On September 17, 2020, Ambassador Zhang Ming, Head of the Chinese Mission to the EU, delivered a keynote speech at the Sixty-Minute Briefing organized by the European Policy Center (EPC) under the theme “Prospects and Challenges of China-EU Relations”. After the speech, Ambassador Zhang answered questions from the audience selected by Mr. Fabian Zuleeg, host of the event. The Q&A transcript is as follows:
Host: In terms of the progress which has been made before Covid-19, there was a lot of hope that due to the German presidency, we would make a decisive step forward in the EU-China relationship. The Covid-19 has changed the situation. Are you satisfied with where we have reached in the entire relationship? Are we making special progress to be able to conclude the BIT negotiation by the end of the year?
Ambassador Zhang Ming: This year marks the 45th anniversary of the establishment of diplomatic ties between China and the EU. This year, we have seen a rich agenda between the two sides. Indeed, the Covid-19 has brought an impact on international exchanges. Yet with a proactive attitude from both sides, Covid-19 has not prevented us from talking to each other. Chinese leaders such as President Xi Jinping and Premier Li Keqiang have had frequent contacts with leaders of the EU and its member states via video link, phone call and correspondence. The intensity, level and breadth of our exchanges speak to the strategic and global significance of the China-EU relations. Last Monday, President Xi Jinping and German and EU leaders had an in-depth and earnest dialogue on a wide range of issues, reaching broad consensus and producing concrete deliverables. We can see profound changes in the world around us with growing uncertainties and challenges. Yet, despite challenges and difficulties, China-EU relations have been able to maintain steady growth.
You referred to the investment agreement negotiation. This is a priority on the China-EU agenda. It has been closely watched by many. The negotiation has been going on for seven years. Since last December, the two sides have visibly intensified the negotiation with almost one round of formal talk per month. The latest round took place in the second half of last July. And so far, as Executive Vice President Valdis Dombrovskis said, the negotiation has achieved significant progress.
Specifically speaking, we have basically reached consensus on the level playing field issues such as transfer of technology, subsidy transparency and SOE disciplines. We are narrowing our differences on market access and sustainable development. In the second half of this month, there will be another round of formal talks between the two sides. We are trying to find a potential landing zone.
The major progress we have made so far is primarily attributable to the high-level political commitment from the two sides. During the video summit last Monday, the two sides reaffirmed the commitment to concluding the agreement by the end of this year. We are going to redouble our efforts to turn the commitment into actions and turn the actions into deliverables.
I have noticed that the signing of the GI agreement has been applauded by media and citizens from both sides. They are quite excited. I have noticed that for Chinese media articles on the signing of the GI agreement, there have been a great number of comments made by Chinese citizens which are very positive. I believe that is because this agreement is closely linked to the daily life of our citizens. The support and blessing of our citizens are important drivers for our cooperation.
I referred to the two newly established high-level dialogue mechanisms in my opening remarks, namely the dialogue on environment and climate, and the other is on digital cooperation. Despite the uncertainties and challenges around us, I am personally optimistic about the prospects of China-EU comprehensive strategic partnership.
Host: Thank you very much, Ambassador. Another question refers to the changes we have seen in the global economy over the last months and the policy responses. In particular, the falling global demand in certain sectors, the wish to reshore some of the business in the health field or the idea that we need state aid to prop up a certain industry, certain companies over time. What impact do you think this kind of developments will have on the relationship between China and the EU?
Ambassador Zhang Ming: Indeed, Covid-19 has a visible and broad impact on the global economy. It is almost the instinct of countries to introduce some economic policy responses such as state aid, reshoring, and supply chains adjustment. Yet, I believe that to address the economic difficulties, the most effective way is global solidarity and cooperation. It is important to resort to multilateral means and consultation of all members of the international community.
The Chinese economy has not been spared since the outbreak. In the first quarter, China's GDP fell by 6.8%. Yet coming to the second quarter, China's GDP returned to positive territory. It rose by 3.2%. As you rightly pointed out, under the difficult circumstances, falling demand could be a problem. But fortunately we have seen positive changes in the major indicators for China's economy last August. In August, China's social retail sales rose by 0.5% year on year, the first time for this indicator to go back to positive territory this year.
I'm trying to put the Chinese economy into the broader perspective of global economy. What I mean is that with the Covid-19, it is still possible to bring the global economy back to the positive track. The solution lies in multilateral cooperation. When difficulties occur, the spontaneous response might not be very rational or well-informed. So when we calm down and look back, it's important to look for more rational and well-informed solutions through cooperation. The important thing is to let the market rules play their due part. We should not allow excessive artificial intervention to distort economic activities.
Under the new circumstances, we have put forward a new dual-cycle development pattern with domestic and international markets reinforcing each other and with the domestic cycle as the mainstay. There are two key aspects here. The first is expanding domestic demand. Actually from 10 years ago we already started the efforts to boost the domestic demand of China. This is what our global partners hope to see, and has lent impetus global economy. We have 1.4 billion people in China, yet there are only 400 million in the middle income group. In other words, there are still 1 billion, which means huge potential to further bring up our domestic demand. This new dual-cycle development pattern will bring hugely positive energy into the global economy.
And the second line of efforts will be promoting opening up at a higher level. By the dual-cycle development, we do not mean close-door domestic cycle only. It is reinforcement between domestic cycle and international cycle. We will go further along the path of reform and opening-up. Our tariffs will be lower. The negative list for foreign investment will be shorter. We are going to further ease the market access. We are going to introduce more transparent market rules and foster a more attractive business environment. This means greater opportunities to the rest of the world. And we count on our cooperation with and support from global partners, including the EU.
Host: Let me come to some of the differences you mentioned. And here I'm summarizing the questions. Clearly，there are some controversies and disagreements between EU and China on issues of human rights. They have been questions raised around the growing military power of China. There are concerns on the role China plays in Africa and Latin America. Do you see these differences could have a material impact on the EU-China relationship? Do you think this will hinder progress on issues such as the investment treaty?
Ambassador Zhang Ming: As comprehensive strategic partners, we have substantial cooperation and differences as well. For any partners, there are differences. It’s very normal. Otherwise, we diplomats will lose our jobs. But we agree to resolve differences through dialogue and communication. Those differences that could not be resolved for the time being should be managed well. This is one of the major reasons for the substantial progress in China-EU relations in the past 45 years. In terms of human rights，we have both convergences and divergences. The most important thing is that we are in close communication on these topics. The video summit last Monday confirmed that the new round of human rights dialogue is going to be held in Beijing in the near future. As partners，we do not shy away from deep exchanges and dialogues on human rights issues.
I’d say a few words on China's military power. China has a vast land territory of 9.6 million square kilometers, a 18,000-kilometer coastline and 1.4 billion population. So we need national defense capabilities that are necessary for defending China's sovereignty，security and development interests. For years, the share of national defense spending in China's GDP has remained at about 1.3 percent, lower than the global average. China pursues a defense policy that is entirely defensive in nature. So the growth of China's defense capabilities is the growth of a force for peace. We will stay committed to the peaceful development path. And also we have made it abundantly clear that China's national defense is not aimed for seeking hegemony, expansionism or spheres of influence.
In my opening remarks，I emphasized that I hope the outside world would not misinterpret China's strategic intention. In the past 70 years since the founding of the People's Republic of China，particularly in the past 40 years of reform and opening up，we have been concentrating our every possible effort on development. Development is of paramount importance to us. What we want to do is quite simple. We want to provide adequate food，warm clothes，housing services，medical care and elderly care for the 1.4 billion Chinese people. It may not seem very ambitious. Yet this is a daunting task. In 2017, during the 19th National Party Congress，we drew up a vision for China's development for the next 30 years. By 2050，we are going to raise the living standards of the Chinese people to the current living standards of European citizens. This is an ambitious yet quite humble vision. To turn the vision into reality, we need enduring global peace and an open environment for international cooperation. So along that logic，China will make the utmost efforts to safeguard global peace and openness. China upholds, supports, benefits from and contributes to the current global order. China has no interest nor the capability to revolutionize the existing international system or create a brand new system on its own.
Let me come to china's role in Africa and other places of the world. I have noticed that maybe a few years ago, there were comments from Europe of this or that kind on China's role in Africa. But China’s policy measures on Africa have been increasingly recognized by Europe. I previously worked on the Africa file. I know quite well that China's intention in the African continent is to help African people live a better life. And I could say that we are doing a good job. Here in Brussels，I often joke to my European friends that you owe me a big thank you. Because but for the China-Africa cooperation on infrastructure, industries，healthcare and education, the refugee crisis would have been on a much bigger scale. I have no intention to exaggerate China's role and contribution. After all，China is not a superman. What I want to emphasize is that China's engagement with Africa or Latin America is aimed for peace and development in the local communities. And in this process，we are eager to work together with global partners like the EU.
Coming back to your question，I don't think these differences could or should affect the normal development of China-EU relations.