long march.jpgWe
don't normally document the visits of dignitaries to China but today's
visit by Spain's heir apparent Prince Felipe is worth a few paras, if
only to ask “por qué?” or “why?”

Like every other
nation on this planet, Spain is looking to do more business with China.
Or as China's Xinhua news agency diplomatically puts it (in Spanish!), balance the trade gap between the two countries, which is “currently tilted toward the Asian country.”

And
what a big tilt it is. In 2005, China bought just €1.5bn of Spanish
goods and services, while Spain sucked in €11.6bn of Chinese imports.
Spain contributes just 0.3% of China's imports and the PRC occupies a
lowly 18th position in the league table of destinations for Spanish
exports.

LIBROS - CHINA: NUEVOS RETOS PARA EL SIGLO XXIJust
57 of the 1,357 foreign businesses operating in China are Spanish. For
comparison, France has 191 while the UK has 561. Thanks to William
Chislett at Spanish think tank Elcano Royal Institute for picking out
the figures in his (Spanish) review ($) of this recent book, China: Nuevos retos para el Siglo XXI.

Spain
has nevertheless started to take the problem of the trade imbalance
seriously. A new “China Plan” signed by Spain's premier last year, sets
aside €740m to promote China as a priority target for Spanish business.

The
plan includes a battery of well-intentioned measures but nothing really
new and most of the financial instruments, such as export credits have
existed for some time, according to this analysis (Spanish) by the Elcano Royal Institute.

Prince
Felipe made mention of the Plan as he inaugurated a trade forum in
Shanghai attended by 500 businesses from both countries. But its
difficult to see Spain convincing China that it has something more to
offer than a market for Chinese textiles, toys and shoes — all sectors
which Spanish industry has been hard hit by cheap Chinese competition.

There
are some bright spots, such as wind energy, where two Spanish companies
Acciona and Gamesa have won contracts in China. Cepsa, Spain's second
biggest energy company, sees potential in the petrochemicals sector,
while infrastructure heavyweights like Abengoa and ACS, are also eyeing
the Asian giant. Irizar, Spain's largest bus maker, has been in China
for a decade.

But the biggest challenge is for Spain's army of
SMEs, most of which do not have the time or resources to mount a
prolonged trade offensive in China.

Tomorrow, Prince Felipe goes
on to Beijing to open the first Chinese branch of the Cervantes
Institute, which promotes Spanish language. There are already 57
scatter around the world and the Beijing branch is the biggest.

But
the fact that Spain has taken this long to stake its claim in China
says much about the distance — physically, culturally and economically
— between the two countries.

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