Managing Director Gunnar Wiegand,
President Hu Zhengyue,
Ladies and Gentlemen,
Good afternoon. This year, spring came to Brussels earlier than usual. An EU official said that it is a China spring. Indeed. Just two days ago, Chinese State Councilor and Foreign Minister Wang Yi co-chaired the 9th High-level Strategic Dialogue with HR/VP Federica Mogherini, and was invited, for the first time, to an informal working lunch with the EU28 foreign ministers. In two days, Chinese President Xi Jinping will visit Italy, Monaco and France on his first overseas trip this year, which speaks volumes about China’s support for Europe. Next month, Premier Li Keqiang will come to Brussels again after six months, and co-host the 21st China-EU Summit with President Tusk and President Juncker. I have also noticed that China will be on the agenda of tomorrow’s EU Summit, and that a joint communication on China was published last week. To me, such intensity of visits, meetings and exchanges is an indicator of the great seriousness that China and the EU attach to each other and to our relations. The theme of this event “Can Cooperation Trump Competition” is eye-catching. It is probably on the minds of many who are following China-EU relations at the moment.
To get a thing right, it is crucial to grasp its defining features. As State Councilor Wang Yi said, cooperation is the mainstay of China-EU relations and mutual benefit is the goal. In 2018, our trade went over US$682 billion, hitting a record high. For 15 years, the EU has remained China’s top trading partner, while China is the EU’s second largest trading partner. In the past 40 years of reform and opening up, European capital, technology and management expertise have given a boost to China’s industrialization. The vast Chinese market has generated huge opportunities to European companies. Last year, EU28 investment in China grew by more than 22%, the United Kingdom and Germany by 150% and 79% respectively. European companies were among the first to benefit from China’s new steps to further open up the automobile, finance, telecommunications, among other sectors. Chinese capital, technology and services also contribute to growth and employment here in Europe, with a helping hand extended when Europe was in a difficult time ten years ago.
Chinese and EU leaders agreed on forging synergy between the Belt and Road Initiative and the EU Strategy for Connecting Europe and Asia. Businesses are running ahead of us by already engaging in concrete projects, in observance of international rules and market principles. China-EU cooperation keeps moving forward in a wide range of areas, like finance, research and innovation, and people-to-people exchanges. More horizons could be opened in our cooperation, as we go deeper in our respective reform agenda.
Globally, China-EU cooperation is imperative and active. State Councilor Wang Yi summed up ten major points of consensus, regarding multilateralism, world economic openness, climate change, non-proliferation, counter-terrorism and so on. Ms. Mogherini fully agreed, and joked that we could even have 100 more.
Admittedly, there is competition between us. We won’t shy away from that. Competition in itself is not a bad thing. China’s development comes with a growing appreciation of the value of competition. We have learned much about that from European partners. Without healthy and rules-based competition, businesses won’t thrive and citizens won’t get the best goods and services. Competition among Mercedes, BMW, Volvo, Toyota, Ford and other carmakers is what has driven sustained innovation and progress of the car industry.
Competition and cooperation are two sides of one coin. Competition is not a you-lose-I-win or winner-take-all game. Rather, it goes hand in hand with cooperation. Take 5G. It is a product of joint innovation and international cooperation. The much-talked-about Huawei has a global network of 13,000 suppliers, extending to the US, Japan, Europe and many other countries and territories. The global supply, industrial and value chains are so interlinked that not any country or enterprise could claim dominance. The interplay of competition and cooperation eventually delivers benefits to all.
Since I started working in Brussels, I have heard complaints about so-called unfair competition. Some are saying that China is buying its way into Europe while putting barriers to the European companies’ entry into Chinese market. So Europe is no longer naïve and must strive for reciprocity. There are three issues getting involved here.
First, Chinese investment in Europe. A growing number of Chinese firms have an interest to expand their global footprint, and Europe is a popular destination. But there is a myth about Chinese investment and it must be put into perspective. We appreciate the benefits brought by European enterprises in China over the decades, while Chinese business operations in Europe are still at an initial stage. According to Chinese statistics, Chinese investment only accounts for 2% of all FDI flowing into the EU. Eurostat figures show that in 2017, Chinese FDI stock only took up 0.41% of total FDI received by the EU. Some European businessmen with long-time engagement with China told me that Chinese investment has helped with local growth and employment, thus something to be welcomed, not to be feared. China’s Government Work Report pointed out the importance to further advance the China-EU BIT talks, which will give a boost to investment in both ways.
Second, market access in China. Over the past two years, new measures have been introduced by the Chinese government step by step to expand opening. We have widened market access for foreign investors in the finance, agriculture, mining, manufacturing, among other sectors. Just over one year, China’s global ranking in ease of doing business went up by 32 places. I just came back from the annual session of China’s top legislature. An important item on the agenda was the adoption of the Foreign Investment Law, which reaffirms the management system of pre-establishment national treatment plus a negative list. Sectors beyond the list will be fully open, foreign investors and their Chinese counterparts being treated equally. This piece of legislation has clear provisions on IPR protection, transfer of technology and other issues of concern to foreign investors.
Despite the rise of protectionism and the inclination of some parties to raise tariffs and tighten investment rules, China stands firmly and clearly for greater openness. Our commitment is here to stay and is backed by vigorous actions. We will continue to open up at our own initiative and at a reasonable pace. The concerns of European friends will be gradually addressed in this process. We believe that the EU side would not close the door while asking China to open up its door.
Third, reciprocity. It’s true that China has developed fast. But absolute reciprocity, though sounds nice, is still far-fetched between China, whose industrialization did not start until 40 years ago, and Europe, whose industrial revolution already started 260 years ago. Just as it is premature to ask a Chinese U15 soccer team to be on a par with a UEFA champion.
Generally speaking, China’s level of development is far behind that of Europe. Our per capita GDP is only one quarter that of the EU. We just rank 87th in terms of Human Development Index. Our industrialization is yet to be finished. We still have 600 million farmers whose per capital annual income is less than US$2,000. There are 16.6 million rural people living in poverty and over 80 million people with disabilities, equivalent to the total population of Germany. Developing country remains the fundamental status of China. There is still a lot to be done to deliver a decent life to all the 1.4 billion Chinese people. Obviously, it does not make sense to force a blanket reciprocity.
That said, China actively fulfills its due international obligations and responsibilities. Since joining WTO, we have honored our commitment in earnest and have done even better than committed in terms of tariff cuts and opening of service sector. We will continue to exercise responsibilities to the best of our capabilities.
It is quite normal that China and the EU have different views in some areas. But there are no fundamental clashes of interests between China and the EU. What matters is how the differences are handled. As Premier Li said last week, China and the EU have gained good experience in managing differences. The most important thing is to increase mutual trust, view each other with an open mind, and seek solutions through consultation. It is not helpful to play up differences, point fingers at each other, or turn up pressure by issuing ultimatum.
The joint communication triggered some discussions on the phrase “systemic rival”. Frankly speaking, I don’t concur with that. China and the EU do have different political systems and economic models, but we do not necessarily become rivals. When the Cold War was at its height, China and the EU made a bold decision to establish diplomatic ties, demonstrating a long-term and strategic vision. In the following decades, we have managed to seek common ground in joint pursuit of cooperation and prosperity. History is the best teacher. We hope that European friends would jump out of the zero-sum mentality and not fall into a self-fulfilling prophecy.
Let me finally say a few words on the China-EU Summit next month. The Summit will be the last one before the end of this EU leadership mandate. It is befitting to take stock of what have been achieved in the past five years and chart the course for the future. Our teams are now working on the agenda, topics and deliverables. Last week, Premier Li expressed his expectations for the Summit when he met the press. I want to emphasize that for any deliverable to move forward effectively, both sides need to make an effort. We hope to work with the EU toward a successful Summit and bring a positive and healthy China-EU relationship to the next EU leadership.
To be brief, China views the EU in a strategic and cooperative light. We trust that Europe will keep its own fundamental, long-term interests in mind, pursue a China policy that is independent, consistent and forward-leaning, and join forces with China for the sustained and sound growth of our relations on the basis of mutual respect.
Thank you.