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Areas for economic and financialcooperation in Sino-European relations
Central Bank RoundtableShanghai Forum, May 27, 2017
Peter MooslechnerExecutive DirectorOesterreichische Nationalbank, Vienna, Austria
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As a starting point: China and Europe - Many centuries of common “Silk Road history”
From a global geographical…
…as well asfrom a historicalperspective
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Where we come from – to where we have developed…
Donald Trump: “Our politicians have aggressively pursued a policy of globalization, moving our jobs, our wealth and our factories to Mexico and overseas.” (June 28, 2016 ) “We must protect our borders from the ravages of other countries making our products, stealing our companies and destroying our jobs.” (January 20, 2017)
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A broader geographical (and political) perspective on the New Silk Road initiative and Pan-European Corridors
Pan-EuropeanCorridors
New Silk RoadTrans-European Networks
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China‘s growing contribution to the global economy
0
20000
40000
60000
80000
100000
120000
1990 1995 2000 2005 2010 2015 2020
EU USA
Other advanced Economies China
Other emerging and developing economies
World GDP
CurrentUS$, in billions
Source: IMF World Economic Outlook (April 2017).
Forecast
0
10
20
30
40
50
60
70
1970 1975 1980 1985 1990 1995 2000 2005 2010
Economic globalization Social globalizationPolitical globalization KOF Index of globalization
China: KOF Index of globalization and components
Index points
Source: KOF, ETH Zurich.
0102030405060708090
100
1970 1975 1980 1985 1990 1995 2000 2005 2010
Austria China GermanyFrance United Kingdom JapanSingapore United States
KOF: Index of globalization
Index points
Source: KOF.
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Already strong economic ties between Chinaand Europe to build on
58%
6%
3%
3%
2%
1%
1%1%
25%
Hong Kong, China
European Union
United States
Australia
Singapore
Kazakhstan
Canada
Russian Federation
Other countries
China: Outward FDI stocks in 2012
Source: UNCTAD.
Percent of total
32%
13%
5%5%4%3%
2%2%
34%
United States
Switzerland
Brazil
Canada
Russia
Australia
Hong Kong
China (except HongKong)Other extra-EU
EU: Outward FDI stocks to extra-EU in 2012
Source: Eurostat.
Percent of total
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Many interesting technological and financial prerequisitesfor China – EU cooperation exist
OECD (2017): Making the most of innovation in China
0
50
100
150
200
250
.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
United States China European Union
Stocks traded, total value (current US$)Stocks traded, total value (% of GDP) - right axis
Stocks traded, total value and shares in GDP, 2014
Trillion current USD
Source: World Bank.
% of GDP
,0
,50
1,0
1,50
2,0
2,50
3,0
3,50
4,0
China European Union United States
Total reserves (includes gold, current US$)Total reserves minus gold (current US$)
Total reserves, 2015
Trillion current USD
Source: World Bank.
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Avoid a (to) narrow focus on economics!Successful cooperation needs to be based on a much
broader and long-term oriented approach
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Within a broad-based approach,there are many areas for successful enhanced cooperation…
• Climate change and energy: EU and China remain the two single most important signatories of the Paris climate agreement
• Trade policy and transportation infrastructure: trade agreement significant potential for enhanced cooperation and „win-win“ situations
• Investment protection agreements: Useful tool to avoid asymmetric access to domestic markets
• Financial markets: China‘s role in the global financial system is increasing and will continue to grow
• Education, science and research, innovation• Cultural dialogue and increased cooperation on cultural
issues
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Practical experiences: The Oesterreichische Nationalbank (the Central Bank of
Austria, OeNB) was the first EU-central bank that signed an FX-trading agreement with the People‘s Bank of China in 2007 already
The Austrian agreement was understood as clear signal forincreased cooperation and many other EU-central banksfollowed this example
Types of trades/investments: FX-transactions & fixed income transactions/investments
Main positive aspect: Mutual efforts to create trust and a basis for cooperation in other areas
Clear signal: OeNB‘s early decision to invest in China
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Instead of conclusions:5 important messages
• The New Silk Road Initiative offers a mutual opportunity to work on this regarding the China – EU relationship
• Economic ties between China and EU are already well established andare deepening to the benefit of both sides
• Most importantly, successful cooperation should be designed muchbroader than with a narrow focus on economics only
• There are many areas beyond narrow economics – from energy toresearch and culture – where a long-term „win-win“ cooperation alongthe Silk Road blueprint makes sense
• Emerging de-globalizationtendencies underline theimportance of other forms ofinternational cooperation
Areas for economic and financialcooperation in Sino-European relations
Central Bank RoundtableShanghai Forum, May 27, 2017
Peter MooslechnerExecutive DirectorOesterreichische Nationalbank, Vienna, Austria
