Synergy between China, EU development plans provide huge opportunities for financial cooperation: European Commissioner

The agreements to connect China-proposed "Belt and Road" initiative and the Juncker Plan, an investment plan for the European Union (EU), provide huge opportunities for EU-China financial cooperation, European Commissioner Jonathan Hill said in a recent interview.

The EU and China agreed to increase cooperation at the 17th China-EU Summit held in Brussels on June 29. During September's high level economic and trade dialogue in Beijing, the two sides signed a series of agreements which was viewed as a further positive step toward closer cooperation on investment issues.

"The agreements are very encouraging. It is the right way to go," the commissioner in charge of financial stability, financial services and capital markets union said.

"Europe needs to have investment. We need lots of investments in our infrastructure," he said.

Huge opportunities in different areas would be created by connecting the two investment plans, including the financial sector, he added.

"For the financial market, there are great European products that have a global reputation that we would be keen to expand. There are opportunities for more equity investment by European companies in China or in Chinese businesses, such as joint ventures," he said.

The key point is to open up the capital market mutually. The EU is going a step further to deepen reform and open up to foreign investments, Hill emphasized, adding regulation is important in a global setting.

"If we operate under similar rules, it's much easier for us to invest in each other and sell to each other the financial products," he said.

The main challenge will be financing issues: how to find new ways to raise funds for the investment plans.

"There is no shortage of capital in Europe," the commissioner said, but added there was little investment activity going on. To address this, the EU is working to make investments from inside or outside Europe easier and cheaper, he said.

Over 40 major rules have been put in place in the past five years in the EU to make the financial system more secure and stronger. However, the commissioner said it was time to assess whether the rules hadn't made it harder for investment.

Noting that non-bank funding in the EU was lagging behind other major economies such as the United States, the commissioner said one of his main responsibilities was to carry out a plan, namely the Capital Markets Union, to diversify the sources of funding in the bloc.

"I want the Capital Markets Union to help European businesses, and our small and medium-sized enterprises (SMEs) in particular, have a wider range of funding sources. I want it to give consumers more options for investing their money. I want to knock down barriers to make it easier for capital to flow freely across all 28 member states," he said.

Deeper and more integrated capital markets will lower the cost of funding and make the financial system more resilient. The commissioner said it will make Europe projects and products more attractive for foreign investment as well.

Overall, the financial and capital reforms going on in the EU will facilitate the capital flow between China and Europe, thus making it easier for companies and infrastructure projects to get the financing they need, regardless of where they are located, Hill said.

In response to concerns that China's economic slowdown may increase the risks of a third global financial crisis, the EU commissioner said he was optimistic about the future of Chinese economy, calling it "an extraordinary engine of growth, an extraordinary success story."

Addressing the possibility of a third global financial crisis, he said: "I prefer to look at what we have done since the last crisis to make our system more secure, so as to reduce the likelihood of another crisis."

Hill stressed that the global financial system was much more resilient and transparent at present, and the regulators were better placed to take action before a crisis would take place. Endit