<![CDATA[Spain's top envoy to China says New Silk Road won't solve 'substantial' trade gap]>

Spain's top envoy to China has called on Beijing to open its market and level the playing field to close the "substantial" trade gap between the two countries.

Rafael Dezcallar de Mazarredo, who took up the ambassador role in Beijing last year, also said that while Madrid was deepening cooperation with China on its "Belt and Road Initiative", it was not the answer to Spain's most pressing concern " addressing the trade imbalance.

The Spanish envoy's call came ahead of a key summit between Chinese and European Union leaders in Brussels on Tuesday, when bloc members are expected to raise what European Commission President Jean-Claude Juncker has called China's unfair trade practices.

During Xi Jinping's visit to Europe last week, Juncker reportedly told the Chinese president that "it cannot remain that Chinese companies have free access to our markets in Europe, but we do not have access to the markets in China".

Rafael Dezcallar de Mazarredo said the trade gap with China was a problem. Photo: Handout

Dezcallar expressed similar concerns, calling the trade gap between China and Spain "substantial".

"The [belt and road projects] are contributing to the Spanish economy, but we have problems in our trade balance with China," the Spanish ambassador said. "We would like to find ways to solve it. [But] I don't think the belt and road is a way to solve that problem."

European countries are increasingly raising grievances with China at a time when it is locked in a protracted dispute with the United States, including over their trade imbalance.

China has sought to partner with the European Union, seeking to brand itself as a new driver of globalisation amid US President Donald Trump's protectionism and to prevent the bloc from aligning with Washington in isolating Beijing.

But veteran diplomat Dezcallar stressed that the EU was "not a secondary player" and would walk its own path independent of Washington.

"Sometimes we forget the European Union is the largest market in the world. We are the largest importer by far, and we are a very strong exporter ... so we are not a secondary player," he said.

"We are not an annex of anyone. We are not a secondary player here " we have our own views, we have our own values, and we defend what we think is right. The United States may choose the options they think are best for them, but it is not necessarily our option."

The path for Europe, Dezcallar said, was to have "good communication" with China in continuing to negotiate over their differences.

"The way is to create a level playing field that Spanish firms in China can enjoy the same conditions in which the Chinese firms can operate, invest in and export to Spain," he said.

To address the trade gap, Dezcallar said Spain was working within the EU framework on issues including tariffs and non-tariff barriers, and he urged China to take more responsibility by reviewing its trade practices.

"We think that China of today is not the China 15 years ago. The kind of trade conditions that China enjoyed 15 years ago have to be reviewed because China has become a different economic actor," he said. "China has now a role of a great economic power and growing political power, and with power comes also responsibilities."

He added that Madrid hoped the new foreign investment law Beijing passed in March would help to improve market access for Spanish firms in China, particularly in finance, insurance, engineering and legal services.

"We are hopeful that the new foreign investment law will approach some of these problems and solve some of them ... If it is properly implemented, it can represent a step forward," he said.

Some 600 Spanish companies have a presence in China, including telecoms firm Telefonica, oil and gas company Repsol, Inditex, which owns fashion retailer Zara, and Santander and BBVA banks.

"What we want is a significant opening up in the service sector. We have seen some improvement but very limited. Our bigger banks tell us that the realm of what is opened to foreign businesses is still very narrow," Dezcallar said.

The country has continued to pursue close ties with China, according to Dezcallar.

For example, a direct cargo train link has been launched between the Chinese city of Yiwu and Madrid, while Chinese state-owned shipping company Cosco now holds a majority stake in Noatum Port Holdings, the Spanish firm operating ports in Valencia and Bilbao.

They are also cooperating in third-country markets, such as the high-speed railway in Saudi Arabia linking Mecca and Medina that was built by two consortiums of Saudi, French, Chinese and Spanish companies. Chinese and Spanish firms have also jointly worked on a solar plant in Egypt and a major oil refinery in Kuwait.

But Spain has not formally endorsed Beijing's belt and road scheme. The plan to develop trade routes linking China to Asia, Europe, Africa and beyond has met with varying degrees of acceptance in Europe " viewed with scepticism in Germany and France, it has been embraced by Italy and Greece.

Madrid has said it would focus instead on a plan presented by the EU in September to develop a parallel network of infrastructure to connect it to Asia. Dezcallar said the European initiative shared the same goal as the Chinese plan but it focused more on financial and environmental sustainability, transparency, rules-based operation, and respect of international regulations.

He also said that while Beijing could improve how it implements the scheme, the belt and road plan itself was a natural next step for China "to project her presence" and presented great opportunities for many countries.

"I think that when you have the means and the vision, then it is only natural that China expresses it or to project its presence towards the outside world ... It is a very natural expression for the growth of Chinese presence in the world," he said.

European Commission President Jean-Claude Juncker. The EU has struggled to present a united front on China's "Belt and Road Initiative". Photo: AP

Beijing's controversial infrastructure plan is not the only issue over which the European bloc has struggled to present a united front. While it has regularly called on China to improve human rights " particularly its treatment of the Uygur Muslim minority in the Xinjiang region, and lawyers, dissidents and activists " Dezcallar said "discreet diplomacy normally works much better" and the EU should avoid antagonising Beijing.

"Publicity may be helpful sometimes, but in principle it is better to use channels which the other side doesn't feel that we are putting them in a very uncomfortable position," he said. "We have to help them to understand us and to help to build common ground."

The Spanish envoy's assessment of Beijing's engagement with 16 central and eastern European nations " 11 EU member states and five Western Balkan countries " also contrasted with some of the more hawkish voices in Europe.

"My impression is that countries of the members of the European Union in the 16+1 group, particularly Croatia, which is the host country, have a very good cooperation with the European Union ... I don't see a particular problem for this meeting," Dezcallar, referring to a 16+1 summit to be held in Dubrovnik, Croatia on Friday.

"I think it is significant that this meeting will take place not before the [EU-China] summit but after. So the main decisions would have already been made between China and the European Union. It will be a way to complement maybe in some cases, but not to contradict."

This article originally appeared on the South China Morning Post (SCMP).

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