News Xina 6

The economy is obviously the hub of our bilateral relations. Although economic relations with China today are much closer and produce much higher figures than a few decades ago, they are still below their possibilities. Whereas in 1990 only half a dozen Spanish companies had set up in the People’s Republic (plus some twenty more in Hong Kong), today there are 600. But among more than 600,000 foreign companies, this is only 1 per thousand. Our exports account for 0.45% of Chinese imports, whereas Spain’s share in worldwide exports is close to 2%. In other words, what we sell to China is only a fifth of what we sell to the world as a whole. And Spanish investment in China is only 0.3% of overall foreign investment in China, even after major investments like Telefónica, BBVA and La Caixa, which means that only one of every 300 dollars entering China came from Spain. These are not figures that would be expected of the ninth world economic power in its relations with the country that, barring the unexpected, is on its way to becoming the top economic power.

Our companies barely went abroad a quarter century ago and, logically, began by reaching out to what was closest, best known and easiest. Indeed, our large companies became multinational in Latin America, where we have comparative advantages that we need to continue maximizing. China and Asia should not be seen as an alternative but as a complement and a diversification of risk. Today our companies are finally looking toward China. In a couple of years China will become the world’s leading importer and is pointing its economic modelin a new direction, moving from one based on investment and export to one based on consumption.

The emergence of consumption in China in the coming years and decades will be one of the central chapters in the world’s economy. President Hu Jintao said in December 2012 that China expects its imports to be worth eight trillion dollars in the next five years. Companies capable of offering goods and services attractive to China will have enormous opportunities.

Spain-China economic relations have taken on new dimensions, such as the purchase of public debt and investment by the country that is not only the world’s factory but with its mountain of reserves is becoming the world’s banker. Tourism is obviously another of these dimensions and in a few years China will be the leading provider of tourists. Now is the time to undertake major tourist promotion operations (like those being prepared by Tourespaña with FerránAdriá and the Real Madrid football club). The current figure for Chinese tourists, some 150,000 in 2012, is less than 0.2% of the total number of tourists coming to Spain. Tourism is therefore the great hope to be able to offset the enormous trade deficit, at least partially.

I estimate that, barring exceptions, neither politicians nor the general public are aware of the true dimension of China’s reemergence. And this is true for politicians and the public in Europe. We need to double our efforts to enhance the presence of our businessesin China and Chinese businesses in Spain, on the basis of agreements between the public and private sectors, without letting the difficulties discourage us.

Eugenio Bregolat
China Embassor until January 2013