China keen to boost bilateral trade with EU to $1 trillion

The China-EU summit in Beijing was relatively low profile this year, overshadowed somewhat by the Communist Party plenum and the ensuing reform package, then by the row between Beijing and Washington over an air defence zone in the East China Sea.

However, the summit, the 16th such meeting, did contain some remarkable statements of intent, which are good news for Ireland within the EU context if brought to fruition.

Premier Li Keqiang said Europe and China were aiming to boost bilateral trade to $1 trillion (€740 billion) by 2020 and to significantly boost co-operation in areas of transportation, infrastructure as well as science and technology innovation.

There were signs that progress is being made on an EU-China bilateral investment agreement, which industry figures feel is crucial to boosting trade, if that ambitious target is to be met.

A bilateral agreement would be the EU’s first stand-alone investment agreement to date and would be a shot in the arm to investment flows by reducing barriers to investing in China, improving the protection of mutual investments and by providing European investors with better access to the Chinese market with more legal certainty.

The target of $1 trillion in bilateral trade would represent an 83 per cent increase from last year, when China-EU trade totalled $546 billion (€401.42 billion), according to the Chinese Customs Office website.

“All these moves will significantly boost bilateral trade and economic co-operation,” Mr Li said. “The plan is unprecedented in its breadth of content, ranging from aerospace and counter-piracy to urbanisation and energy.”

Europe and China needed to deepen co-operation in every field, he added, hailing the momentum of steady recovery in Europe’s economy.

He was speaking after meeting European Union president Herman Van Rompuy and European Commission president José Manuel Barroso.

Rapid development
Mr Van Rompuy said the new Chinese leadership found itself at a crossroads after many years of rapid development, and as Beijing looked to maintain such momentum of growth.

“China’s domestic challenges are linked to its foreign policies as it has been becoming more and more interdependent with the rest of the world,” he said.

Mr Van Rompuy said China was a major destination for EU exports, had offered assistance during Europe’s financial crisis and its investment had expanded. “I think in the future years, China’s investment will grow faster in Europe,” he added.

Analysts believe that Europe should be doing more to develop a China strategy, indeed an Asia strategy, that is ambitious and regional.

In a new policy brief from the European Council on Foreign Relations (ECFR), Divided Asia: the Implications for Europe, François Godement argues for the development of a Europe-Asia-Partnership.

“The EU’s focus on bilateral trade deals is no longer enough,” Mr Godement said. “Europe needs to create a regional trade and investment proposal to match the US-backed Trans-Pacific Partnership while offering China the opportunity to join. Otherwise, it risks falling behind in gaining more access to the region’s expanding markets.”

Energy security
He believed the lack of a common European strategy continued to dilute Europe's influence in the region. The document also sought more of a focus on regional energy security.

“Asia needs new energy resources for its economic success,” Godement added. “Europe should prioritise the enhancement of energy security through common initiatives, from the limitation of the use of sanctions and boycotts to the creation of an agreement on rights of navigation (as opposed to freedom of navigation) and joint sharing of resources and surveillance of exclusive economic zones.”