In this episode of China Money Podcast, guest David Gosset discusses China’s potential aid to the Eurozone and the long-term relationship outlook between China and the European Union.

Q: Premier Wen Jiabao has clearly signaled that China will help Europe to overcome its debt crisis. What kind of role do you think China can and will play?

A: What’s interesting is that from the very beginning of this Euro-China story, China has always been supportive. I remember President Jiang Zeming told his European counterparts that we would be supportive of the Euro because we want to be in a multi-polar world. It’s not about economics. It’s about politics.

Premier Wen said also to the Chinese media that to help Europe is to help China itself. He’s obviously trying to persuade public opinion. But this year we will see an interesting fact, in which China will become the biggest trading partner of the EU, before the U.S.

If you look at China-EU trade, more than 30 percent is between China and Germany. Already, 5 percent of German exports go to China. For the first time this year, the first trading partner of Germany, outside of the EU, will be China. So that’s some very interesting facts (that will strengthen the relationship).

Q: So do you think China will either go through the European Financial Stability Facility or the IMF in helping Europe?

A: China would like better to go through the IMF than through the new mechanism in Europe (the EFSF). If China goes through the IMF route, it will also allow China a bigger say within the IMF.

But on the long-term, what also matters is that how much Chinese companies are going to invest in Europe. China’s outbound investment is estimated to be more than one trillion dollars for the next decade. For the most part, it will be in the Asia Pacific region. A small amount will go to Europe. It is in the interest in Europe to create conditions to attract more Chinese investments.

Q: What kind of risks, or even backlash, should China be prepared for when it accelerates its outbound investment?

A: There are lots of traps, for sure. But I’m sure Chinese companies will learn extremely quickly. One of them, Huawei, is already very successful, and it’s creating jobs (in Europe).

Q: We are all aware of the problems that Huawei has to deal with in the U.S. Can that similar problems happen in Europe?

A: It could, but it faced these problems in the U.S. because of its obsession with national security. Huawei is not threatening anyone in the U.S. The business environment in EU is better than the U.S. from this perspective.

Our Guest Today:
David Gosset is the director of the Euro-China Center for International and Business Relations at China Europe International Business School in Shanghai and Beijing. He is also the Founder of the Euro-China Forum with the objective of nurturing mutual understanding between the two edges of the Eurasian continent.

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