China and EU should take a strategic and long-term perspective and strengthen their bilateral policy coordination and dialogue

Economic and trade relations between China and the European Union (EU) have matured over the 36 years since the establishment of their diplomatic ties and are an important engine for the strategic partnership.

The EU is now China's largest trading partner and export market and it is the leading source of high-tech imports. Meanwhile, China is the EU's second largest export market and its largest import source. In 2010, bilateral trade volumes reached $479.7 billion, an increase of 12.7 percent from 2008. Trade with the EU accounted for 16 percent of China's total foreign trade value. The EU has also remained China's fourth largest investor for several consecutive years. By the end of 2010, the EU had had a total of 33,361 direct investment projects in China with an actual investment of $73.3 billion, 7 percent of the foreign investment volumes the country absorbed.

China-EU economic and trade cooperation has maintained a steady recovery momentum despite the global economic slowdown, with bilateral trade volumes reaching $372.14 billion from January to August, an increase of almost 22 percent on the same period last year. The number of additional direct investment projects by the EU in China reached 1,083 during the same period, with an actual investment of $3.84 billion, an increase of 4.2 percent year-on-year.

While the effects of the global financial crisis continue fermenting and the global economic recovery still remains sluggish, the increased China-EU cooperation fully demonstrates that their cooperation is on a robust footing. This has benefited from the frequent high-level dialogues between the two sides, the establishment of unblocked communication and coordination mechanisms between their economic circles as well as their open and problem-solving approach in case of disputes.

The gloomy global economic prospects highlight the necessity and urgency for China and the EU, as two major international players, to join hands to tackle the global and regional challenges ahead.

The EU's "Europe 2020" strategy aims to revive its economy and promote "smart, sustainable, inclusive growth" with greater policy coordination among EU members. While China's 12th Five-Year Plan (2011-2015) for national economic and social development aims to expedite the transformation of the country's economic growth mode and promote full, coordinated and sustainable development. Such a common development approach and the top priority China and the EU have placed on the pursuit of a green, low-carbon and sustainable economy will create opportunities for the two sides to learn from each other and deepen cooperation. In particular, technological advantages enjoyed by the EU will come to China's aid in the country's endeavor to boost innovation, improve the efficiency of its resources utilization and its ability to cope with climate change.

The EU is the world's largest developed economy while China is a fast-growing emerging economy, this lays a solid foundation for their economic complementariness and beneficial cooperation. The EU is now in a knowledge and innovation-based post-industrial era and its developed high-end manufacturing, energy conservation and environment sectors will help facilitate China's ongoing efforts toward industrial upgrading and technological advancement. At the same time, the export of China's consumer goods and labor-intensive industrial products to the EU has also brought tangible benefits to EU citizens.

Both China and the EU face the challenge of transforming their macroeconomic polices in a post-crisis age. That makes it necessary for both sides to look at their ties from a strategic and long-term perspective and strengthen bilateral policy coordination and dialogue to enhance mutual trust, increase common ground and reduce divergences. At the same time, the two sides should continue strengthening coordination and communication through multilateral channels in a bid to build a stable and open global economic and financial environment and create a favorable external environment for their economic and trade cooperation.

The EU should adhere to an open and transparent investment policy and take practical steps to facilitate investment from Chinese enterprises, a move encouraged and backed by the Chinese government in recent years.

China and the EU should also fully respect each other's concerns in bilateral economic and trade cooperation and try to resolve their disputes through consultation and dialogue for the sake of their common interests.

It is hoped the EU will recognize China's full market economy status as soon as possible to further deepen bilateral economic and trade cooperation. As two important economic players, the two should also firmly oppose various kinds of trade protectionism and continue to promote market openness in an effort to push forward trade and investment liberalization and help pull the global economy out of the current crisis.

The author is secretary-general of the China Center for International Economic Exchanges.

(China Daily 11/15/2011 page8)