Leadership change evokes positive reaction

Investment

Derek Scissors, a research fellow in Asia Economic Policy at The Heritage Foundation in Washington DC, said he is interested in China's outbound investment.

"In 2002, it was very small. Now it is much larger and more dynamic. There are bumps in every road, but this is an important success story," he said.

In order to promote bilateral ties and provide mutual benefits, the analysts also suggested that Chinese and European leaders should increase investment.

Establishing an investment trend between China and Europe to improve market access for investors on both sides should be the top priority for the leaders of both sides, said Francois Godement, a China specialist and director of the Asia Center think tank in Paris.

"It is important for Europe to gain better access to China and for Chinese companies to be protected and to know how they can invest in Europe," he said. "That's probably where the change will be in the EU-China relations."

He noted that the trade imbalance will continue to be a problem that needs to be addressed by leaders on both sides, but concrete and effective measures are more valuable than "simply saying it should go down".

European nations should prepare a common position in the triangular relationship of Europe, the US and China, he said.

"If the European leaders don't coordinate and create a common position, they will not have any weight compared with the Americans and the Chinese in bargaining power," Godement said.

"I hope that the eurozone crisis will fade away soon and we can move on to other priorities, such as preparing a common policy for relations with countries like China, which is very important," he added.

Pierre Defraigne, executive director for the think-tank the Madariaga - College of Europe Foundation in Brussels, said investment should be at the top of the agenda, because it's really the most urgent and the most sensitive issue at the moment.

"Investment is the bridge we need to consolidate the economic partnership, and cross-regional investment really matters to the growing mutual interests," he stressed.

The experts all said that European leaders need to make their macroeconomic environment more attractive for international investment if they want to create jobs and maintain Europe's competitiveness over the long term.

However, there is a debate in Europe about the security and political implications of Chinese investment in sectors considered to be of strategic importance.

Ho noted that several things are necessary for Chinese investment in Europe to increase.

One of the most pressing issues is how the EU deals with its sovereign debt crisis, and whether the steps will be taken in a sufficiently effective and efficient manner to restore the confidence of consumers and producers in the EU market, Ho said.

Another major issue is whether the EU will be able to establish a more unified political system that will allow more effective and coordinated trade negotiations, Ho said, adding that coordination of EU-China trade needs to be improved, meaning that favorable investment policies will need to be handled at a transnational level.

Yao gave some guidelines for European leaders to attract China's investment, which include working closely with central and local governments and major companies, identifying key sectors, especially those that China has identified as strategic sectors such as high-technology manufacturing, environmental services, healthcare, aerospace technology, biotechnology and renewable energy.

As Yao put it, Europe needs to "be more open to China and respect China's values and foreign policies."