China and France, as well as China and Europe, should further strengthen their financial co-operation, expressed top officials from both China and France at the Sino-French Financial Forum held in late September in Shanghai and Beijing.

The forum, jointly sponsored by the People's Bank of China and Banque de France, attracted more than 500 participants from the two countries' financial sectors.

"We hope the forum will be a starting point to change the co-operative status between euro countries and China and lead to deeper co-operation," said Jean-Patrick Yanitch, financial councillor of the economic mission of the French Embassy in China.

According to Yanitch, financial co-operation between European countries and China is relatively inactive compared with co-operation between China and the United States.

"Sino-European and Sino-French financial co-operation has bright prospects," said Zhou Xiaochuan, governor of the People's Bank of China.

The further development of a Sino-European comprehensive strategic partnership has provided a strong basis for financial co-operation, he said.

Statistics show the European Union is China's largest trading partner, the largest technology provider and the fourth largest investor.

In 2005, bilateral trade volume between China and Europe totalled US$217.3 billion, an increase of 22.6 per cent year-on-year.

Economic and trade co-operation between China and France has also expanded. Today, France is China's second largest technology provider, the third largest investor and the fourth largest trading partner among EU countries.

The bilateral trade volume between the two countries reached US$25.93 billion last year, 22.5 per cent higher than the previous year. Growth of imports and exports both exceeded 20 per cent.

Strengthened co-op

During the past few years, the two countries have had fruitful co-operation in aviation, energy and environmental protection fields. French companies including Veolia, Alcatel, Michelin, Renault, Carrefour, Danone and Lafarge have all established businesses in China.

Accordingly, many French financial institutions are looking for opportunities to co-operate with Chinese counterparts.

"The size and dynamics of the Chinese market have given European companies room for further development," Zhou said, "at the same time, large inflow of European investment provides capital and technology support for sustainable and rapid economic development in China."

He told the forum that the financial market had shown a trend towards globalization and the Chinese Government would continue efforts to develop the financial market, further open up the market in a gradual and orderly manner and promote the renminbi's free convertibility steadily.

Christian Noyer, governor of Banque De France, highly praised the Chinese Government for its gradual approach in opening-up of the financial market.

Moves like the launch of the qualified domestic institutional investors (QDII) scheme show the government's determination to open up its financial market, he said.

He urged French banking institutions to take opportunities to strengthen co-operation with their Chinese counterparts.

Gerard Mestrallet, chairman and CEO of Paris Europlace, called for more co-operation and exchanges in the financial sector between the two countries, in particular in banking, insurance and assets management.

"It is crucial for the financial market in Paris to develop a co-operative relationship with the Chinese financial market, as both countries are given the task of enhancing the competitiveness of the financial markets," he said.

European opportunities

At the forum, French participants welcomed Chinese investors interested in euro financial products, encouraged Chinese enterprises to list on the pan-European Euronext exchange and Chinese financial institutions to issue bonds in Paris.

Arnaud de Bresson, senior executive of Paris Europlace, said Europe is more attractive since the United States issued the Sarbanes-Oxley Act in July, greatly raising the cost for foreign enterprises of listing in the United States by strengthening requirements on business information.

"The European Securities market is more flexible in management, the yield of euro bonds is consistent and many financial derivatives are available in the market," he said.

According to him, the scale of the EU capital market is valued at 10.95 trillion euros (US$13.9 trillion), second only to the 16.9 trillion euro, or US$21.5 trillion capital market of the United States and higher than the 7.5 trillion euros (US$9.5 trillion) of Japan.

Euronext has been talking to potential Chinese candidates, including financial groups and biotech companies, about listing in its market.

The first Chinese company is likely to be listed in Euronext in the first half of 2007, Erik Wenngren, director of Euronext's international listings said. The company plans to raise 50 million euros (US$63.5 million) to 100 million euros (US$127 million).

During the forum, Euronext and the Shanghai Stock Exchange signed a memorandum of understanding (MOU) to strengthen the framework for a relationship and co-operation for mutual benefits.

They will study the feasibility of distributing the relevant products in China and on Euronext markets.

They will also share information on products and services, the financial environment, regulations and policies applying to their markets and information technology, to aid mutual development.

Under the MOU, regular meetings will be held at an executive level and joint research projects or seminars will be organized on topics of mutual interest.

(China Daily 10/25/2006 page19)