Time to strengtheneconomic relations

between Italy and China

Marco RanieriCIRPET - Research Centre on Transition and Developing Countries

Department of EconomicsUniversity of Turin (Italy)

Contents

• Macroeconomic data

• Trade indicators

• Italian FDI in China

• Selected sectors for further economic cooperation

• Other measures for cooperation

Main Sources:• World Development Indicators database, World Bank (1 July 2008)• Italian Institute for Foreign Trade 1/21

Macroeconomic data (2007)China Italy Ratio

Surface (Km2) 9.597.000 301.000 32

Population (mil.) 1.319 59 22

GDP (bil. US$) 3.280 (4th) 2.107 (7th) 1,6

Per capita GDP (US$)

2.485

(99th)

35.494

(18th)

0,07

Growth GDP +11,4% +1,5% 7,6

Stock FDI at home (bil. US$)

759 324 2,3

Stock FDI abroad

(bil. US$)

94 461 0,2

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Trade interchange Italy-China(bil. US$)

2002 2003 2004 2005 2006 2007

June

2007

Italian expo

In China

4,31 5,08 6,44 6,93 8,61 4,85 10,21

Italian impo

from China

4,82 6,65 9,23 11,69 15,98 10,08 21,17

Total

interchange

9,13 11,73 15,67 18,62 24,59 14,93 31,38

Balance

for Italy

-0,51 -2,08 -2,79 -4,76 -7,37 -5,23 -10,96

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Import of China - Italian share

2001 2002 2003 2004 2005 2006 2007

(June)

1,56 1,46 1,23 1,15 1,05 1,09 1,12

Main origins of imports (2006): Japan 14.6%, South Korea 11.3%, Taiwan 10.9%, US 7.5%, Germany 4.8%, Malaysia 3.0%, Australia 2.4%, Thailand 2.3%.....Italy (23rd)

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Export of China - Italian share

2001 2002 2003 2004 2005 2006 2007

(June)

1,50 1,47 1,52 1,55 1,53 1,65 1,84

Main destinations of exports (2006): US 21%, Hong Kong 16%, Japan 9.5%, South Korea 4.6%, Germany 4.2%, Netherlands 3.2%, UK 2.5%, Singapore 2.4%

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Italian FDI in China (2007)

FDI in 2007: 74,80 bil. US$

….Italy 18th with 0,35 bil. US$ in 2007

(UK 10th, Germany 11th, Netherlands 13th, France 14th)

1 Honk Kong

2 Virgin Islands

3 South Korea

4 Japan

5 Singapore

6 USA

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Italian FDI in China - Sectors

2000 companies in “traditional” sectors for the Italian economy:

• Machinery & mechanical industry

• Chemical industry

• Textile industry

• Forwarding companies

• Legal and consultancy firms

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Italian FDI in China - Forms

• Mainly Representative offices

• Buying offices

• Show rooms

• Joint ventures

• ONLY 10% of FDI are made by SMEs (in Italy 99% of total companies are SME, 95% has less than 10 employees)

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• General delay in comparison with other EU countries

• Italian companies mainly active in import (export) and not much in investment and selling in the local market

• Thanks to official meetings, fairs and promotional events, lately the image of China changed and companies started to invest more and sell on the local market

Italian FDI in China - Features

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Further economic cooperation – General Strategy

• => need to overcome the general lack of knowledge and negative perception (fear) of China, especially among SMEs

• Italian investors should think about China as market and not only as a “factory”

• To capitalize on the growing importance of the “second and third-tier” cities

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Further economic cooperation – General Strategy

• Italian investors and authorities should promote the “Italian way of life” in all its components (fashion, furnishings, gastronomy, related machineries, culture)

• After Made in Italy, investors and authorities should promote the idea of Designed by Italy and Made by Italy

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Further economic cooperation - Sectors

• Fashion and Luxury (China expected to pass Japan as bigger buyer of luxury products)

• Italian food and beverage

• House system (building materials, furniture, house appliances, lighting equipment, bath furniture, etc.)

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Further economic cooperation - Sectors

• Machinery (packaging, textile machinery, light machinery, food and zootechny processing, wood and plastic processing)

• Bio-technology and medical appliance

• Harbors infrastructure and boating

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Further economic cooperation - Sectors

• Design and styling for Chinese products

• Tourism (in both directions)

• Infrastructure in renewable energy and environmental sector (SICP)

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“The Sino-Italian cooperation for environmental protection (SICP)”

• Launched in 2000 by the Italian Ministry for the Environment and Territory

• Main Chinese Partners: State Environmental Protection Administration, Academy of Social Sciences, Ministry of Science and Technology, Beijing, Shanghai, Nanjing and Suzhou Municipalities

• Aim: realize pilot projects for natural resources protection, energy efficiency, renewable sources promotion, low emission transportation systems and technologies, sustainable agriculture

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Other measures for cooperation

• Spread information to overcome the general lack of knowledge and “fear of China”, especially among Italian SMEs

• Boost exchange in technology

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Other measures for cooperation

• Open to Chinese investment in Italy to acquire technology, design, brands (COSCO shipping in Genoa; ChangAn and Jac Anhui Janghuai automotive, Hisense household appliance in Turin)

• Boost exchange of experts and university students (visa facilitation)

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Study in Italy• “Marco Polo Project”, promoted by the

Conference of Italian University Rectors (CRUI)

• Italian Cultural Institute in China open a dedicated website: www.studyinitaly.cn

• University info on the Italian Embassy in China page for visa: www.italyvac.cn

• EU Erasmus Mundus Programme, aimed to attract third-countries students

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Marco RanieriCIRPET

Research Centre on Transition and Developing Countries

Department of EconomicsUniversity of Turin (Italy)

www.cirpet.unito.itranieri.marco@unito.it

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Thank you for your attention!