MercoPress. South Atlantic News Agency

As with Greece and Portugal, China comes to Spain’s rescue; 7.5 billion deals

Spanish President Rodriguez Zapatero with Vice-Premier Li Keqiang

China and Spain signed this week business deals worth 7.5 billion US dollars, a welcome boost for Spain's recession-hit economy. Visiting Vice-Premier Li Keqiang also vowed to help Europe overcome its debt crisis (and support the Euro), as he started his three-nation European tour.

Li told a meeting of Spanish and Chinese business leaders in Madrid that the signed agreements and contracts cover 16 programs.

The deals reportedly involve the banking, energy, transport and telecommunications sectors. According to the Spanish daily El Mundo, they include Spanish flight simulator manufacturer Indra, and the Spanish branch of Vodafone. It was not clear whether China is committed to the purchase of Spanish sovereign bonds as was anticipated by the official press from both countries.

Li said prior to the trip China will buy more of the country's treasury bonds “depending on market conditions”.

Spain's Finance minister Elena Salgado praised China and told Li that Chinese investors played an important role in stabilizing financial markets and suggested the two countries join in developing markets in Latin America.

“For Spain, 7.5 billion of deals is a significant figure, and will serve as a timely boost for the country's economy,” Zhang Min, a deputy researcher on European studies at the China Institute of International Studies, was quoted by China Daily.

The Spanish economy, the EU fifth largest, slumped into recession during the second half of 2008 as the global financial meltdown exposed and forced the collapse of the once-booming property market. Spain also has the highest unemployment rate (above 20%) in the EU with over four million Spaniards out of work.

Spain emerged with a very mild growth rate in the first quarter of 2010 (0.1%) and 0.2% in the second but then stalled with zero growth in the third.

Li also met Spanish Prime Minister Jose Luis Rodriguez Zapatero, King Juan Carlos and Foreign Minister Trinidad Jimenez. During the meeting Li said that the economies of China and the EU are complementary, with closely interwoven interests at bilateral and global levels.

Li also said that Beijing hopes the EU will recognize China’s “full market economy” status as soon as possible and expressed hopes that the EU will ease its high-tech export limitations on China. He also urged the EU to resist protectionism and handle bilateral disputes via dialogue.

Li arrived in Spain on Tuesday, the first leg of his European trip, which will also take him to Germany and Britain. Analysts believe that China's help could be important for the EU recovery. China has previously announced multibillion-dollar accords with Greece and Portugal, the two worst performing economies in the EU together with Ireland.

“China's support for the EU financial stabilization measures and its help to certain countries in coping with the sovereign debt crisis are all conducive to promoting full economic recovery and steady growth” Li said in a comment piece published in the German daily Sueddeutsche Zeitung Wednesday.

China has become the EU second largest trading partner. China's purchased of EU goods and services rebounded rapidly in 2010.

Chinese analysts said that the visit may also help China explore possibilities of new cooperation in technology transfer, especially green technology, to help ensure China restructures its energy-reliant economy, said Jin Ling, an expert on EU studies at the China Institute of International Studies.

European countries have a traditional edge in high-tech and clean energy industries, which are most useful for China's needs if it is to transform rapidly growing economy into an energy sustainable model.

However, Jin also cautioned that both China and the EU have to do a lot more to build “political confidence” in each other.