a Dragon.

"Internationaal ondernemen in China", (in Dutch) a study of Agoria.

Dirk Sterckx (VLD), chairman of the EU "Delegation for relations with the People's Republic of China") in an interview (in Dutch) about China, economic opportunities, and the EU weapons embargo against China.

Photo: (click to enlarge) Karel De Gucht and Dirk Sterckx musing about the Chinese Dragon (original picture in China last week, except the dragon toys).


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