Skip to main content
Part of complete coverage on

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

By Jim Boulden, CNN
updated 8:03 PM EST, Wed November 14, 2012
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
updated 7:13 AM EDT, Fri October 17, 2014
A smuggler in Dandong, a Chinese border town near North Korea, tells CNN about the underground trade with North Korean soldiers
updated 2:54 AM EDT, Fri October 17, 2014
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.
updated 11:15 PM EDT, Tue October 14, 2014
When I first came across a "virtual lover" service on e-commerce site Taobao, China's version of Amazon, I thought it was hype.
updated 9:15 AM EDT, Tue October 14, 2014
Each year Yi Jiefeng does what she can to stop China turning into a desert.
updated 10:54 AM EDT, Mon October 13, 2014
As its relationship with the West worsen, Russia is pivoting east in an attempt to secure business with China.
updated 10:29 PM EDT, Tue October 7, 2014
Aspiring Chinese comics performing in Shanghai's underground comedy scene hope to bring stand-up to the masses.
updated 12:54 PM EDT, Tue September 30, 2014
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.
updated 7:44 AM EDT, Fri October 3, 2014
Cunning wolf? Working class hero? Or bland Beijing loyalist? C.Y. Leung was a relative unknown when he came to power in 2012.
updated 7:25 AM EDT, Thu October 2, 2014
 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.
updated 8:20 PM EDT, Thu October 2, 2014
Yards from pro-democracy protests, stands the Hong Kong garrison of the People's Liberation Army (PLA), China's armed forces.
updated 7:23 AM EDT, Thu October 2, 2014
The massive street rallies that have swept Hong Kong present a major dilemma for China's leadership.
updated 3:07 AM EDT, Sat September 27, 2014
Chinese wine drinkers need to develop a taste for the cheap stuff, not just premium red wines like Lafite.
updated 9:09 PM EDT, Tue September 23, 2014
The Dalai Lama, Tibet's spiritual leader, set off a media kerfuffle this month when he spoke about his next reincarnation.
updated 10:18 AM EDT, Sun September 28, 2014
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.
updated 10:57 PM EDT, Mon September 22, 2014
China has no wine-making tradition but the country now uncorks more bottles of red than any other.
updated 5:29 AM EDT, Tue September 16, 2014
Christians in eastern China keep watch in Wenzhou, where authorities have demolished churches and removed crosses.
updated 1:38 AM EDT, Wed September 10, 2014
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