China's growth vs US crisis

Regardless of the problems the US faces today, Trairatvorakul said he does not foresee another currency, such as the euro or the renminbi, replacing the US dollar as the world reserve standard in the coming years.

Moscovici expressed displeasure that only three paragraphs in a recent 600-page document on the US' future outlook were devoted to Europe. But with US policies focusing more inward or looking elsewhere internationally, Europe may present additional lucrative growth opportunities for Chinese companies.

The speakers at Harvard agreed that the worst of the European economic crisis is over and that many EU member states have reduced their deficits drastically in the past three years. But Mario Draghi, president of the European Central Bank, warned that a system in which some countries, such as Greece and Italy, are permanent debtors and others, like Germany, are permanent creditors is not sustainable.

Nevertheless, he stressed that the EU has created 600,000 more jobs than the US since 1999 and the euro is an irreversible single currency. With Latvia set to become the 18th country to adopt the common currency in January, the eurozone will expand further, he said.

What will be certainly welcomed by Chinese investors is Moscovici's policy of according "top priority" to economic growth. Also welcomed will be Almunia's advice to European economies not to unnecessarily favor their domestic companies over their Chinese counterparts. With governments being notoriously unsuccessful in picking domestic winners, Almunia cautioned against a waste of European taxpayers' money.

Almunia also warned European governments not to conceal subsidies in the guise of "green" environmental and energy policy. The EC vice-president vowed to maintain a level-playing field for domestic and international companies competing in the energy and environmental sectors. He emphasized that the benefits of a strongly enforced competition policy are evident and that the market, not policymakers, must determine success or failure.

The financial leaders indicated that growth areas outside the US might gain more momentum. With the US still paralyzed by ideology driven bargaining between Democrats and Republicans on how to solve the country's budgetary problems, many Chinese companies may shift their focus on expanding European and regional businesses. The signing of a currency swap agreement last week between China and the EU, as well as recent Chinese negotiations at the East Asia Summit in Brunei may accelerate this process.

The author is a faculty member at the Nottingham University Business School China and a Rajawali Fellow at the Harvard Kennedy School's Ash Center.

(China Daily 10/17/2013 page9)