Mutually beneficial relations

By Jiang Shixue (China Daily)

http://www.chinadaily.com.cn/opinion/2010-12/04/content_11651989.htm

EU can benefit more by deepening cooperation with China because the two economies have many goals in common

Against the backdrop of accelerating globalization, China and the European Union (EU) have become more interdependent. The 27-member EU is the world's largest economic bloc and China, as a country, has the second largest GDP.

Bilateral trade and flow of funds are the two major channels of interaction between China and the EU. The higher one side's growth rate, the more economic exchanges it will have with the other, and vice versa. This is true of bilateral flow of funds, too.

China lent a helping hand to Greece to overcome its sovereign debt crisis. A similar crisis has erupted in Ireland, another EU member state, even before Greece could emerge from its sovereign debt. China is likely to offer a helping hand to Ireland, too, if the latter's crisis does not subside by end of next year. But that will depend on whether the Chinese economy maintains its present strength till then.

China's economic growth rate is expected to be 10 percent next year, a little below that of 2010, according to some economists. Such a high growth rate will undoubtedly help pull the world economy out of the lingering global financial crisis. A fast-growing China will also help the EU tackle its expanding sovereign debt crisis.

The year 2011 will the first year of China's 12th Five-Year Plan (2011-2015) for economic and social development. For the next five years, the Chinese government will focus more on transforming the country's economic development model. To facilitate the process, the government has vowed to boost domestic demand, promote scientific and technological innovations and take further measures to conserve resources and protect the environment.

Boosting domestic demand, however, does not mean reducing the country's imports. Instead, it means China will promote coordinated and simultaneous development of consumption, investments and exports, the "three chariots" of a country's economy.

The government has vowed to make greater efforts to boost domestic demand, which has long lagged behind investments and exports. For this, the government will use its inherent economic advantages to the full and continue to value the enormous purchasing power of the European market. It will also continue to import capital goods, and intermediate and consumer products from global markets, including Europe's.

It is still not clear whether the EU will recognize China's market economic status in 2011. But it is clear that the EU's non-recognition has served as a double-edge sword, for it not only affects China's export to Europe, but also compromises the bloc's foreign economic ties.

A country's scientific and technological competitiveness, which is closely related with its technological innovations, will determine its position in the fierce international market. In the 12th Five-Year Plan, Beijing has paid more attention to promoting scientific and technological innovation, a change that to some extent will create rare opportunities for the EU to increase its high-tech exports to China. The EU is a leader in many high-tech fields and should not let slip the chance of broader cooperation with a fast-growing China, an emerging market with enormous high-tech potential.

China and the EU will create broader cooperation prospects in their bid to push forward energy conservation and environmental protection. The EU's huge technological advantage in energy conservation, emission reduction and the fight against climate change is likely to facilitate bilateral cooperation in these fields. At their 13th summit in Brussels in early October, Chinese and EU leaders indeed agreed to make joint efforts to conserve energy, reduce emissions and develop low-carbon economies.

Smooth China-EU cooperation in these fields will not only benefit Beijing, but will also help Brussels implement its "Europe 2020 Strategy", a strategy for smart, sustainable and inclusive growth. Under the plan, the EU is committed to developing an intelligent economy, based on knowledge and innovation, and raising its efficiency in the use of energy to increase its competitiveness and promote sustainable development. The EU will make efforts to boost its employment rate and strengthen social cohesiveness, too.

The many common elements in the EU's "Europe 2020 Strategy" and China's 12th Five-Year Plan will create more room for cooperation between the two economies.

But well begun is half done. The great importance China has attached to the 12th Five-Year Plan is expected to help it maintain a comparatively fast economic growth. That will benefit the EU greatly, if it takes concrete steps before other economies and carries out candid cooperation with a fast-growing China.

The author is deputy director of the Institute of European Studies, affiliated to the Chinese Academy of Social Sciences.