Businesses on both sides seeking new markets and opportunities

BEIJING - China and the European Union (EU) will start negotiations on investment agreements as soon as possible, in a bid to enhance bilateral economic relations, top trade officials from both sides said Thursday.

During a joint news briefing in Beijing, Chinese Minister of Commerce Chen Deming and EU Trade Commissioner Karel De Gucht said each welcomed investments from the other.

A branch of Industrial and Commercial Bank of China (ICBC) in Brussels. Chinese companies, including ICBC, have accelerated their investment in the European Union.?[Photo/Agencies]

European countries are major investors in China, with the United Kingdom, France, Germany and the Netherlands among the top 10 foreign direct investors.

In 2010, the EU accounted for investments of $6.59 billion in China, up 10.7 percent, according to the Ministry of Commerce.

The EU was the third-largest destination for Chinese investment in 2009 at $3.35 billion.

"We have agreed to start negotiations centered on China-EU investment agreements soon," Chen said at the joint press briefing after a meeting with the EU delegation.

"We welcome European companies to invest in China, and also encourage Chinese companies to add or make new investments in the EU."

The EU is the largest trade partner of China, and China is the second-largest market for European exports.

From January to June, China-EU trade grew 21.3 percent year-on-year to $265.9 billion, according to the General Administration of Customs.

"These are impressive figures. We can take bilateral economic relations even further by developing investment opportunities, as investment is part of the global trade picture and the global supply chain," said De Gucht.

While the European debt crisis appears to be spreading, shifting investment to China, the most populous nation and the fastest-growing economy worldwide, could be a good choice for European investors to offset risks at home, said Wang Zhile, director of the Research Center for Transnational Corporations with the Ministry of Commerce.

From January to May, investment in China by the 27 European nations from the bloc grew by 9 percent to $2.93 billion, while the capital inflow from the United States to China decreased 24.1 percent to $1.29 billion.

"Up to now, European investment in China has been rather limited. The EU has been investing more in other countries like Brazil, Argentina and India. So there is a lot of room for investing in China," said De Gucht.

"Cross investments will be mutually beneficial for European companies and Chinese companies alike."

Last summer, foreign companies represented by the European and American chambers of commerce made several criticisms of the Chinese investment environment, citing what they said were problems of market access, government procurement and intellectual property rights (IPR).

But while China launched a series of projects to address global concerns during the past year, the nation's investment environment is widely recognized as having improved, said Wang.

Since last October, China launched a nine-month campaign against counterfeit goods, the government's most comprehensive effort to promote IPR protection during the past few years. From July 1, three rules linking government procurement to indigenous innovation by domestic firms were scrapped.

"I welcome the important step taken by the Chinese government on cutting the links between some indigenous innovation rules and government procurement," said De Gucht.

Fu Jing in Brussels contributed to this story.