The giddying Chinese goods pouring into the European market often causes alarm on the Western continent. But is the flow of China's exports an opportunity or a challenge? It is a recurring question that divides Europe and some even see the challenge as a threat.
 
Henri de Groot, of the Department of Spatial Economics of Vrije University, Amsterdam, however, is one leading economist who does not buy that theory.

"Considering China as a threat is not a fruitful standpoint," he said in an interview with Xinhua recently, "the net effects are positive."

Those who complained about China's strong exportation to the European market are actually benefiting from Chinese products, said de Groot, who recently published a report on the economic effect of emerging China on the Netherlands.

Thanks to Chinese exports, a characteristic shopping basket of an average Dutch household is currently around 300 euros per year cheaper, the report said.

"I am convinced that the gains from trade that we emphasize in our report are also relevant for other European countries," said de Groot, adding that access to cheap inputs and consumer products help reduce inflation.

Wim Suyker, an economist from CPB Netherlands Bureau for Economic Policy Analysis, said another advantage brought by China's economic development was lower mortgage rates caused by strong Chinese demand for foreign government bonds, prompted by its huge current account surplus.

Estimates vary, but Suyker said enormous Chinese foreign reserves might have led to the lowering of interest rates by one percentage point globally.

Suyker suggested Europe should adjust itself rather than head for protectionism.

"European policy makers should facilitate required adjustments prompted by the increasing role of China," he said.

"It has become a cliche to say that we should see China as an opportunity and not as a threat," Suyker said.

China's staggering development has also created a vast market irresistible to EU companies. They are investing heavily in China.

Sino-EU trade held on to its double-digit growth pace in 2006, with an annual volume set to approach US$300 billion.

Official figures show that the EU's real investment in China had added up to US$47.78 billion by the end of 2005, ranking the fourth largest source of foreign investment for China. There were altogether 22,680 Chinese enterprises jointly or solely invested by EU companies.

Taking this into consideration, the European Commission last month distributed a green paper for public consultation on its anti-dumping measures.

The EU executive arm said EU companies outsourcing were actually being hurt by its own anti-dumping measures, as illustrated in last year's shoe dispute with China and Vietnam.

(Xinhua News Agency January 15, 2007)