China's Wen - ready to boost eastern Europe trade

By Kevin Yao and Maciej Onoszko | April 26, 2012 4:51 PM IST

China is aiming to increase trade with eastern and southern European countries to $100 billion in 2015, Prime Minister Wen Jiabao said in Warsaw on Thursday.

Wen, in Poland as part of a European tour, also said the global economic situation had been improving this year, but that the recovery was still fragile.

"The global economic situation has shown some improvement so far this year, but the basis for such recovery is fragile and there are still relatively big uncertainties," Wen told an economic forum bringing together eastern European countries from Estonia in the north to Macedonia in the south.

"The Chinese side understands concerns among eastern European countries over trade imbalances and will boost imports from those countries," he said. Wen was a member of the last Chinese prime ministerial delegation to visit Poland, in 1987.

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China is also ready to seal currency swap agreements and conduct trade settlements in local currencies with its eastern and south-eastern European partners, and wants to launch a dedicated $10 billion credit line for them, initially by setting up a special fund with $500 million, Wen said.

Cash-rich China has signed a string of bilateral currency agreements, including with Mongolia and Kazakhstan, to promote the use of Chinese yuan in cross-border trade and investment.

The CEEU/SEEU fund will offer loans on favourable terms to support infrastructure, high-tech and green energy projects.

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Earlier this week Wen also promised to increase bilateral trade volumes with Germany [ID:nW8E7KD00A] and Poland [ID:nL5E8FOFAP] as part of a drive to diversify its foreign currency reserves, the world's largest at $3.3 trillion.

Poland, engaged in a large-scale infrastructure building programme and struggling to modernise its energy sector to curb reliance on highly polluting coal, is hoping for Chinese investments in those fields.

China is interested in Poland's banking sector and wants to open branches of its banks, including Industrial and Commercial Bank of China, its biggest lender, in Poland, the largest eastern member of the European Union.

In inviting regional leaders and business representatives to Warsaw for multilateral talks with Wen, Poland is also trying to present itself as a regional leader offering economic stability to other parts of Europe.

"We are pleased that Poland today is China's largest partner in central Europe, with trade volumes exceeding 14 billion euros in 2011," said Polish Prime Minister Donald Tusk, adding that the potential for trade between China and Poland and its regional peers was much bigger.

"Today, partners with no reason to feel inferior are meeting (...) who represent success and development in the world today," Tusk told the forum.

Poland is the only European Union member to have avoided recession since the start of the global financial crisis in 2008.

(Reporting by Maciej Onoszko and Kevin Yao, writing by Gabriela Baczynska, editing by Tim Pearce)

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