'Great leap' envisioned by Europe in China trade more like a baby step

In the three years since the new regime in China decreed its economy open to outside assistance, Europe has been vainly seeking to emulate the pioneering commercial thrust made into that same land some 700 years earlier by a Venetian merchant named Marco Polo.

For a while after the Fifth National People's Congress of 1978 set out ambitious economic development goals for the country and the signature of a trade cooperation treaty between China and the European Common Market at about the same time, enthusiastic European industrialists and planners saw the vast Chinese market as a possible remedy for their slump.

Upon returning from a 1979 visit to China, Wilhelm Haferkamp, the EC commissioner for trade, remarked, "The world economy needs a new historic impulse to growth on the scale of the postwar reconstruction of Europe or the spread to the mass of the population of higher living standards in the 1950s and 1960s.

"The Chinese program of modernization will be perhaps the major economic event of the next two decades and could make a major contribution to this strategy. . . ."

Although Chinese officials at the time hinted that Europe was destined to rival Japan as China's leading supplier, it has become increasingly clear to both since then that this goal was beyond their anticipated leap forward.

Lately, EC trade officials here have been expressing disappointment with the results of recent trade flows which have, in fact, favored China. And a major trade fair scheduled for later this month in Brussels is being looked upon as a chance to turn this flagging economic relationship around.

An upsurge in trade between the two would be seen by many Europeans as the just payoff for a rapprochement that began in 1964 when President Charles de Gaulle became the first in the West to recognize China, and China in 1978 became the first major communist power to recognize the Common Market.

After a 41 percent increase in exports from the Common Market countries in 1979 after conclusion of the joint trade pact, EC exporters in early 1980 saw a 24 percent downturn in sales. In the meantime, Chinese shipments to the EC climbed 41 percent in 1979 and 53 percent in 1980, bringing EC-China trade roughly in balance, at about $2 billion each way. Expressing their disappointment to their Chinese counterpart, European trade officials were told that Chinese policy adjustments had caused the downward turn but that sales should pick up once again once the readjustment and review period was over.

Europe's recent trade relations with China have been marked by such gyrations. EC countries' exports to China were cut in half in 1963, then rebounded and held at a fairly steady level until 1973, when they nearly doubled. The next three years again witnessed a regular progression, interrupted abruptly in 1977, rising again in 1978 and 1979, only to be brought to a screeching slowdown again last year.

The main European exports were steel, chemicals and plastics, machinery, transport equipment, instruments, and textiles, which were mainly synthetic fibers.

At the same time, China's shipments to the EC market have shown a relatively steady growth during the same period, with the main items in recent years being textiles, agricultural products, skins, furs, leather goods, wickerwork, tin, and shoes.

The EC has been China's second-leading trading partner after Japan, with Germany by far the top European performer, although lagging considerably behind Tokyo. The new Chinese regime signed multi-year trade cooperation agreements with both Japan and the EC within weeks of each other in 1978. The pact with Japan was said to provide for two-way trade to reach $20 billion, with about $10 billion flowing each way. At the time Japan's trade was only $3.5 billion. In the case of the EC, China told negotiators that trade between the two should be brought to the same level as between China and Japan.

While some major deals have been concluded between European operators and the emerging Chinese economy, the anticipated blossoming of business potential has still to be realized. Despite high-level contacts including European Visits by Chairman Hua Guofeng, Vice-Premier Gu Mu, and a flurry of initial study missions by officials, there has been a noticeable slowdown, which planners on both sides hope to reverse.

Chinese plans have been revised, European ardor has cooled, and major deals, such as the proposed British sales of military aircraft to China, have been put on ice. A major European-China trade week originally planned for last year in Brussels was postponed.

But it is expected that some 100 Chinese experts will be at the Brussels trade fair, the largest number ever to gather for such an event, will be on hand to meet with European officials, business, and financial leaders to expl ore trade potential.