Last week, Prime Minister Mariano Rajoy visited Beijing, China to help gain economic support for Spain. Rajoy met with the President Xi Jinping and Premier Li Keqiang to help facilitate the signing of 14 contracts, totaling about 3 billion euros ($3.8 billion). A crowd of Spanish and Chinese businesspeople were in attendance as Rajoy encouraged China to invest in Spain after its recovery from the Eurozone crisis.
Spain’s economy seems to be recovering following years of an on-off recession caused by the property bubble bust. In fact, the economy grew at its fastest rate in 6 years in the second quarter. This measured growth was due to an increase in household spending, which expanded by 0.7% this quarter in comparison to 0.5% in the previous quarter. Rajoy elaborated upon Spain’s open and competitive market in his speech, and also emphasized the potential growth in both the food and consumer goods industries where both countries could increase cooperation.
As China’s economy is maturing and gradually becoming more complex, companies are beginning to search for investment opportunities abroad. In doing so, they hope to gain higher returns, further strengthening the country's economy. Last year alone, Chinese firms invested $90.2 billion in 156 countries, a figure which increased 17% from 2012. Consequently, the Chinese trade ministry is predicting that foreign direct investment will surpass direct investment received by foreign firms.
The new trade contracts between the two countries appear to be potentially beneficial for both. Premier Ling himself expressed “We hope to strengthen our relationship with the European Union through our relationship with Spain,” possibly implicating future trade between China and other European countries. Following Germany and France, China is Spain’s third largest importer with mobile phones and apparel comprising about half that amount. Recent deals being signed include industries ranging from telecommunications to finance and companies such as Banco Standander, Inditez, and Alibaba, which is set to become the world’s largest retailer in 2016.
Although Spain has seemingly emerged from its recession in the second half of 2013 with promising economic indicators, the unemployment rate remains stubbornly high. At 24.47%, Spain’s unemployment rate is currently the second highest in the Eurozone after Greece. This may seem high to those without prior knowledge of Spain’s economy, however, this is the first time in two years that unemployment has been lower than 25%. It is the hope of Rajoy and numerous other economic exports that the recent signing of these contracts will add more jobs to the labor force for Spain and continue to lower the unemployment rate.