At the World Economic Forum in January, Premier Wen Jiabao pledged that China would be a responsible country in the financial crisis and that it would dispatch business delegations to purchase European products. On February 24, the China Trade and Investment Promotion Group led by Minister of Commerce Chen Deming embarked on a four-day buying trip to four European countries-Germany, Spain, Switzerland and Britain.

TRADE CHAT: Chinese Minister of Commerce Chen Deming (left) talks with his German counterpart, Karl-Theodor zu Guttenberg, in Berlin on February 25 (LUO HUANHUAN)

Gao Hucheng, Vice Minister of Commerce, said part of the group's mission was to enhance economic and trade cooperation with Europe, demonstrating China's continued resolve to open up and its desire to join global efforts to overcome current economic difficulties.

The delegation signed a total of $13 billion in deals with the four European countries, much more than the previously anticipated $2 billion. The largest include a $1.1-billion deal between China Mobile Corp., China Unicom Corp. Ltd. and Finnish-German Nokia Siemens Networks, and a $1.2-billion deal with Britain's Rolls Royce Group to supply aircraft engines to China's Hainan Air Group.

Boosting trade

European financial institutions have been pushed to the brink because of liquidity shortages. Their financial woes are increasingly taking their toll on the real economy. The German economy-Europe's largest-decelerated 2.1 percent in the fourth quarter of 2008, its biggest economic slump since 1990 when former East and West Germany were unified.

"If the European economy keeps worsening, the aftermath could be unimaginable," Liu Jiansheng, an associate researcher at the China Institutes of Contemporary International Studies, said.

The European Union is China's biggest trade partner. Last year, their bilateral trade was $425.5 billion, accounting for 16.6 percent of China's total foreign trade value.

Chen Deming said the Chinese trade delegation wanted to send a message to reassure its major trade partners in Europe that both sides could weather the financial storm by working closely together.

During the four-day trip, the Chinese delegation bought $10 billion worth of goods from Germany, $320 million from Spain and $300 million from Switzerland, and signed another $2 billion deals with Britain.

'No' to protectionism

Chinese leaders have firmly warned against trade protectionism in the midst of the global economic downturn. Along with leaders of other countries they have raised concerns about the "Buy American" provisions in the recently enacted American Recovery and Reinvestment Act.

"Protectionist behaviors taught us expensive lessons in the Great Depression," Liu said. At that time the U.S. Government hiked import duties on more than 20,000 foreign products to record high levels. "The false decree triggered a global trade war."

In 1932, the world's total trade volume shrank to $12 billion, one third of that of 1929. U.S. exports were also punched hard when their value plummeted to $1.2 billion in 1932 from $5.2 billion in 1929.

"Those who defy free trade will end up swallowing a bitter pill," Liu said.

In a speech during his visit to Germany, Chen Deming said all countries should make concerted efforts to safeguard an open and fair world trade system to shake off the financial crisis.

In the meantime, the Chinese economy has not been looking good. Its GDP growth sank to a seven-year low of 6.8 percent in the last quarter of 2008. Exports, a major proponent of GDP growth in the past decade, dropped 17.5 percent in January year on year, the worst in a decade.

Chen said that China could come to the rescue when needed even though it was affected by the financial crisis too. But it would be unrealistic to depend on China alone for a global economic revival.

Technology transfer barrier

European companies have complained that China always demands technology transfers as prerequisites for buying their products. Before the outbreak of the global financial crisis, a fraction of Sino-EU business cooperation pre-nups ended unpleasantly as the European side refused to sell parts of their core technology.

But this situation eventually could change in the aftermath of the credit crunch. Many European companies are now stuck in the mire of plunging profits and worsening performance.