EU-CHINA Shaping a shared future
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EU-CHINA Shaping a shared future
EU-CHINA
Shaping a shared future
Spring 2015
BrusselsEU-China: Shaping a shared future | 4th Europe-China Forum 5 The opinions and analysis presented in this book do not necessarily reflect the official views of the organisations that participants represent, nor of the Mission of the People’s Republic of China to the European Union and Friends of Europe, its Board of Trustees, members or partners. Editors: Shada Islam and Sophia Kabir Publisher: Geert Cami Project Director: Nathalie Furrer Design: Marina Garcia Serra Copyright © 2015 Friends of Europe Reproduction in whole or in part is permitted, providing that full credit is given to Friends of Europe, and provided that any such reproduction, wether in whole or in part, is not sold unless incorporated in other works. Acknowledgements Friends of Europe gratefully acknowledges the continuous support and assistance provided by the Mission of the People’s Republic of China to the European Union (EU). A special note of thanks to the China Public Diplomacy Association (CPDA), Huawei, Boao Review and China Daily for their support to make the Third Europe-China Forum a big success. Image credit: CC/Flickr Steve Webel. CC/Flickr Theen Moy. CC/Flickr Roger Price. CC/Flickr Freedom II Andres. This report is printed on responsibly produced paper
Table of contents IV. Guest Contributions 60
Forging a China-EU Comprehensive
Partnership with Global Influence 61
Promoting peace, prosperity and progress
Consumers can drive China’s transformation
for China and Europe 8
to a high-income economy with steady growth 66
Shaping a shared future 10 China’s urban leap forward:
challenges and opportunities 69
I. 4th Europe-China Forum 2014
12
Silk Road initiatives fit into EU recovery goals 72
Premier Li Keqiang’s special message 13
EU China trade and investment relations:
European Commission president Jean-Claude Juncker’s issues for the coming years 76
special message 14
China and the EU:
Executive Summary 16 Partners for Growth? 79
Helping to shape the world 18 Deepening China-EU security cooperation
Trade and Investments 20 along the ‘Silk Road Economic Belt 82
Helping upgrade the Chinese Economy 24 China and Europe: Striding Together into a Better
Connected World 85
Social Challenges: Jobs and Homes 29
Shared Destiny: New Silk Road between
Innovation 31 China and Europe 88
Communicating better 32 The unpalatable choices that lie ahead for
China’s economy 91
II. 2nd EU-China policy and practice partnership 36
Silk Road as a Tool to Facilitate Europe-China
III. Commentaries 46 and Intra-Europe Ties 96
New EU team must engage urgently with China 47 One Belt One Road:
Opportunities for Europe-China cooperation 100
EU-China Partnership on Sustainable Urbanisation 53
How China plans its next reform phase 104
EU Views on China’s Urbanisation Drive 568 Friends of Europe | Global Europe EU-China: Shaping a shared future | 4th Europe-China Forum 9
Promoting peace, prosperity There is strong voice for expanding and deepening communication and
coordination on global issues. Being fully convicted that China and the EU
and progress for China and are key international players, the general sentiment is that China and the EU
Europe must work hand-in-hand on climate change, environmental protection and
post-2015 international development agenda and promotion of an fair and
It is with great pleasure that I present to you the Report of the just international order and international system.
4th Europe-China Forum—Shaping a Shared Future.
There is, in the meantime, wariness of conflicting interest and increasing
Though the views contained in the Report are those of the rapporteur’s competition between China and the EU and cautious approaches toward
and not necessarily those of the organization that participants issues such as a China-EU FTA. However, the overriding argument is that
represent, nor of Friends of Europe, its Board of Trustees, members China and the EU have a common stake in consolidating their partnership
or partners, they nonetheless have captured pertinent observations featuring peace, growth, reform and civilization. So long as the two sides
and enlightening thoughts on shaping a shared future for China-EU are guided by their vision for mutual respect and win-win, they will embrace
relations from ongoing debates and deliberations. various challenges and broaden and deepen their converging interests while
bridging or reserving their differences.
There is growing recognition of the importance of the comprehensive reform
and opening up of China and its relevance to the EU. Observations have been As an envoy for friendship, I am very much encouraged by the important
made that China’s new normal and its shifting towards quality and efficiency message transpired from the 4th Europe-China Forum. I wish to thank the
of growth, services, innovation, technology and high-end products will Forum and its participants for their valuable contributions and I look forward
boost stronger interaction with international business and generate greater to the continuous intellectual input to shaping a shared future of China-EU
opportunities for trade, investment and cooperation. Strategic Partnership that will contribute further to the promotion of peace,
prosperity and progress of both China and the EU and the world at large.
There is greater appreciation and sense of urgency to build up synergy
between the respective development and reform agenda of China and the
EU. Many are of the view that China and the EU have become partners in a
deeper sense than just trade. The two sides should implement the China-EU
2020 Strategic Agenda for Cooperation with renewed ambition and vigor.
While pushing forth negotiations on a China-EU Comprehensive Investment Yang Yanyi
Agreement, China and the EU should open up new cooperation opportunities, Ambassador
including, among others, “One Belt One Road” initiative, ICT, innovation, Mission of the People’s Republic of China to the EU
sustainable urbanization, infrastructure, pollution reduction, public services,
modern agriculture, energy conservation, as well as rule of law, mobility
facilitation, people-to-people exchanges and culture diversity.10 Friends of Europe | Global Europe EU-China: Shaping a shared future | 4th Europe-China Forum 11
Shaping a shared future As in the past, the Forum was preceded by a «policy and practice» roundtable
which brought together academics, think tank representatives, business leaders
The publication of this volume coincides with celebrations of 40 years and journalists. Our partners CPDA organised the meeting in Changsha in
of diplomatic relations between China and the European Union - and October. The discussions, held under the Chatham House rule, were frank and
as we illustrate in this publication there is indeed much to celebrate. lively and looked at issues such as urbanisation, China’s Silk Road initiative and
China-EU ties are strong and diverse, covering trade and economic EU-China trade and investment relations.
relations but also, increasingly, focused on political and security
issues as well as on promoting links between people and cultures. This volume brings together the reports of both the roundtable and the Forum
as well as our own main commentaries and articles written about EU-China
The potential for a further development of relations is being relations by members of our growing network of experts in both Europe and
explored by both sides through regular meetings, high-level visits China. Taken together these documents provide valuable insight on EU-China
and a constant conversation between policymakers, students, relations today - and our hopes for their future expansion.
business leaders, academics and think tank representatives. The Europe-China
Forum, set up by Friends of Europe and the Chinese Mission to the EU, meets We wish you happy reading!
every year to discuss the multi-faceted EU-China relationship, with an emphasis
on setting out key priorities for the future. The Forum is therefore an important
element of people-to-people exchanges and plays a vital role in injecting
continued dynamism into EU-China relations. It is an indispensable link in the
expanding dialogue between China and Europe. We are delighted to have the
China Public Diplomacy Association as our partners.
Shada Islam
Director of Policy
Under the theme of «Shaping a Shared Future,» discussions at the 2014
Friends of Europe
Europe-China Forum looked at President Xi Jinping’s important wide-ranging
reform agenda and the opportunities it opens up for further synergies
between the two partners. In his message to the Forum, Premier Li Keqiang
urged the EU to explore the possibility of a Free Trade Agreement (FTA) with
China and recommended quick agreement on the investment treaty under
negotiation as a first step towards reaching that goal. In written remarks to
the meeting, new European Commission President Jean-Claude Juncker said
both sides must work closely on issues like climate change and sustainable
development.12 Friends of Europe | Global Europe EU-China: Shaping a shared future | 4th Europe-China Forum 13
I. 4th europe-china forum Premier Li Keqiang's special
The Europe-China Forum is a joint initiative of Friends of Europe and the Mission message
of the People’s Republic of China to the EU aimed at promoting greater EU-China
engagement and cooperation. This annual high-level meeting brings together By Li Keqiang, Premier of the State Council of The People’s
policymakers, business representatives and leading academics from across Republic of China
Europe and China to discuss issues of shared interest and address pressing
common challenges. In its 4th year, the Forum shed light on the challenges and On the occasion of the 4th Europe-China Forum, I would like to extend,
opportunities facing China and the EU as they embark on the second decade of on behalf of the Chinese government and in my own name, hearty
their strategic partnership. The high-level event was live streamed in English and congratulations on its opening and warm greetings to all its participants.
Chinese and the videos are available at www.friendsofeurope.org.
As two major forces in global political and economic landscape,
This chapter includes the speeches delivered at the Forum as well as a China and EU have stood firm in safeguarding stability and security
comprehensive account of the discussions held. in Asia and Europe, and played a pivotal role in dealing with
international financial crisis and other global challenges. China-EU partnership
for peace, growth, reform and civilization not only serves the interests of the two
peoples, but also contributes to world peace and prosperity.
Next year marks the 40th anniversary of China-EU diplomatic ties. As an old
Chinese saying goes, “At the age of forty, one will no longer suffer from perplexities”.
Weathering ups and downs in the past four decades, an already mature China-EU
relationship has now enjoyed steady growth. We stand ready to work with the EU
to implement in real earnest the China-EU 2020 Strategic Agenda for Cooperation,
accelerate the investment agreement talks and launch joint feasibility studies for
the free trade agreement at an early date. We look forward to intensifying our
cooperation in infrastructure, new urbanization, trade on high-tech products and
other prioritized areas. China and EU will not only be good partners of mutual
respect and trust in pursuit of win-win cooperation, but also champions for open
innovation and inclusive development.
China attaches strategic importance to the EU and always supports the integration of
Europe. I believe that a united, prosperous and strong EU under the new leadership of
the EU institutions will play an even bigger role in international affairs. I look forward to
meeting with my counterparts during the 17th China-EU Summit next year, and adding
fresh impetus to the healthy development of our Comprehensive Strategic Partnership.
I wish Europe-China forum greater progress in serving as a bridge of dialogue and
cooperation for our two peoples and this year’s event a complete success!14 Friends of Europe | Global Europe
European Commission President
Jean-Claude Juncker’s special
message
By Jean-Claude Juncker, President of the European Commission
The EU-China Comprehensive Strategic Partnership has expanded
significantly since its inception in 2003. The EU is China’s biggest
trading partner, and China is the EU’s second biggest one. Negotiations
on an EU-China investment agreement started earlier this year and are
expected to further improve the business environment on both sides.
But the EU and China have become partners in a deeper sense
than just trade. As key international players, the EU and China share
responsibility for contributing to global peace and stability. The first round of the
EU-China Dialogue on Defence and Security, which took place recently, should
open up new cooperation opportunities.
Ensuring sustainable development for the future is essential. The EU must work
hand-in-hand with China on climate change, environmental protection, international
development, human rights and social inclusiveness at the domestic and global
level. The EU-China Partnership for Sustainable Urbanisation has become an
important pillar of our relations and we look forward to developing more projects
in that framework. We would like to increase cooperation with China on the rule
of law, in line with the outcome of the 4th Plenum, and to do more to develop EU-
China transport links.
We also want to build bridges between Europe and China by expanding people-
to- people exchanges. The EU wants to see more cultural, student and linguistic
interactions, as well as cooperation to promote cultural diversity. Progress on visa
and migration cooperation is essential if we are to realise these goals.
The EU and China should celebrate the 40th anniversary of EU-China diplomatic
relations next year by implementing the EU-China 2020 Strategic Agenda for
Cooperation with renewed ambition and vigour. I was happy to discuss our future
cooperation with President Xi Jinping at the G20 Summit in Brisbane, and wish
today’s Forum all the best in contributing to the advancement of EU-China relations.16 Friends of Europe | Global Europe EU-China: Shaping a shared future | 4th Europe-China Forum 17
EXECUTIVE SUMMARY China has become increasingly proactive since President Xi Jinping took office in
2012. Xi is pushing big structural changes at home, including market economic
After years when Europe mostly noticed China for its dramatic rise in trade and reforms, greater emphasis on rule by law and a fight against corruption. He also
economic output, Beijing is now helping shape the international agenda. In a wants to make growth sustainable, as China prepares to become the world’s
written message delivered to Friends of Europe’s 4th Europe China Forum, largest economy by the end of 2014.
Premier Li Kequiang urged the European Union to move quickly towards a
possible free trade agreement (FTA) with China – and to put more effort into The changes will trigger a dramatic increase in Chinese demand for services,
current discussions towards a joint investment accord. “We stand ready to and require stronger interaction with international businesses, throwing up new
work with the EU to accelerate the investment agreement talks and launch joint possibilities for Europe. Relations between the EU and China have until now
feasibility studies for the free trade agreement at an early date,” Li said in the mostly be based on trade: bilateral EU-China trade amounted to 428 bn euros in
message. 2013, and Xi wants to aim for 700 bn euros by 2020. In addition, an investment
treaty, currently being negotiated, could strengthen links in fields such as the
environment and urbanisation – notably the task of making China’s burgeoning
“We stand ready to work with the EU to accelerate the investment cities clean, safe and comfortable to live in.
agreement talks and launch joint feasibility studies for the free trade
agreement at an early date.” “The EU must work hand-in-hand with China on climate change,
environmental protection, international development,
human rights and social inclusiveness.”
Special message by Jean-Claude Juncker, President of the European Comission
“The EU must work hand-in-hand with China on climate change, environmental
protection, international development, human rights and social inclusiveness,”
said European Commission President Jean-Claude Juncker in a written message
delivered to the forum.
Special message by Li Keqiang, Premier of the State Council of The People’s Republic of China18 Friends of Europe | Global Europe EU-China: Shaping a shared future | 4th Europe-China Forum 19
HELPING TO SHAPE THE WORLD Europeans generally welcome the new, proactive China, said Knapen. “However,
you have to be honest: it could also go in the wrong direction, and the jury is out
“China at the beginning was very passive as it tried to adapt and integrate itself on that.”
into the international political and economic system,” said Men Jing, Director of the
EU China Research Centre at the College of Europe. “It gradually became actively Rule-setting for trade, investment and government procurement is now happening
involved in the initiatives, and now it is proactive and taking initiatives in economics, outside the World Trade Organization (WTO), said Iana Dreyer Founder and
finance, investment and even the political development of the world agenda.” Editor-in-Chief at Borderlex and China is increasingly active. Recent high-profile
initiatives include a joint statement in Beijing by President Xi Jinping and U.S.
However, the current multilateral system of trade and finance was developed President Barack Obama, agreeing to reduce carbon emissions from the 2020s.
with European input in the years after the Second World War, and Europeans China also proposed a single, region-wide FTA covering the Asia-Pacific region,
are naturally inclined to preserve this, said Ben Knapen, Brussels Permanent the Free Trade Area of the Asia-Pacific (FTAAP).
Representative of the European Investment Bank (EIB). “I think the member
states of the European Union have a vested interest in engaging China in the Moves with a direct impact on Europe include the China-EU free trade agreement
multilateral system, and whenever China reaches out to be a stakeholder in this (FTA) proposal, plus the so-called “One Belt and One Road» projects: a Silk Road
multilateral system we should welcome that,” he said. Economic Belt to provide an improved overland trade route between China and
Europe, passing through central Asia and Turkey; and the 21st-Century Maritime
Still, Chinese input could help improve current institutions. “China must be a Silk Road to facilitate trade between the Chinese coast, Indian Ocean ports and
rule maker,” said Jonathan Peel, Vice-President for External Relations at the Europe via the Suez Canal. China has even formed links with a group of 16
European Economic and Social Committee (EESC). “Most of these institutions Central Eastern European countries, the so-called “16 plus 1 cooperation”, to try
date from the 1940s and they probably do need urgent updating. I see China as to boost commerce beyond traditional partners in Western Europe.
a key player in coming years.”
“China must be a rule maker.”
Jonathan Peel, Vice-President for External Relations at the European Economic and Social
Committee (EESC)20 Friends of Europe | Global Europe EU-China: Shaping a shared future | 4th Europe-China Forum 21
TRADE AND INVESTMENTS As well as investment, trade with China will change in coming years, said Iana
Dreyer. “We are at the end of a cycle of export-led growth in East Asia and we’re
The recent changes in China follow a profound shift in global economic structures. also in the end of a cycle of the stretching of supply chains globally,” she said.
The past few decades were characterised by globalisation, as manufacturers “Trade in the coming years is going to be much more regionalized. The kind of
took advantage of the big differences between the labour costs in rich countries trade we’re likely going to see more and more between EU and China is going to
and the developing world by manufacturing goods in low-cost regions and selling be about investments, services, building cities, cleaning cities and running their
these to wealthier consumers in members of the Organisation for Economic Co- transport.”
operation and Development (OECD).
“In the past, most foreign investment in China was focussed on producing at
lower cost and selling in other countries, and imports from China were mostly
mass market products where price was a major factor,” said Ana Serban,
Secretary General of ND European Business Development. “Now the focus in
China has shifted towards services, technology and high end products. And
China has turned from being a producer into being a big consumer.” “We are at the end of a cycle of
export-led growth in East Asia.”
“And China has turned from being a producer into being a big Iana Dreyer, Founder and Editor-in-Chief at Borderlex
consumer.” Just 2% of overall EU Foreign Direct Investment (FDI) is in China, even though it
is the EU’s biggest source of imports. An EU-China investment treaty – and the
preparations for one – could have a comparable effect to the lengthy negotiations
before China’s 2001 accession to the WTO, said Moderator Shada Islam,
Director of Policy at Friends of Europe. “That actually triggered, accelerated, the
reforms that were under way in China in those days,” she said. “I was recently
in Beijing talking to European business there, and they said that the negotiation
of a bilateral investment treaty would probably be just as seminal a moment for
China’s reform effort.”
“I was recently in Beijing talking to
European business there, and they
said that the negotiation of a bilateral
investment treaty would probably be
just as seminal a moment for China’s
reform effort.”
Ana Serban, Secretary General of ND European Business Development Shada Islam, Director of Policy at Friends of Europe22 Friends of Europe | Global Europe EU-China: Shaping a shared future | 4th Europe-China Forum 23
Lv Fengding, Vice President of the China Public Diplomacy Association, said “We can negotiate a deep and comprehensive free trade agreement because we
China should move quickly. “We in China are ready to make investments have a comprehensive deep internal market,” said Mauro Petriccione, Deputy
anywhere on the basis of equality and mutual benefit, and we would like to invite Director General for Trade at the European Commission. For an EU-China FTA,
all possible investors to come to China to make their businesses prosperous,” he issues such as intellectual property protection and state subsidies would have
said. “I don’t think we should wait for too long. We will try to make the conditions to be tackled, Petriccione said. Moreover, an investment agreement would have
as favourable as possible with our foreign partners, especially those from Europe. to come first. “My immediate reaction is: not so fast,” he said. “If you look at the
We should seize the hour.” depth of analysis and cooperation, Europe is not an easy partner for an FTA.
And, I’m sorry to say, we don’t want to be easy. It’s a big thing for us, and it takes
time to work it out.”
“We will try to make the conditions as favourable as possible
with our foreign partners, especially those from Europe.
We should seize the hour.” “My immediate reaction is: not so fast.”
Lv Fengding, Vice President of the China Public Diplomacy Association
China’s proposal for an FTA is being answered by calls for patience from EU
trade officials. The EU’s new generation of trade deals are often prefixed with the
description “deep and comprehensive”, to specify that they are about more than
just tariff reductions. They include the protection of geographical brand names,
participation in the service sector and access to public procurement projects.
That is, they make demands on the partner country’s domestic regulation. Mauro Petriccione, Deputy Director General for Trade at the European Commission24 Friends of Europe | Global Europe EU-China: Shaping a shared future | 4th Europe-China Forum 25
HELPING UPGRADE THE CHINESE arable land, but has to feed a fifth of the world’s population – and climate change
is already negatively impacting Chinese agriculture. “A majority of China’s top
ECONOMY leadership has a science and technology background, so they treat climate
change seriously,” she said. By contrast, the U.S is dominated by lawyers.”
The coming six years will be critical for China, said Chi Fulin, President of the
China Institute for Reform and Development, as wages rise and China shifts its “A majority of China’s top leadership has a science and technology
economic model to innovation and services. In six years, about three-fifths of background, so they treat climate change seriously.”
Chinese will live in cities, creating demand for services that provide adequate
living conditions, for example in fields such as water and healthcare management.
As a result, the service sector will maintain double-digit growth, outstripping the rise
in overall GDP, and leading services to account for a fifth of the Chinese economy
by 2020. “By 2020 China’s domestic market will single-handily support the Chinese
economy,” Chi said. “This has very important repercussions for the world.”
“By 2020 China’s domestic market
will single-handily support the
Chinese economy. This has very
important repercussions for the Dale Jiajun Wen, Visiting Fellow of Renmin University on energy security and food security
world.”
Since 2008, China has been the world’s biggest investor in renewable energy, and
Chi Fulin, President of the China Institute for
it now has the world’s biggest renewables capacity, notably in hydroelectric, wind
Reform and Development
and solar power. Solar panel penetration expanded more than a hundredfold
The “upgrade” in economic structure will have to be carried out while growth between 2005 and 2010. But China’s total energy demand is still growing rapidly,
slows. But Chi said economic expansion would be still enough to support the and its consumption of coal is rising too. The biggest challenge for sustainable
changes. “We are not aiming for a figure like 8% annual growth,” he said. “But development in China is the “American dream”, said Wen – though she said that
with average growth of between 5% and 6% over the next five to 10 years, we from an environmental point of view it’s really an “American nightmare”.
will be able to upgrade our economic and consumption structure.”
“If everybody on this planet wants to live the American lifestyle, we will need
A major change for China is its move towards clean energy, as highlighted by the five or six planets to sustain the world population, and of course we don’t have
China-U.S. joint statement in Beijing. China has become serious about climate that,” she said. “But unfortunately the American dream is very powerful and
change for two big reasons, said Dale Jiajun Wen, Visiting Fellow of Renmin addictive, and most of China’s middle class feel that they are entitled to live just
University: energy security and food security. China has only 9% of the world’s like Americans.”26 Friends of Europe | Global Europe EU-China: Shaping a shared future | 4th Europe-China Forum 27
The EU appears a good potential partner for China in a range of areas linked to The similarity in outlook is one reason Build Your Dreams (BYD), a Chinese
energy and the environment. Though Europe has not yet achieved sustainability, company, is active in Europe. BYD was founded in 1995 to specialise in new
its big economies’ per capita ecological footprints – the amount of land and sea energy and related products, and is now a leading producer of electric cars. “Our
needed to supply the resources they consume – are only about half that of the head office for European operations is located in Rotterdam in the Netherlands.
U.S., Wen said. In addition, some European cities have public transport and So sometimes we consider ourselves a European company but with a mother
waste and water management systems that could be adapted for China. ship located in Shenzhen, China,” said Isbrand Ho, Managing Director of BYD
Europe. “Environmental ecology is very important to Europeans. They are very
The EIB is investing in China not because China needs the financing, but because much aware of impacts on the environment and resources.”
the bank has invested in European energy efficiency projects and so has long
experience in the field. “Sustainability and the reduction of greenhouse gases Alice Rezková, a Research Fellow at the Association for International Affairs,
are an area where Europeans and Chinese can help each other,” said Knapen. pointed to a number of fields where the EU could cooperate with Chinese cities:
“Europeans have a fine tradition when it comes to investing in sustainability – pollution reduction, public transport, urban agriculture, and public services such
something the Chinese are apparently in urgent need of after the tremendous as education, housing and healthcare.
economic growth over the last decade.”
“Sustainability and the reduction of greenhouse gases are an area
where Europeans and Chinese can help each other.”
“Environmental ecology is very
important to Europeans. They are
very much aware of impacts on
the environment and resources.”
Isbrand Ho, Managing Director of BYD Europe
But it’s not always simple. Many of the European companies that develop
smart city solutions are small- and medium-sized enterprises (SMEs) with
no experience of operating in the Chinese market or of dealing with Chinese
municipal governments. Sometimes their proposed solutions do not match
local needs. Rezková related a recent meeting of companies that develop water
management and cleaning solutions. The Chinese counterparts were interested,
but said: “You know, the system, it’s too complicated for us. You just make the
Ben Knapen, Brussels Permanent Representative of the European Investment Bank (EIB) water too clean. We don’t need that.”28 Friends of Europe | Global Europe EU-China: Shaping a shared future | 4th Europe-China Forum 29
Europeans need to learn from this kind of interaction, said Rezková. “Sometimes SOCIAL CHALLENGES: JOBS AND
it’s better to offer a microwave with one button and not with 100 programs,” she
said. “And this is something we need to understand and need to deliver in the HOMES
Chinese market.”
Chinese cities’ rapid growth will create huge social challenges. Some 700 million
In general, cooperation on urbanisation between the EU and China can take the Chinese – or half the population – live in cities. But a third of these do not have
form of Europeans saying how they dealt with a particular problem when their access to the social security or housing systems because they are migrant
own cities were growing fast, said Peel of the EESC. This could then be adapted workers or students, according to Rezková.
to China today. He suggested infrastructure as a potential area for cooperation:
energy grids, transport networks, and water and sewage systems. Despite the huge, growing demand for affordable housing, most of the
development projects in China are aimed at the lucrative market for high-end
customers, she said. Meanwhile, China has the world’s largest number of slum
dwellers – some 180 million according to figures from 2009. “It’s a problem that
should be tackled, otherwise it might escalate,” Rezková said.
“Sometimes it’s better to
offer a microwave with one
button and not with 100
programs.”
Alice Rezková, Research Fellow at the
Association for International Affairs
But such cooperation will need an environment in which European private
companies can feel their investments will be secure – for example investment
protection mechanisms and a dispute settlement procedure. These issues
should be addressed by the ongoing investment negotiations.
“The private sector innovates because it needs its cutting edge and it needs to
boost its competitiveness,” Peel said. “This will mean the removal of investment
From left to right: Song Ronghua, Secretary General of the Chinese Public Diplomacy
barriers and restrictions. It will mean combating local protectionism. And it will Association (CPDA); Lv Fengding, Vice President of the China Public Diplomacy Association
need a greater degree of accountability – and, above all, greater transparency.”30 Friends of Europe | Global Europe EU-China: Shaping a shared future | 4th Europe-China Forum 31
Improvements underway include a reform of China’s social benefits system, which
that Chi says will be completed by 2020. The redesign follows a programme part-
INNOVATION
funded by the EU, the EU China Social Security Reform Co-operation Project. One channel through which the EU is contributing to Chinese innovation is its
This aimed to use EU expertise and experience to help develop a sustainable Horizon 2020 Research and Innovation programme. The current programme,
social security system that guarantees accessible, adequate and affordable the seventh, which lasts from 2014 to 2020, has several hundred Chinese
social security benefits. researchers participating in hundreds of joint research projects, said Diego
Sammaritano, Policy Officer for Research and Innovation Cooperation with China
Above all, cities will need to create jobs. Chi said the booming service sector will at the European Commission. From now, the Commission wants more of the
be a big engine of job creation. He expects the sector to grow 20% and generate funding to come from Chinese organisations. It will also direct research towards
10 million jobs each year to 2020. priority areas, one of which is sustainable urbanisation.
But there are about 16 million new entrants interns in the labour market each “China has made huge progress in terms of innovation performance,” said
year, and 9 million unemployed persons registered in public employment service Sammaritano. “R&D spending in China has been increasing at 20% per year
centre every year, said Wang Yadong, Senior Expert on China’s Employment for the last 15 years, and R&D intensity is now 2% of GDP, exceeding that of
Policy at the International Labour Organization (ILO). Slower economic growth Europe. China has demonstrated the capacity of not only copying, but combining
means that the job gap each year is approximately 14 million, he said: “The technologies imported from abroad with technologies developed at home.”
long-term unemployed are another problem, and youth unemployment is a
big challenge at the top of the Chinese government’s agenda. Moreover, job
insecurity has increased after the financial crisis.”
“Youth unemployment is a big challenge at the top of the Chinese
government’s agenda.”
“China has made huge
progress in terms of innovation
performance.”
Diego Sammaritano,Policy Officer for
Research and Innovation Cooperation with
China at the European Commission
Further progress could come from improved links between universities and
the private sector, so that research translates into business applications.
Sammaritano also called on China to fund more basic research: currently, most
of the research in China is funded by private companies and it is allocated to
Wang Yadong, Senior Expert on China’s Employment Policy at the International Labour developmental research.
Organization (ILO)32 Friends of Europe | Global Europe EU-China: Shaping a shared future | 4th Europe-China Forum 33
COMMUNICATING BETTER Wei said there are two main kinds of students at his university: “One type is those
who are very interested in working and capitalizing on the Chinese economy
Language has always been a big obstacle to cooperation between Europeans and the opportunities there. The other type, more traditional, is interested in
and Chinese, as they tend to find each others’ languages hard. Chinese culture – they want to travel to China to learn more about painting and
philosophy.”
Androulla Vassiliou, Former European Commissioner for Education and Culture,
promoted Chinese language learning during her time in office, as well as the
training of teachers of lesser-spoken European languages in China. “Language
learning is really very important,” she said. “Through cooperation, young
researchers can produce better results and build on each others’ work. In
science, you can achieve much more when you work with others and try to “Some students want to travel to
complement what they have done.”
China to learn more about painting
“Through cooperation, young researchers can produce better and philosophy.”
results and build on each others’ work.” Shen Wei, Director of the Confucius Institute at
Lancaster University
Frances Ainley, a student at the College of Europe, said such people-to-people
exchange is the best way to interest young Europeans more in China. Only if they
invest time in language learning can they access Chinese pop culture and social
networking. Encouraging them to spend time in China means they can find out
about the country for themselves.
“I think top-down messaging – if something is perceived as such – can turn people
off slightly,” said Ainley – “when they see a country as dynamic and energetic but
don’t really understand what messages from the highest level mean to them.”
Androulla Vassiliou, Former European Commissioner for Education and Culture
and Friends of Europe Trustee
So far, Chinese students have been the more enthusiastic learners: there are
around six times as many Chinese students in Europe as European students in
China, said Shen Wei, Director of the Confucius Institute at Lancaster University.
The Confucius Institutes are trying to change that. Set up 10 years ago, they “I think top-down messaging
typically form a joint venture with a university to support Chinese language – if something is perceived as such –
teaching alongside other China-related courses. There are already a total of 471 can turn people off slightly.”
Confucius Institutes and 730 Confucius classrooms in 125 countries, making
them bigger already than the Alliance Française and the British Council. Frances Ainley, Student at the College of Europe34 Friends of Europe | Global Europe EU-China: Shaping a shared future | 4th Europe-China Forum 35
Fu Jing, Chief Correspondent of China Daily in Brussels, said that the Chinese Yan Shaohua, another student at the College of Europe, said he felt the need to
government manages social media in line with its own laws, and suspects the reason learn about Europe while studying modern Chinese history, as he realised that
might be to do with the Chinese services’ business interests. “China has its own Europe had played a large role. Moreover, he said, while Europe is no longer at
versions of Twitter and WeChat. My guess is that there is some kind of competition,” the centre of world affairs, many of the key ideas and principles that underpin the
he said. “Maybe if there is a negotiation between China and the EU about digital modern world come from Europe.
market openness is, there will be hope that Twitter or Facebook can be opened.”
“If we want to understand China, to understand ourselves, I think we have to
understand Europe,” he said. “And if we want to understand the world, we also
have to understand Europe. That’s basically why I am here today.”
The EU is trying to make participation easier in its Erasmus Programme of
student exchanges. The new Erasmus Plus will provide credit mobility, so that
“China has its own versions European students can gain credits during short periods of study in China and
of Twitter and WeChat. My transfer these to their university course at home. That means they will be able to
guess is that there is some spend six months or a year at a different university, rather than having to sign up
kind of competition.” to a full course lasting three years or more.
Fu Jing, Chief Correspondent of China “It is easier for students and their parents if they go for an experience of six months
Daily in Brussels
and come back to their own university and finish,” said Vassiliou. “This will give a
Men Jing said the key to language learning is necessity. Chinese students learn new dimension to the knowledge of each other, of their culture, of their language.”
English because they realise that it’s necessary. So far, many Europeans don’t feel
that way about China and its language. “If you go to Chinese bookstores you will “If we want to understand China, to understand ourselves,
find so many publications, either in English or in Chinese, introducing the outside I think we have to understand Europe.”
world,” she said. “But in Europe you rarely find books introducing China, Chinese
history, Chinese culture and the Chinese language. If Europeans really feel that
China is important enough, then of course they will feel the need to learn.”
“If Europeans really feel that
China is important enough,
then of course they will feel
the need to learn.”
Jing Men, Director of the EU China
Research Centre at the College of Europe
Yan Shaohua, Student at the College of Europe36 Friends of Europe | Global Europe EU-China: Shaping a shared future | 2nd Policy and Practice Partnership 37
II. 2nd EU-CHINA POLICY AND EU-China relations should move from promises to action to strengthen and
deepen their strategic partnership according to a selected group of think tank
PRACTICE PARTNERSHIP representatives, policymakers, business leaders and academics who attended
the 2nd EU-China Policy and Practice Roundtable held in Changsha, Hunan
The EU-China Policy and Practice Partnership is an exciting new Friends of Province, on October 20-21.
Europe initiative aimed at promoting stronger understanding of EU-China
relations. Through roundtable discussions and publications, this project seeks to Convened by Friends of Europe in cooperation with the Chinese Mission to the
bridge the existing gap between the academic and scholarly work being done on European Union and the Beijing-based Chinese Public Diplomacy Association
EU-China relations, the policy initiatives undertaken by officials and the priorities (CPDA), the Roundtable was designed to spur fresh thinking on EU-China
identified by business leaders. It is only through such synergies that EU-China relations. The meeting took place as the Central Committee of the Communist
cooperation can be made strong, sustainable and able to deliver concrete results. Party of China convened in Beijing for the four-day Fourth Plenum.
The second roundtable brought together a unique mix of participants for an The Roundtable was held under the Chatham House rule in order to ensure a
insightful outcome driven dialogue on how to reboot the EU-China Strategic more open and frank exchange of views.
Partnership. This chapter provides a full account of the wide-ranging discussions
and a list of recommendations to strengthen the relationship. From Promises to action
With China and the EU set to celebrate 40 years of their relations in 2015,
participants explored ways in which the different pledges for stronger EU-China
cooperation made by leaders at the 2013 EU-China summit in Beijing can be
turned into practical action. Discussions focused on trade and investment,
food safety, urbanisation and China’s Silk Road initiatives. The importance of
strengthening people to people ties to build much-needed trust was also
highlighted.
Boosting trade and investment flows
Trade has been one of the main drivers of the EU-China relationship, but
investment flows are still far below their potential. China is the EU’s biggest
source of imports and has also become one of the EU’s fastest growing export
markets. Both sides trade well over €1 billion worth of goods a day. According
to Chinese statistics, Chinese investment in the EU reached 9.8 billion dollars
in 2014.There is therefore room for improvement and great untapped potential.38 Friends of Europe | Global Europe EU-China: Shaping a shared future | 2nd Policy and Practice Partnership 39
the regionalisation of international investment agreements which allows for a
It was with the view to unlocking this potential that negotiations for a Bilateral
more coherent governance of global investment flows rather than separate
Investment Treaty (BIT) were launched in 2013. Getting better market access
administration of more than 3,000 different international investment pacts.
and protection for investors will be essential in boosting two-way investment
flows. “Merchandise trade growth is likely to slow down. It’s going to be about Success in concluding the BIT could also be a step towards a future broader
investment in services,» a European participant told the Roundtable. FTA with the EU. Chinese interest in such an agreement is echoed by some EU
governments. FTA negotiations would certainly be more ambitious, and would
“Merchandise trade growth is likely to slow down. It’s going to be probably include the discussion of a number of new areas such as environmental
about investment in services.” and labour standards as well as competition.
European policymakers see the China of today as different, one where markets Food safety
are to play a more important role in the allocation of resources, and where
smaller private companies will become more important. That is why ensuring the China is engaged in a massive overhaul of its food safety system, with a focus
protection of investment and market access in both directions is so important. on more transparency, better enforcement, education and training of farmers,
small businesses, consumers and rural communities. «The number of agencies
Chinese investment is being welcomed in Europe, however one European dealing with food safety questions has to be reduced,» said a participant,
participant expressed concern that this was not always the case in China where pointing out that as was the case in Europe, food safety concerns were spurring
one of the central pieces of the investment regime is a catalogue which categorises the authorities to tackle the issue urgently. The role of the media was also vital in
investments into 3 main groups: encouraged, restricted and prohibited. Within spotlighting food safety challenges.
the restricted category for instance are several service sectors such as banking,
insurance, real estate, legal advice, transport and entertainment. European “The number of agencies dealing with food safety questions
companies, for example, cannot participate in Chinese local public procurement. has to be reduced.”
In Europe, public procurement is open. Better access to the Chinese market
would also help to attract the technology and investment China needs. There is an emerging focus on prevention in Chinese law. The situation is very
complicated because each business seems to be producing its own standards
Although there have been trade frictions and confrontations in recent years, with the government only acting as a consultant. But the power of Chinese
including the 2013 EU anti-dumping investigation into Chinese exports of solar consumers is developing in different ways. One is the consumers’ association;
panels, tensions have now subsided. One European participant argued that an though not very powerful, it is present. Another is simply voting with your feet.
EU-China Free Trade Agreement was more important for the EU than for China Customers increasingly prefer to shop online rather than from their local store,
since the EU needs a stimulus for economic growth as well as markets and more as they recognise the products offered there are possibly harmful. The selling of
participation in international networks. labelled organic products also has a social effect because only those with money
can buy these organic products free from pesticides.
While it is true that 27 out of 28 EU countries already have investment agreements
with China, the new EU-China umbrella agreement will serve to update those Urbanisation
accords harmoniously and replace the out-dated bilateral deals which were
designed to address very different economic conditions. As such, a comprehensive With Chinese cities expected to be home to 1 billion people by 2030, managing
investment agreement aiming to increase investment flows between the EU urbanisation is a major challenge for China. At present, 53% of the Chinese
and China would be beneficial to both parties. Also, the EU approach, aimed population is already living in cities, with an expectation that a further 1% will
at substituting existing agreements with a single one, is part of a new trend of40 Friends of Europe | Global Europe EU-China: Shaping a shared future | 2nd Policy and Practice Partnership 41
move from the countryside each year. Roundtable participants cautioned that The new trend in the urban strategies of both Europe and China is the term
China should be careful not to ignore its rural population and neglect the plight ‘smart cities’. Everyone wants to be ‘smart’ by implementing a smart strategy
of older people left behind in villages once the younger generation migrated. and smart technology in order to tackle urban problems, but this involves a lot
«We should also talk about ruralisation,» said a participant, adding: «we should of challenges. Also, China, unlike Europe, has the unique opportunity to build
cool down urbanisation so that people can breathe.» At the same time, many cities from scratch. This is a once in a lifetime chance to decide how to design a
farmers yearn for life in more colourful, urban areas. Some participants warned city, and what we want from it for our lifestyles. A priority should be ‘walkability’,
that scrapping the hukou residence permit in order to give full rights to rural a concept which says that a neighbourhood should be accessible by public
migrants in cities would not automatically end the gap between rich and poor. transport and on foot.
«We should issue basic citizenship which does not distinguish between rural and
urban hukou,» said an expert.
Walkability
“We should also talk about ruralisation. We should cool down Walkability can also have a direct impact on people’s public health by helping
urbanisation so that people can breathe.” to battle obesity. Lifestyle is often influenced by the city’s structure, and the
accessibility of convenient and reliable modes of transport. Most Chinese cities
European cities are a great attraction for China which is keen to learn from now, for instance, are designed along existing traffic corridors, creating difficulties
Europe on issues like smart, liveable and walkable cities as well as urban for pedestrians who have no way to safely cross these 6-lane highways. Eastern
mobility, planning and preservation of cultural heritage. Cities have systems and Europe, for example, experienced a very fast phase of urbanisation with many
urban planning requires a comprehensive approach taking into account all key apartments being built in a short space of time. These areas then became
infrastructure decisions such as transport, energy and housing. EU countries impoverished neighbourhoods, and the properties themselves are falling in price
have learned over time that all these major decisions need to be centralised in a and in danger of falling down - quite literally. Beijing features several modern
single local entity. For this reason, an important part of the EU-China urbanisation neighbourhoods which house prosperous communities, fenced off and enclosing
partnership is the mayor’s forum, providing mayors from China and EU member very expensive real estate. But this often leaves pedestrians at a disadvantage
states with the chance to meet and exchange experiences on how they are and leads to an increase in the use of cars. There are some very useful maps
solving their particular problems. The urbanisation partnership not only involves being drawn up which illustrate how far a pedestrian can travel within a city in 30
EU mayors and urban planners, but also EU companies which can be brought minutes. This is a really useful tool for showing the difficulties of a city resident’s
together with their Chinese counterparts. everyday routine.
While it is suggested that the US model would be better for the western part of Now is the time to define the walkability elements for Chinese cities. Europeans
China, a European participant was confident that the European model, which include the density of their cities into findings, and it definitely informs the way
looks more at dense cities was considered more productive and efficient and in which they design their cities, but for China density is not such a problem.
would be more applicable. The EU is the region of the world with the most According to research, Chinese people care less about how dense a building
expertise in many technically challenging areas in this field, like dealing with traffic is, so there may be other elements that are more relevant to the Chinese. There
management systems, energy production and renewable resources. With the is also the suggestion that Chinese cities should be built on local tradition.
development of a low-carbon eco-cities scheme, it is hoped that the EU can This idea could also be an opportunity to involve the citizens directly in the
soon select one Chinese partner city that has demonstrated the usefulness of development of their city, and could lead to some exceptional concepts being
the EU’s comprehensive approach to urbanisation. adopted by each city.42 Friends of Europe | Global Europe EU-China: Shaping a shared future | 2nd Policy and Practice Partnership 43
A great example of Chinese walkability is the Lujiazui pedestrian bridge in the With the relaxation of the hukou system and the rise of the middle classes, there
Pudong district of Shanghai. This bridge has made a very difficult crossing into are new aspirations for a better quality of life, better products, and a better lifestyle.
a very interesting example of walkability, and offers the chance to show that
walkability isn’t only a European concept. Walkability can be applied to every European SMEs have a huge interest in discussing urbanisation in China, seeing
city in the world even if it has 10 million citizens. Neighbourhoods with better the opportunity where the scope of the strategic partnership has moved to
walkability also have higher resale values of their properties, deepening the implementation and practice. When the Chinese talk about the challenges of
people element further. mobility, or pollution, water and waste management, green and smart cities,
Europeans all see these as major opportunities for a plethora of incentives for
“Chinese designers should not overlook the possible lessons from businesses investors and exporters.
Japan. Tokyo is a clean city with great public transport and no noise.”
But, rural development should not be side-lined as a result of urbanisation. A
“I am impressed how Shanghai works. It has developed so quickly but is still memorandum on rural development has made the point of food security and
an agreeable city despite being so huge, public transport is still very good and protection of agriculture to help the sustainability of cities, and gives incentives
has its livable areas. Europe has very different problems, with old cities renewing for people to remain in the countryside. This can be supported through land
infrastructure,” said one European expert, adding: “Chinese designers should rights transfers and greater investment in machinery.
not overlook the possible lessons from Japan. Tokyo is a clean city with great
public transport and no noise. It has many neighbourhoods where people are “One of the positive effects of urbanisation is that women are going
able to walk easily. to cities and become independent.”
Global challenge “One of the positive effects of urbanisation is that women are going to cities and
become independent. Of course there they face other challenges, other risks,
Urbanisation is a challenge beyond China, it is a global phenomenon impacting but from that perspective we should also be fair and highlight the advantages
on global politics and global economics. This is where growth and jobs are being urbanisation has created for parts of the populations. Many people also come
generated and it’s impacting on global society overall. Urban citizens are very to the cities because in the countryside they cannot find an appealing salary
connected to each other and to those like them in other parts of the world. and that’s also one of the reasons that people migrate, to earn a living and save
According to the Asian Development Bank, by 2025 2.5 billion Asians will live in money for their children who remain with their grandparents in the countryside,”
cities, and this will represent 54% of the world’s urban population. The challenge said a Chinese expert.
facing policymakers is how to make this process manageable, how to make
these cities sustainable and liveable, walkable. Journey on the new Silk Road
The pace of urbanisation in China really is unprecedented, but Indian cities are The China-led Silk Road Economic Belt and 21st Century Maritime Silk Road
also growing very quickly and the situation there is much more complex than initiatives were the subject of an in-depth discussion at the Roundtable, with
anywhere in China. Comparing Mumbai to Shanghai, China certainly wins on experts debating various aspects of the «one belt, one road» projects. Chinese
liveability. Now is the first time that two major Asian countries, China and India, scholars maintained that the two initiatives are aimed at deepening reform and
have cities growing at a similar pace. The challenge is also opportunity for these further opening up China to the world, while also encouraging development in
countries to work together and exchange ideas. The Global Institute has said that the countries involved in the project. «They represent a more active Chinese
out of 75 dynamic cities in 2020, 29 will be Chinese, yet India goes unmentioned; neighbourhood policy,» said a European scholar, adding that Beijing was reviving
China is ahead of the game.You can also read
