Past Event

EU-China economic relations: looking to 2025

This event will see the launch of a report on EU-China relations and discuss issues such as trade and investment, industrial cooperation and innovation and global governance

Date: September 13, 2017, 9:00 am Topic: Global Economics & Governance

Video recording

Note that parts of this event are in Chinese.

Event summary

This event saw the launch of the report: EU–China Economic Relations to 2025. Building a Common Future by Bruegel, Chatham House, China Center for International Economic Exchanges (CCIEE) and the Chinese University of Hong Kong on EU-China relations.

Presentation of the report

At the start of the event the he lead authors -Alicia Garcia-Herrero, K.C. Kwok, and Zhang Yansheng- presented their recommendations for enhancing EU-China economic relations, summarizing two years of discussion and four workshops. The panel focused on four themes: investment, trade in goods, trade in services, and global governance.

EU-China investment relations are underdeveloped relative to US-China’s equivalent. Both sides recognize this is where there is greatest potential for improvement. Since China is improving its business environment, the key recommendation is now to reinvigorate EU-China investment agreement negotiations.

Even though EU-China trade in goods is similar to US-China’s equivalent, there is hope that the Belt and Road initiative will deepen this relation even further. China has liberalized its relations over the past 15 years, although there remain restrictions. Collaboration on issues such as excess capacity could help deepen trade in goods by further levelling the playing field.

As for trade in services, the EU-China relation is slightly underdeveloped relative to that enjoyed by the US and China. The financial services are an industry where trade could be improved. China has not fully liberalized its financial system, yet the authorities recognize the need for reforms. China’s growing external involvement must indeed be supported by an efficient domestic financial sector. Another recommendation is therefore for European and Chinese financial institutions to collaborate on this front, with China benefitting from EU’s expertise on financial regulation. This collaboration would also pave the way to reforming the global financial architecture.

This brings the final theme covered in the discussion – global governance. The EU and China enjoy a stable economic and political relationship, without the shadow of security concerns. Collaboration has prevailed over disputes, despite an increasingly protectionist and polarized world. Consequently, the EU and China are now in a position to direct governance towards not only freer but also fairer trade.

The dominating issue in this panel was investment, the barriers that lead to subdued FDIs on both sides, but also the commonly achieved progress and the huge potential of future investment and trade activities.

Session on trade and investment

The first panel focused on trade and investment. Subdued bilateral investment between China and Europe have their roots in both the different economic conditions as well as governance frameworks. According to Ian Davis, foreign investors face several other barriers that hamper stronger investment activities. Companies engaged in the high-tech sector were worried about the ownership of intellectual property, the cost of capital, contract enforcement but also more general issues regarding working conditions and human rights.

Despite this background, gradual progress has been achieved e.g.

  • The launch of a link between the Hong Kong, Shanghai and Shenzhen stock exchange lifted the constraints for foreign investors to get access to China’s main land A-shares
  • The standard of banking regulations becomes increasingly aligned with those of developed countries
  • Chinese services take on a greater share of the value chain e.g. R&D outcomes become a great source of innovation for foreign companies

With initial low levels of investment, the panellists agreed that the wide-ranging potential should be seized. Most importantly, a rule-based framework that creates a common level playing and defines rights and rules for all players needs to be set in place. Furthermore, the Belt and Road Initiative (BRI), which should be financed by the international community rather than solely by its initiators, creates the potential of building a common financial and governance infrastructure. Additionally, as the convergence of economic models is slow, Victor Chu encourages for greater partnerships between European and Chinese companies including medium-sized players maximising the range of potential cooperation.

Session on industrial cooperation and innovation

At the second panel an exchange of ideas on the three dimensions of the UE – China relation took place. The outlined areas are:

  • energy and innovation
  • exchange of scientific and technical knowledge
  • collaboration in finance.

The first main message discussed in the panel was the idea that when it comes to innovation you have to talk to people. Exchange of people provokes innovation, which in its turn starts with the exchange of ideas. Several speakers underlined the importance of programs such as an undergraduate student’s exchange. However, people to people exchange encounters several barriers on the path to its realization such as visa requirements, where an introduction of 10 years multiple entry visa can be highly desirable.

Secondly, cooperation may bring success with the combination of the EU and China’s strengths. The market scale and basic research have a profound positive influence on innovation. There is a need of an element which will promote the EU – China cooperation, paying attention to the fact that there exist many areas where China is actually way ahead of Europe. The element could be, for example, fifth generation communication network. The potential for the EU – China collaboration may lie as well in space exploration with academic cooperation, patent application services and decarburization.

Last but not the least, framework conditions, where European and Chinese approaches are said to be different, are crucial for the development of the EU – China relationship and clear standards and rules must be developed.

Session on global governance

The final panel highlighted the major challenges and opportunities for collaboration on global governance, in light of the report’s findings. Several aspects were covered: world trade, security and climate, and the growing role of China in the multilateral order.

Regarding trade, the US withdrawal puts pressure on EU and China to uphold global trade governance. A recommendation here is to prevent sliding into protectionism by stimulating multilateral initiatives. However, promotion of free and fair trade by China can only influence other countries’ policies if its own current account is liberalized. A recurrent problem here is that China sometimes puts its domestic policy objectives before the international rules it advocates when there are diverging interests.

For security, the discussion highlighted the South China Sea and how flourishing EU-China relations should not alienate the US and Russia. Overall, EU and China should have a more inclusive approach to global security. Related to that point is the issue of global cooperation on the threats from climate change, one of most promising areas for collaboration. Again however, to inspire other nations on climate issues, China’s championing of renewables should be accompanied by ambitious emissions reduction policies.

Underlying all these discussions is multilateralism and China’s growing role. Its sheer size implies international spillovers and requires China to take responsibility. As can be seen in their greater assertiveness in international organizations, Chinese authorities now embrace this new role. They have the intentions to reform several domestic policies to make their economic situation more sustainable. The recommendations are therefore for the EU to assist China in that transition; to decide the rules the EU and China would like to jointly promote globally so that both enjoy the outcomes; and, within the EU, to develop a more cohesive approach to global governance among member states.

Closing remarks

In his closing remarks, Managing Director for Asian and the Pacific at EEAS, Gunnar Wiegand, took stock of the current situation for EU-China relations. The fundamental agreement on both sides is that there are gains from maintaining the relationship. For economic relations, the EU’s stance is to assist the Chinese authorities wherever possible for implementing the remaining reforms for trade and investment. For political relations, a lot of uncertainty remains as China is still perceived as a silent giant on foreign policy. To conclude the event, he reemphasized the need for reciprocity to maintain harmony, as well as the importance of being more result-oriented and transparent for the future of the EU-China relations.

 Event notes by Nicolas Moës, Yana Myachenkova and David Pichler (Research Assistants)

 

Schedule

Sep 13, 2017

9:00-9:30

Check in and welcome

9:30-9:45

Welcome remarks

Chair: Jean-Claude Trichet, Chairperson of the Board

Robin Niblett, Director, Chatham House

Guntram B. Wolff, Director

9:45-10:30

Presentation of the report and the key recommendations by the lead authors

Alicia García-Herrero, Senior Fellow

K.C. Kwok, The Chinese University of Hong Kong

Zhang Yansheng, Chief research fellow, China Center for International Economic Exchanges

10:30-11:45

Trade and Investment

Chair: André Sapir, Senior Fellow

Victor Chu, Chairman, First Eastern Investment Group, Hong Kong

Ian Davis, Chairman, Rolls-Royce

Dame Clara Furse, Chairperson HSBC UK, Former Chief Executive, London Stock Exchange

11:45-12:00

Coffee break

12:00-13:15

Industrial Cooperation and Innovation

Chair: Anatole Kaletsky, Chief Economist and Co-Chairman of Gavekal Dragonomics

Tony Graziano, Vice- President European Public Affairs, Huawei

Lawrence J. Lau, Ralph and Claire Landau Professor of Economics, The Chinese University of Hong Kong

Hanna Müller, Chief Representative, BDI Representation Beijing

13:15-14:00

Lunch

14:00-15:30

Global Governance

Chair: Guntram B. Wolff, Director

Ina Lepel, Director-general for Asia-Pacific, Federal Foreign Office

Robin Niblett, Director, Chatham House

Huang Ping, Director General, Institute of European Studies, Chinese Academy of Social Sciences

György Szapáry, Former Deputy Governor, Central Bank of Hungary

15:30-16:00

Closing remarks

Gunnar Wiegand, Managing Director, Asia and the Pacific, European External Action Service

16:00

End

Speakers

Victor Chu

Chairman, First Eastern Investment Group, Hong Kong

Ian Davis

Chairman, Rolls-Royce

Alicia García-Herrero

Senior Fellow

Dame Clara Furse

Chairperson HSBC UK, Former Chief Executive, London Stock Exchange

Tony Graziano

Vice- President European Public Affairs, Huawei

Anatole Kaletsky

Chief Economist and Co-Chairman of Gavekal Dragonomics

K.C. Kwok

The Chinese University of Hong Kong

Lawrence J. Lau

Ralph and Claire Landau Professor of Economics, The Chinese University of Hong Kong

Ina Lepel

Director-general for Asia-Pacific, Federal Foreign Office

Hanna Müller

Chief Representative, BDI Representation Beijing

André Sapir

Senior Fellow

Robin Niblett

Director, Chatham House

György Szapáry

Former Deputy Governor, Central Bank of Hungary

Jean-Claude Trichet

Chairperson of the Board

Zhang Yansheng

Chief research fellow, China Center for International Economic Exchanges

H.E. Ambassador Yang Yanyi

Head of the Chinese Mission of the European Union

Liu Xiangdong

China Center for International Economic Exchanges

Gunnar Wiegand

Managing Director, Asia and the Pacific, European External Action Service

Guntram B. Wolff

Director

Huang Ping

Director General, Institute of European Studies, Chinese Academy of Social Sciences

Elena Flores

Director, International economic and financial relations, Global Governance, DG ECFIN

Location & Contact

Bruegel, Rue de la Charité 33, 1210 Brussels

Matilda Sevon

matilda.sevon@bruegel.org

Read about event

Past Event

Past Event

Where is China’s financial system heading? Implications for Europe

How ready is China for the transformation of its financial system and how will this effect Europe?

Speakers: Elena Flores, Alicia García-Herrero, Gene Ma, Hu Yuwei and Guntram B. Wolff Topic: Finance & Financial Regulation, Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 25, 2018
Read about event More on this topic

Upcoming Event

May
28
12:00

Making trade work for all – the Danish case

This event will discuss how we can make trade work for all, focusing on the example of Denmark.

Speakers: Maria Åsenius, Jens Boe Andersen, Sofia Bournou, Brian Mikkelsen, André Sapir, Eva Rytter Sunesen and Guntram B. Wolff Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read article More by this author

Blog Post

The EU should not sing to Trump’s tune on trade

The US threat of trade sanctions has put the EU in a difficult position. Nevertheless, the EU must respond decisively – not just to protect its own interests but those of the multilateral trading system, and to demonstrate to the US and other partners that trade is not a zero-sum game.

By: Maria Demertzis Topic: European Macroeconomics & Governance, Global Economics & Governance Date: May 17, 2018
Read article Download PDF More on this topic

Working Paper

How big is China’s digital economy?

The rise of influential Chinese digital giants, including Baidu, Alibaba, Tencent and Xiaomi has shown the world that China is a global leader in digital innovation and it is not surprising that China has started to influence the global digital market. But is China exploiting its full potential in this area? To answer this question, the authors assess how big China’s digital economy is relative to the rest of its economy, and how China performs compared to the rest of the world.

By: Alicia García-Herrero and Jianwei Xu Topic: Global Economics & Governance Date: May 17, 2018
Read article More on this topic More by this author

Blog Post

Trade war: How tensions have risen between China, the EU and the US

The multilateral trading system has been challenged by unilateralist measures and subsequent threats of retaliation. We collect the main events that have shaped the current situation and show which trade flows have been and will potentially be affected by the various measures. We end by discussing possible scenarios moving forward for the EU.

By: Francesco Chiacchio Topic: Global Economics & Governance Date: May 15, 2018
Read about event More on this topic

Upcoming Event

Jun
26
08:30

EU-LAC Economic Forum 2018

The second edition of the EU-LAC Economic Forum, a high level gathering for in-depth research-based exchanges on economic issues between European, Latin American and Caribbean (LAC) policy makers and experts.

Speakers: Sylvie Durán, Emilio Lamo de Espinosa, Alicia García-Herrero, Jorge Grunberg, Gonzalo Gutiérrez, Bert Hoffmann, Edita Hrdá, Ramón Jáuregui, Juan Jung, Carlos Malamud, J. Scott Marcus, Neven Mimica, Andrew Murray, Detlef Nolte, Guillermo Fernández de Soto, Paulo Speller, Anne Sperschneider and Guntram B. Wolff Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read article

Opinion

China’s financial opening: Will it be different this time?

It is hard to judge whether China will indeed carry out a substantial opening of its financial sector, despite the significant external pressure it faces from countries such as the United States to liberalise its economy.

By: Alicia García-Herrero and Gary Ng Topic: Finance & Financial Regulation, Global Economics & Governance Date: May 9, 2018
Read about event More on this topic

Past Event

Past Event

Protecting EU firms without protectionism

Do we need more effective support for EU companies, more targeted to threatened sectors of strategic importance to the EU? Do we need to revise our competition policy rules on state aid to allow for a more strategic industrial policy support? Do we need new policy approaches to prepare for a changing global environment?

Speakers: Vincent Aussilloux, Tomas Baert, Paolo Casini, Gert-Jan Koopman, André Sapir, Reinhilde Veugelers and Focco Vijselaar Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 3, 2018
Read article More on this topic

Opinion

Germany’s export-oriented economic model is caught in a US-Chinese squeeze

The new Merkel government has to reduce the dependencies on exports by stimulating domestic growth forces in Germany and Europe. At the same time, Berlin should push for a more ambitious national and European innovation policy as well as a robust European foreign trade policy.

By: Sebastian Heilmann and Guntram B. Wolff Topic: Global Economics & Governance Date: April 30, 2018
Read about event More on this topic

Past Event

Past Event

What European trade policy in face of an emerging global trade war

On 25 April Bruegel is pleased to host Bernd Lange, Chair of the European Parliament's committee on International Trade.

Speakers: André Sapir, Bernd Lange and Guntram B. Wolff Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: April 25, 2018
Read article More on this topic

Opinion

Why this round of U.S. protectionism is different

Although it is not the first time that the world has been caught in the China-U.S. crossfire, this round of U.S. protectionist moves against China is very different, and more worrisome than past ones. They involve a much larger number of products and in that they also target the global competition for U.S. companies and not only the U.S. market. It is in no way just a poker game launched by the U.S. to reduce its bilateral trade deficit with China, but the herald of an era of China-U.S. strategical competition.

By: Alicia García-Herrero and Jianwei Xu Topic: Global Economics & Governance Date: April 24, 2018
Read article More on this topic More by this author

Blog Post

Trade Wars: what are they good for?

Following the US announcements in early March of their intent to impose steel and aluminum tariffs, and the subsequent threats from China to retaliate with their own tariffs, the global trade picture remains uncertain. The IMF and the World Bank Spring Meetings set off amid US-Japan bilateral negotiations and Trump’s hot-and-cold approach to the TPP. This week we review blogs’ views on tensions over international trade and how they can impact world economic growth.

By: Inês Goncalves Raposo Topic: Global Economics & Governance Date: April 23, 2018
Load more posts