EU advisor: Chinese middle class to ‘boom’

European Union would like Beijing to give workers more freedom to negotiate wages, special advisor Maria João Rodrigues said.

The “extremely fast” growth of the Chinese middle class, picked by the local gaming operators as their next target, will continue, Maria João Rodrigues, special advisor to the European Commission, told Macau Daily Times yesterday. The advisor stressed that the European Council’s September summit dedicated to China could mean good news for trade and foreign direct investment (FDI) between the two markets.
Rodrigues was the speaker at the ‘Global Recovery and the Eurozone Reform’ conference, organised by the European Union (EU) Business Information Programme and the local British Business Association. Afterwards, she said there were no reasons to assume the growth of the Chinese middle class will falter in the next few years. “China has undergone a remarkable progress in reducing poverty and empowering the middle class,” the former Portuguese minister said.
Furthermore, she stressed that a boom of the Chinese middle class would be good “not only for China but also for the world economy.” Rodrigues acknowledged Beijing’s efforts to recover from the financial tsunami as “outstanding”. However, she added: “The one thing that China can do to help the worldwide crisis recovery is to promote its internal market and be more open to imports.”
Last month, the deputy chairman of Galaxy Entertainment, Francis Lui, said Macau has to diversify its casino industry to “catch the new wave” of customers from mainland China. Lui warned that the “amazing growth” of the sector, based on VIP gaming, will not last forever. The operators, he added, should start looking at the Chinese middle class, whose spending power will almost triple by 2025, according to predictions.

Trade deficit ‘too high’

The European Council will have a meeting in September to discuss its relationship with China. The issues on the table will be the heavy trade imbalance between the two markets, FDI and also “political” topics.
EU “is prepared to have a trade deficit with China,” Rodrigues said, but “so far the imbalance is just too high.” The depreciation of the Euro currency has helped, but EU “has pressured the Beijing Government to reduce the trade deficit,” she revealed. It’s likely that the European Council summit in September will go back to this issue.
Last month, the Beijing central bank announced it would “proceed further with the reform” of the Yuan exchange regime to “enhance its exchange rate flexibility”. A week later, China set the strongest Yuan exchange rate in 10 years. A stronger Chinese currency “could be positive to both sides,” Rodrigues underscored.
The September summit also shows that the relationship with China “is very important” for EU, she said. The negotiations for a partnership agreement are “very advanced,” the special advisor revealed.
But the cooperation between the two jurisdictions is ongoing, she stressed. “Few people are aware of it, but China is implementing a social security system inspired in the European experience,” Rodrigues said.
EU would also like the Beijing Government to further invest in “a more balanced regional development” and to give workers more freedom to negotiate wages, she added. Factories in Guangdong province have been hit by a string of strikes over the past few months by workers demanding pay rises. “It’s an almost natural evolution,” the Portuguese national stated. “As people are more open to new experiences, coming from overseas, they will aspire to better work conditions,” she explained.