Skip to main content
Part of complete coverage on

Like it or not, China and Europe's economies intertwined

By Jim Boulden, CNN
November 15, 2012 -- Updated 0103 GMT (0903 HKT)
A Chinese consumer browses the Burberry flagship store in Beijing.
A Chinese consumer browses the Burberry flagship store in Beijing.
STORY HIGHLIGHTS
  • CNN's Jim Boulden writes he hardly hears positive stories about China's influence in Europe
  • Europe's and China's economies are intertwined
  • A change of leadership in Beijing will not have much impact in Europe

London (CNN) -- When I was driving through Poland last year, all the talk was about a Chinese company's failure to complete a major motorway project. The contract was wrestled away from the Chinese and the Poles finished it themselves.

The details, denials and counter-claims aren't important for this article; far more interesting is the impact of any China-led project in Europe. Any news on such projects -- good or bad -- makes headlines. But the splash is bigger when such projects fail or when people starting mumbling about Chinese influence.

What China does in Europe matters greatly, though rarely do I hear or read a positive story about China's influence.

When a Chinese company bought Volvo, it was the transfer of technology that made the headlines, along with the end of the era for a venerable European brand. When an Indian company bought Land Rover and Jaguar, Tata was hailed as the savior of two venerable European brands.

China taking hit from euro crisis?
Bigger threat: China or Europe?
Inside China's Communist Party Congress
China to maintain economic momentum?

Why is that?

The answer appears clear. We are equally fascinated and frightened by the rise of China's economic and military prowess.

The Chinese government's recent trip to central Europe revealed that the hiccup in Poland has not slowed China's plan to invest heavily in the former communist states. A $10 billion credit line will be used for infrastructure projects in Poland, Hungary and other countries. It was reported that the leaders of 16 central European countries met with Chinese Prime Minister Wen Jiabao while in Poland.

China's tech giant Huawei is a growing power in the telecoms world. But any attempt it makes to expand in Europe, United States or Africa is met with fears of technology transfer to a firm linked to the Chinese military through its founder. Rightly so, governments fret over a "foreign" firm controlling the hardware that is the backbone of modern society. In Huawei's case, as the Economist recently pointed out in a front cover story, the fear is China illegally tapping into western communications, both government and private.

Of course Huawei will say it's a private company with no state control and simply wants to compete on a level playing field with the likes of Nokia-Siemens, Cisco and Ericsson.

A change of leadership in Beijing will not have much impact in Europe. There is no reason to believe big changes will come from the top.

Instead, change appears to be coming from the bottom. Rising wages and increased worker benefits might raise the prices of goods exported to Europe.

It also helps to expand China's middle class which appears to love European and American products.

I recall growing up in America with worries about the rising power of Japan. All the products we desired were designed there or manufactured there, from video games players to VCRs and automobiles to the Walkman. With the wealth created, the Japanese were buying up property in California and buildings in New York.

It was feared the rise of Japan's economic prowess would never abate. But it did.

Europe can't assume the same will happen with China. But the economies now are so interlinked that stingy European consumers quickly translates into weaker manufacturing output in China. That slowdown is dissected by European economists and, on any given day, it can cause stocks to fall, leading to the similar stock tumbles a few hours later on Wall Street.

Recently Burberry noted a slowdown in sales in Asia, particularly in China -- its shares promptly fell 20%. Perhaps it was an overreaction, but it shows investors are quite happy to plow money into companies with "an Asian strategy" and then ignore it -- until there is a profit warning blamed on that same market.

That goes to show Europe has to get comfortable with the growing influence of China on its shores. It cannot expect its companies to grow in the Chinese market, then be surprised when enriched Chinese companies come shopping for European companies to buy.

China needs to understand that it will take time for Europe to get comfortable with China's investments. China has to make sure its investments and intentions are transparent. Oh, then there is that small matter of reciprocity.

ADVERTISEMENT
Part of complete coverage on
October 17, 2014 -- Updated 1113 GMT (1913 HKT)
A smuggler in Dandong, a Chinese border town near North Korea, tells CNN about the underground trade with North Korean soldiers
October 17, 2014 -- Updated 0654 GMT (1454 HKT)
Yenn Wong got quite a surprise one morning earlier this month when she found out an exact copy of her Hong Kong restaurant had opened in China.
October 15, 2014 -- Updated 0315 GMT (1115 HKT)
When I first came across a "virtual lover" service on e-commerce site Taobao, China's version of Amazon, I thought it was hype.
October 14, 2014 -- Updated 1315 GMT (2115 HKT)
Each year Yi Jiefeng does what she can to stop China turning into a desert.
October 13, 2014 -- Updated 1454 GMT (2254 HKT)
As its relationship with the West worsen, Russia is pivoting east in an attempt to secure business with China.
October 8, 2014 -- Updated 0229 GMT (1029 HKT)
Aspiring Chinese comics performing in Shanghai's underground comedy scene hope to bring stand-up to the masses.
September 30, 2014 -- Updated 1654 GMT (0054 HKT)
Liu Wen is one of the world's highest-paid models and the first Chinese face to crack the top five in Forbes' annual list of top earners.
October 3, 2014 -- Updated 1144 GMT (1944 HKT)
Cunning wolf? Working class hero? Or bland Beijing loyalist? C.Y. Leung was a relative unknown when he came to power in 2012.
October 2, 2014 -- Updated 1125 GMT (1925 HKT)
 A man uses his smartphone on July 16, 2014 in Tokyo, Japan. Only 53.5% of Japanese owned smartphones in March, according to a white paper released by the Ministry of Communications on July 15, 2014. The survey of a thousand participants each from Japan, the U.S., Britain, France, South Korea and Singapore, demonstrated that Japan had the fewest rate of the six; Singapore had the highest at 93.1%, followed by South Korea at 88.7%, UK at 80%, and France at 71.6%, and U.S. at 69.6% in the U.S. On the other hand, Japan had the highest percentage of regular mobile phone owners with 28.7%. (Photo by Atsushi Tomura/Getty Images)
App hopes to help those seeking a way out of China's overstrained public health system.
October 3, 2014 -- Updated 0020 GMT (0820 HKT)
Yards from pro-democracy protests, stands the Hong Kong garrison of the People's Liberation Army (PLA), China's armed forces.
October 2, 2014 -- Updated 1123 GMT (1923 HKT)
The massive street rallies that have swept Hong Kong present a major dilemma for China's leadership.
September 27, 2014 -- Updated 0707 GMT (1507 HKT)
Chinese wine drinkers need to develop a taste for the cheap stuff, not just premium red wines like Lafite.
September 24, 2014 -- Updated 0109 GMT (0909 HKT)
The Dalai Lama, Tibet's spiritual leader, set off a media kerfuffle this month when he spoke about his next reincarnation.
September 28, 2014 -- Updated 1418 GMT (2218 HKT)
He's one of the fieriest political activists in Hong Kong — he's been called an "extremist" by China's state-run media — and he's not old enough to drive.
September 23, 2014 -- Updated 0257 GMT (1057 HKT)
China has no wine-making tradition but the country now uncorks more bottles of red than any other.
September 16, 2014 -- Updated 0929 GMT (1729 HKT)
Christians in eastern China keep watch in Wenzhou, where authorities have demolished churches and removed crosses.
September 10, 2014 -- Updated 0538 GMT (1338 HKT)
Home-grown hip-hop appeals to a younger generation but its popularity has not translated into record deals and profits for budding rap artists.
ADVERTISEMENT