China Center for International Economic Exchanges

Wei Jianguo: Spain will lead the Belt and Road third-party market cooperation between China and Europe
Date:Nov 26,2018    Source:CCIEE

Invited by Spain, China’s President Xi Jinping will pay a state visit to Spain from November 27th to 29th. Mr. Wei Jianguo, a special expert of China Going Global Think Tank(CGGTT), former Vice Minister of Commerce, and Vice Chairman of the China Center for International Economic Exchanges, believes that China and Spain are partners in many aspects. Amid the current unilateralism and protectionism, both Spain and China agreed to maintain an open world economy and accelerate business cooperation in third-party markets such as Latin America, Central and Eastern Europe and Africa.

President Xi will pay a state visit to Spain from November 27th to 29th. This is the first time he visits Europe after the victory of the 19th National Congress. Why is Spain the first stop of his trip to Europe? What are the new opportunities for cooperation between China and Spain in third-party markets? The following is the summary of Mr. Wei Jianguo’s interview with the CGGTT.

Some people ask why is Spain the first stop of President Xi?

This year marks the 45th anniversary of the establishment of diplomatic relations between China and Spain and in the future, the China-Spain relations will develop more comprehensively and rapidly. The cooperation between the two countries in third-party market under the Belt and Road framework has achieved remarkable results, which has become the highlight of the China-EU cooperation under the new trend.

Currently, Europe still has doubts about the Belt and Road project but Spain actively conducts third-party market cooperation with China by using its advantages in history, language, geography, culture and economic and trade.

The visit of President Xi Jinping to Spain has a profound significance on the Chinese-Spain cooperation. The two countries will not only design a blueprint for bilateral development in the new era, but also sign a cooperation agreement on third-party market so that the two countries can carry out deep cooperation on a wider scale! This is beyond the reach of other European countries, and the King of Spain the Spanish people are very proud of this.

Spain has a large amount of capital investment in Latin America, Central and Eastern Europe, Africa and Arab countries, apart from a sound trade relationship with these regions. Especially in the investment field, Spanish banking institutions have extensive experience in assessing project risks, minimizing risks and developing effective operational plans. Furthermore, Spanish companies have great credibility in capital investment and project management in the above regions. The cooperation between Spain and China will enable the two countries and their enterprises to complement each other in terms of project risk prevention, management and profitability.

Cooperating with China in third-party market will not only help Spain to open a new path and create new models, but also enable the two sides to complement each other’s advantages.

Within the Spanish government, there is a wide consensus on the “Belt and Road” cooperation.

An important reason behind the smooth cooperation between Spain and China in third-party market is that the Spanish government has fewer doubts on the Belt and Road Initiative at the very beginning, which is different from other EU countries.

Spain is not only one of the first founding members of the AIIB, but has also actively engaged in practical operations. When Prime Minister Mariano Rajoy came to China for the first Belt and Road Forum for International Cooperation in May 2017, he discussed with President Xi Jinping and Premier Li Keqiang on how to give full play to their respective advantages in the aspect of third-market cooperation in the “Belt and Road” infrastructure construction.

In addition, Spain has also sent a positive signal to the Chinese government, encouraging Spanish and Chinese companies to strengthen third-party market cooperation. The Chinese and Spanish governments are the first two countries to establish a working group for third-party market cooperation. The working group not only encourages the companies of the two countries to carry out cooperation, but also give them specific guidance and coordination, which is rather rare in Europe.

Furthermore, when Spain’s new Prime Minister Pedro Sánchez visited Chile, Bolivia, Colombia and Costa Rica in August 2018, he encouraged Spain’s companies operating in Latin America to cooperate with Chinese companies and bridge Europe and Latin America.

Spain makes the best of its own advantages

When doing business in Latin America, Central and Eastern Europe, Africa and the Arab States, Spain has great advantages in language, culture and geography. Due to historical factors, Spain not only has a large foreign investment in the above regions, but also a deep understanding of the local market and advanced business management experience. When China proposed to build the “Belt and Road”, Spain seized the opportunity to combine its advantages with China’s projects and bring them to a higher level.

Latin America is a traditional trading partner of Spain

In 2017, the trade volume between Spain and Latin America reached 32.3 billion US dollars. In the first half of 2018, the trade volume between Spain and Brazil, Mexico and Argentina increased by more than 25% year-on-year. In the future, Spain will increase cooperation with Latin America.

Due to historical reasons, the investment made by Spanish companies in Latin America is well recognized by the host country. According to United Nations statistics, 41% of Latin America and the Caribbean regions’ FDI from 2005 to 2017 came from the EU, of which 29% came from Spain.

For Spanish companies that have operated in the region for a long time, they have accumulated rich experience in the culture, geography and understanding of the local market. The Spanish government is willing to expand cooperation with China through the Belt and Road initiative, especially when China increases its investment and economic cooperation in Latin America.

In fact, the current Chinese and Spanish governments have made positive progress in such kind of cooperation. For example, Telefonica, the Spanish multinational telecommunications company has used Huawei’s wireless communication technology and services to conduct business in Brazil, Mexico and Chile.

At the same time, the Spanish government actively encourages domestic companies to cooperate with Chinese companies in jointly developing the Latin American market.

Spain is the most active member of the EU in terms of investing in Central and Eastern Europe

In Central and Eastern Europe, whether in Poland, the Czech Republic, Romania or Hungary, the bilateral trade volume between Spain and these countries has increased by double digits in recent years. They enjoy a close connection in industrial chain, investment and cultural exchanges.

In 2017, Spain’s investment in 16 of the Central and Eastern European countries reached 200 million euros, especially in Poland and Romania. Spain is the fifth largest foreign investor in Poland and it has established more than 700 companies there, covering finance, infrastructure construction and information industry. By the end of 2016, Spain’s investment stock in Poland exceeded 5 billion euros. When assessed by FDI made in Central and Eastern Europe, Spain is the most active country in the European Union.

 “16+1” is the main platform for cooperation between China and Central and Eastern European countries, which has also attracted great interest from Spain. They are willing to work with China to further develop their advantages and expand cooperation in Central and Eastern Europe. It is expected that the two sides will carry out more cooperation in infrastructure, telecommunications, automotive and renewable energy projects in Central and Eastern Europe in the future.

Spain’s geographical advantages in Africa

Spain is the closest European country to the African continent and has a close trade relationship with Africa. In 2017, the trade volume between Spain and Morocco, Algeria and Egypt reached nearly 30 billion US dollars. In the first half of 2018, the trade between Spain and the above three countries increased by more than 10% year-on-year.

In West Africa, Spain’s bilateral trade with Nigeria reached $5.3 billion in 2017. The economic and trade relations with southern Africa is also getting stronger, reaching 2.7 billion US dollars in 2017.

Currently, Spain fully recognizes the geographical advantages and is aware of the good reputation China enjoys in Africa, apart from China’s improvement in infrastructure, equipment and management. Therefore, the cooperation between China and Spain in Africa and Arab countries is on the rise. For example, China Three Gorges Corporation and Spain’s ACS Group formed a consortium to jointly construct the Grand Inga hydropower station in the Democratic Republic of Congo. Also, China’s Shandong Electric Power Construction Group Co., Ltd. and Spain’s SENER Company jointly built a solar thermal power station in Morocco.

At the same time, Spain has also attached great importance to the market development in the Arab countries along the “Belt and Road” region. For instance, China’s Sinopec and a Spanish consortium established the Al-Zour refinery in Kuwait. With the financial support of the Industrial and Commercial Bank of China, Chinese and Spanish companies established a photothermal power plant in Dubai. In the future, there will be a greater potential for the cooperation between China and Spain in the Arab countries.

The above-mentioned cooperation between China and Spain in Africa and the Arab countries is beyond the reach of other EU countries.

Xi Jinping’s state visit to Spain will open a new era of the Sino-Spain cooperation

The cooperation between China and Spain in third market development under the Belt and Road project will enter a new era after President Xi Jinping’s state visit to Spain.

As Spanish Prime Minister Pedro Sánchez said at the China-Spain High-level Think Tank Conference last November, “Spain admires China because it has succeeded in transforming itself and now it will start to transform the world. I believe China will succeed.”

At present, Spanish companies and business people are looking forward to President Xi Jinping’s visit. They believe that the third-market cooperation between China and Spain will not only lead Europe, but also be at the forefront of the world.

Spain has a large amount of capital investment in the markets of Latin America, Central and Eastern Europe, Africa and Arab countries, which have great demand in infrastructure, energy, communications, finance and other fields. Spain sees these demands as a great opportunity and is eager to enter these regions with the help of China’s experience in infrastructure construction, China’s policies, funds and equipment. The potential for cooperation between the two sides is huge.

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