Free trade zone to boost investment from Europe, EC official says
The European Commission's Maarten Verwey says Shanghai experiment is both a challenge and an encouragement to bloc's companies
Shanghai's free-trade zone, to be launched tomorrow, will attract more European companies to invest on the mainland with the prospect of eased market access, a European Union official said.
"A challenge for European companies expanding into Asia market is the market access. Mainland China has not yet fully opened up its capital market for foreign firms. The free-trade zone experiment will help," said Maarten Verwey, deputy director-general at the Directorate General for Economic and Financial Affairs of the European Commission.
"Many European firms I have met have shown interest in this free-trade zone experiment. We are still waiting for the details. In principal, this will encourage trade and investment and will create business opportunities for European companies."
The free-trade zone in Shanghai will be the first of its type on the mainland, providing tax and other incentives to attract foreign companies to invest. The zone will also allow freer convertibility of the yuan for transfers in and out of the country.
In an exclusive interview with the South China Morning Post during a visit to Hong Kong, Verwey said the mainland became the EU's second-largest trading partner last year, with trade valued at €433.79 billion (HK$4.54 trillion), or 12.5 per cent of the trading bloc's overall trade. Only trade with the United States is higher, at €497.66 billion last year.
Trade between the EU and China took a hit when the global financial crisis arrived in 2008. In 2009, the EU's trade with China suffered a 9.2 per cent annual decline to €296 billion. In the years since, trade has risen for four consecutive years, resulting in a combined 46 per cent gain during the period.