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A Clear Signal
Premier Li Keqiang's Europe tour underlines importance of China-EU relationship
By Wen Qing  ·  2019-04-22  ·   Source: NO.17 APRIL 25, 2019

Chinese Premier Li Keqiang (right) and his Croatian counterpart Andrej Plenkovic visit the construction site of the Peljesac Bridge, which is being built by a Chinese consortium on the Peljesac Peninsula in southern Croatia on April 11(XINHUA)

China and the EU "need to work together to promote an open world economy and address long-running issues and new challenges confronting the human society to inject stability into an increasingly uncertain world," Chinese Premier Li Keqiang wrote in a signed article published in German newspaper Handelsblatt on April 8, as he embarked on a visit to Europe.

In the article titled Embracing Openness and Cooperation for Mutual Benefit, Li said "China is ready to work with Europe to promote two-way opening up and provide a level playing field for our companies to strengthen cooperation in each other's countries."

Li's Europe tour, which ended on April 12, took him to Brussels, Belgium, for the 21st China-EU leaders' meeting, and to Croatia for an official visit as well as the eighth meeting of the leaders of China and Central and Eastern European countries (CEEC) in Croatian city Dubrovnik.

It was Li's first overseas trip this year and another high-level exchange between China and Europe following President Xi Jinping's state visits to Italy, Monaco and France in March. The visits underline the importance China attaches to its relations with Europe.

Li's visit saw the China-EU Summit joint statement and the Dubrovnik Guidelines for Cooperation between China and CEEC issued as well as a flurry of agreements signed between China and EU member countries.

China and the EU sent a clear signal that cooperation results in mutual benefits and differences and contradictions can be resolved through dialogue and cooperation instead of confrontation, Zhang Jian, a researcher on European studies with the China Institutes of Contemporary International Relations, told Beijing Review. With the resurgence of protectionism, unilateralism and anti-globalization sentiments, such a signal is significant, Zhang said.

A common position

There was speculation about Sino-EU ties recently after the bloc called China not only a "cooperation partner" and "economic competitor" but also a "systematic rival" in the document EU-China—A Strategic Outlook. Prior to Li's visit, some Western media had conjectured that there would be no joint statement after the China-EU summit as the two sides would not be able to reach an agreement on many issues.

However, after 50 hours of negotiation, a joint statement was issued. It "is not just a declaration in general but a document that charts the course for the joint effort of both sides in the next phase, with rich content and affluent achievements," Li said at the press conference with EU leaders on April 9.

"A joint statement is no surprise as both sides showed a strong willingness to cooperate," Zhang said. Both China and the EU are targets of U.S. trade protectionism. On the day the joint statement was issued, U.S. President Donald Trump threatened to impose tariffs on $11 billion worth of goods from the EU. It can be said that the U.S. is a catalyst for the close Sino-EU ties, Zhang said.

Moreover, while the U.S. is pursuing unilateral actions such as withdrawing from global treaties and recognizing Israel's sovereignty over the occupied Golan Heights, China and the EU share a common position: upholding multilateralism and an open world economy and opposing protectionism and unilateralism. "As two major economies, China and the EU are capable of playing a leading role in shaping the world economy and trade order and they should shoulder this responsibility," Zhang said.

Divergences do exist between China and the EU due to their different histories, cultures and development stages. But they still have far more common interests than differences, and the joint statement shows the differences can be resolved through dialogue and negotiation, Zhang added.

According to the joint statement, the two sides will strengthen synergies between the EU strategy on connecting Europe and Asia, the Trans-European Transport Networks and the Belt and Road Initiative. They will also welcome exchanges in 5G networks and technological cooperation between their business communities.

Moreover, they are committed to renewing the China-EU Science and Technology Cooperation Agreement, concluding the high-level bilateral investment agreement in 2020, reinforcing intellectual property rights (IPR) protection and forbidding forced transfer of technology.

"A timetable for concluding the high-level bilateral investment agreement was set. This indicated tangible progress in the past negotiations and also a strong willingness on both sides," Zhang said. Chinese investment now takes up 2 percent of all foreign direct investment flowing into the EU, whereas the EU's investment in China constitutes 4 percent of the group's total overseas investment. There's ample room for growth. "The agreement will provide guarantees to facilitate more high-quality bilateral investment," Zhang said.

While some media reports said China had made concessions regarding IPR protection due to pressure, Zhang said the decision was made according to China's own internal development.

"Transfer of technology and establishing joint-venture enterprises are both allowed under the terms of the World Trade Organization as China is a developing country, though the largest one," he said. After a decade of development, the Chinese economy has entered a new era and adjustments have to be made to fit the new situation. "It should be stressed that any protection of technology is two-way and mutual. When the rights of EU enterprises in China are protected, the rights of their Chinese counterparts in EU markets should also be protected," he said.

The joint statement reflects China's decision to deepen its reform and opening up, Cui Hongjian, a researcher on EU studies with the China Institute of International Studies, said.

The Chinese Government has taken a series of measures to open up wider. The First China International Import Expo in Shanghai last year provided a platform to introduce more foreign products in China. Last month, the new Foreign Investment Law was approved, addressing foreign investors' concerns and needs.

EU enterprises will have more opportunities as China continues to open up. An increasing number of European enterprises have expressed readiness to increase their investment in China. For example, German chemical giant BASF announced it will invest $10 billion in a wholly owned production complex in Guangdong Province in south China. ING Bank of the Netherlands and the Bank of Beijing will invest 3 billion yuan ($448 million) to establish a joint-venture bank, with ING holding 51 percent stake, making it the first foreign-controlled bank in China.

From 16+1 to 17+1

The "16+1" cooperation, cooperation between China, 11 EU member states and five Balkan countries, is a supplement to China-EU cooperation. Data shows the benefits it has yielded in past years. Trade between China and the CEEC grew by 21 percent against the dipping global trend last year, a record high, and the CEEC's exports to China increased about five times. This mechanism has become more attractive with Greece officially joining the group at this year's meeting on April 12.

China and the CEEC have become important partners to develop the Belt and Road Initiative. Under the framework, all the 16 CEEC members have signed cooperation agreements with China, and major projects like the Hungary-Serbia Railway are advancing smoothly.

Cooperating with the CEEC is a crucial step in implementing the China-EU joint statement, Zhang said. Stronger China-CEEC cooperation will help shrink the CEEC's development deficit and boost the European integration process. The bilateral cooperation is based on openness and inclusiveness. The EU and European countries and institutions are invited to the annual leaders' meeting as observers.

Landmark visit

Li's visit to Croatia was the first official visit by a Chinese premier to the country since the two states established diplomatic ties in 1992.

On April 11, Li and his Croatian counterpart, Andrej Plenković, pressed a glass-ball button together to start the piling of the main pier of a long-awaited Croatian bridge being built by a Chinese consortium.

The Peljesac Bridge, the first major project in the EU won by Chinese enterprises through global bidding and open tendering, is an example of cooperation between China and the EU under the framework of the Belt and Road.

Spanning 2,440 meters, the bridge will connect the Peljesac Peninsula with the Croatian mainland and can cut a three-hour journey to minutes.

"I hope the Peljesac Bridge will be an excellent project that can withstand all rains and winds," Li said.

Copyedited by Sudeshna Sarkar

Comments to wenqing@bjreview.com

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