State of Play China- Spain Cooperation on The 50T…

原创 Rafael Dezcallar 中国投资参考

H.E. Rafael Dezcallar

Ambassador of the Kingdom of Spain to China

⬆ Spain-China Advanced Manufacturing Technology Conference, April 12, 2023, at the Spanish Embassy in China

China and Spain have profited from mutual trade relations since the 16th century with the establishment of the “Galeón de Manila”. This trade route connected China, the Philippines and México –both of them then under the Spanish Crown- and made it possible to open markets for Chinese products all around the world. Spices, silk, and porcelain became a symbol of status, and a showcase of Chinese know how. They also brought to China silver, which was very important for the monetization of the Chinese economy.

This spirit of cooperation crystallised in the reestablishment of diplomatic relations 50 years ago. Since then, our relations have developed in many fields. During the recent visit last March of the Spanish Prime Minister Pedro Sánchez, we had the chance to do a joint stocktaking of our bilateral relations that have a clear potential for future development with a more balanced and comprehensive approach.

⬆ The largest renewable energy integrated power generation complex in the Canary Islands of Spain, consisting of eight wind farms and 12 photovoltaic power stations.

During these last few decades, and mainly after signing in 1984 the Cooperation Agreement on the Development of Economic and Industrial Cooperation, our countries have laid the foundations to develop and deepen our mutual economic ties. Trade flows between our two countries have grown at an astonishing pace. Since China’s accession to the World Trade Organization in 2001, bilateral trade has increased sevenfold in 20 years, reaching last year a record 57.6 billion € If we add the bilateral investment stock the bilateral relation surpasses 72 billion €, a remarkable figure considering the size of both countries. Many Chinese companies have chosen Spain as their gateway to Europe and to prepare for their Latin-American expansion. Spain is particularly appealing for both Chinese consumer and industrial companies. We are proud to welcome a large and well-integrated community of Chinese population in Spain that brings a very positive entrepreneurship spirit to our society. Spanish products have also found some good opportunities in the Chinese market, mainly in the agrifood sector, that excels for its quality and food safety standards, including pork, wine, olive oil, fish or fruits to name just a few. But also other high-end consumer products such as cosmetics, fashion and luxury goods. In the industrial sector, Spanish companies have been contributing to the development of several key sectors for the Chinese economy and to the green transition, such as automotive, renewables, healthcare and advanced industrial machinery.

However, at the current stage, bilateral trade and investment relations remain deeply unbalanced. Chinese exports into Spain amounted to 49.6 billion euros while exports from Spain to China just reached 8 billion euros. We have a widening trade deficit of more than 41 billion €. China is our main import supplier, but only the 11th destination of our exports.

This situation is neither desirable, nor sustainable. We should find solutions between both countries in a cooperative way. While we obviously recognize the growing competitiveness of Chinese companies and products, the main origin for such an uneven relation is an unbalanced market access and the lack of a level playing field for Chinese and foreign companies. Public statements about openness and national treatment have to be translated into concrete regulations implemented pragmatically in the daily life of Spanish companies operating in China. That includes areas such as public procurement where still remains an explicit discrimination against foreign companies vis-à-vis Chinese ones.

Spain and the EU want to pursue an open strategic autonomy in order to create a more resilient economy in Europe. We must reconcile openness and cooperation with security of supply, development of strategic sectors, competitiveness, and the ecological transition.

We have to work together to engage, rebuild trust and create a community of interests between our two countries and between our companies in areas where we may have more potential for cooperation. Among them, I would like to highlight the synergies between China and Spain in three sectors that are relevant to tackle a global problem: climate change.

The first one is the automotive industry, that is already playing a key role in the decarbonization process. The car industry is very relevant for the Spanish economy, amounting to 10% of our GDP and around 18% of our exports. Spain is the 2nd largest car producer in Europe and the 8th in the world, with 17 production sites across our territory. We produce 38 car models, among them 16 EV models. This success story has been based on foreign direct investment attracted during the last few decades by a highly innovative and competitive ecosystem of auto-part companies, suppliers, human capital and advanced logistic and technological infrastructures. The Spanish automotive value chain has managed to adapt to the needs of very different clients, remaining very competitive and expanding its activity worldwide. Also in China, where Spanish world leaders such as Gestamp or Antolin operate and supply both international and Chinese manufacturers. Just to give an example, one out of four cars produced in China include interior parts supplied by Antolin, a company that has 34 production sites and R&D centers in the country. This has created a symbiotic relation that can play a very positive role to support the value chain of Chinese EV companies developing manufacturing facilities in Europe and Spain.

Definitely, Chinese companies are well positioned with innovative EV brands, and they are taking the lead in critical components such as batteries. Envision has announced a comprehensive agreement with the Spanish government to install a battery production plant in Spain and is partnering up with Spanish companies to develop this project. Companies like BYD have announced an agreement with the Spanish Castrosua to assemble electric buses, while Sentury Tires also committed to invest in a greenfield project to produce tires in the north of Spain. There is a growing momentum and we shall take advantage of the strength and long lasting positive relations between our companies and governments to create new opportunities and shared interests in the automotive industry.

The Spanish government has developed a number of Strategic Projects for the Recovery and Economic Transformation (PERTE). It is an innovative mechanism of public-private collaboration, where public investment is a catalyst for private funding. It is a concept in which public funding mobilizes also private investments, an example of public-private partnership. It is expected that 13 leading projects will mobilize more than 11.855 million € of public and private funds that can potentially benefit Chinese automakers partnering with the local value chain. One of them will be dedicated to the electric and connected vehicle.

Another sector where there is a very clear common interest is the renewables sector. Renewables are a very important part of Spain’s energy transition, as we are shifting to clean energies from nuclear energy and fossil fuels. The renewables have increased their contribution to electricity generation from 32% in 2017 to 47% in 2021. Spain is the fifth country in the world in wind energy and the eighth in renewable generation. Of all green hydrogen projects worldwide, 20% are located in Spain, which is second only to the United States. Spain wants to push forward the renewable energy sector as a key component of the ecological transition, leveraging on the state-of-the-art technologies of Spanish companies in cooperation with other companies, including Chinese patrners. To achieve this goal, the Spanish government has approved another Strategic project for Economic Recovery and Transformation (PERTE) devoted to Renewable Energies, Renewable Hydrogen and Storage. The first PERTE aid programs on Green Hydrogen projects amount to 250€ million and is expected to mobilise 890€ million in 29 projects. Many companies have shown great interest to invest in this sector, which will help Spain to continue to be at the forefront of innovations in this field.

In China, Spanish companies are also contributing throughout the whole value chain of the wind power sector to develop renewable energy generation, bringing their technology and know how to China, including in the increasingly important offshore projects. From the advanced industrial technology sector (machine tools) to produce sophisticated parts of the wind turbines, to technology to asses the best locations for wind farms or new tower structures among others. Some Chinese companies such as Goldwind or Envision are also developing production facilities in Spain to provide their technology and know how to face energy transition challenges.

A third relevant sector is the advanced industrial machinery, that has a significant role throughout a wide range of strategic sectors, providing state-of-the-art technology to automatize industrial processes and to support the manufacturing of components for airplanes, wind turbines, autoparts or ICT, among others. Very recently we organized at the Embassy a meeting between a group of more than 20 Spanish companies and a wide range of Chinses companies where we could witness the good moment and the new opportunities arising in this field. Spain is nowadays the 3rd largest manufacturer and exporter of machine-tools in Europe and the 9th in the World, and has been cooperating since the 80s with Chinese partners.

Current times are challenging. We should work together to promote cooperation rather than confrontation, under a rules-based multilateral system We have common goals and interests both at the political, economic and business levels. We don’t want to delink, but we must manage our links better. For that, we should work together to rebuild trust and create a real level playing field for our companies, and real and tangible openness to tackle our unbalanced relations. We have many opportunities and the support of both governments, as seen during the last visit of Prime Minister Sánchez to China.

Translator | Wang Xiaobo

Design | Demi

本文刊于《中国投资》2023年5月号

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《中国投资》杂志创办自1985年，由国家发改委主管，国家发改委投资研究所、中国国际工程咨询有限公司主办，是我国投资领域唯一的中央级刊物，业界最早专注于投资领域趋势报道的核心期刊。创刊三十多年以来，杂志以全球视角看中国投资，涵盖宏观经济、行业分析和企业投资案例，同时以全球市场为坐标，聚焦特定国家、地区和重大国际趋势，目前已经成为世界各国政府官员、各类投资机构、专家学者、企业家以及记者媒体的专业对话平台。

《中国投资》杂志每期覆盖包括上市公司在内的200多家央企国企和10000多家中国民营企业、1000多家中央与地方政府决策部门和机构、1000多家行业协会和商会、300多家主要金融机构等，是了解宏观经济环境、行业趋势前景和企业投资案例的重要参考。

China Investment, founded in 1985, is a monthly under the supervision of National Development and Reform Commission (NDRC) China’s macro-economic management agency, It’s jointly operated by Investment Research Institute under NDRC, China International Engineering Consulting Corporation. Enjoying an exclusive position under the central government, China Investment is the core journal which started the earliest among similar magazines to focus on the investment trend. Over the past 30-plus years, China Investment has been in line with theglobal market as its fundamental coordinate with a strategic focus on specific countries and regional markets and those major international propensities. China Investment is a key dialogue platform for officials from different countries, investment agencies, experts and scholars, business people and journalists.

原标题：《State of Play China- Spain Cooperation on The 50Th Anniversary》

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