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An article by H.E. Ambassador Song zhe on the website of EuropeanVoice

China's Five Year Plan Means Opportunity for Europe

China's twelfth Five Year Plan, which serves China's national strategy that outlines the country's economic and social development from 2011 to 2016, passed legislative deliberation early this month and is now going into administrative implementation. Different from the previous eleven, this Plan calls for a new economic growth model, embraces principles of "putting people first" and "green growth", and highlights the concept of "scientific development", commonly understood in the West as comprehensive, coordinated and sustainable development.

To our excitement, similar ideas are found permeating the strategic and futuristic policy guideline of the European Union, the Europe 2020, which based all its recommendations on "smart, sustainable and inclusive growth". I believe it's the common mandates and challenges China and the EU confront that have forged the commonalities in our strategic thinking on development. Given our close ties and interdependence built over the past decades, China's Five Year Plan, which will effect enormous influence on the country's domestic reform and development in the second decade of this century, will also have its impact felt in Europe and leave its mark on the outlook of China-EU relationship. The targets and priorities the Plan sets, in my observations, offer vast opportunities for strong partnership and great potentials for win-win cooperation between China and Europe.

First, China will expand internal demand and increase domestic consumption. The Plan demands an annual income growth of over 7%, which will outpace the estimated GDP growth. To give people reasons and means to spend more, social security, particularly pension and medical care, is planned to cover the whole population. Urbanization will speed up, reaching 51.5% in five years time from today's 47.5%. And there is a host of measures to tap the vast consumption potentials of the rural population. With expanding consumption and demand, China poses a bigger opportunity for European products and workers, which on one hand, will boost export from Europe in its traditionally leading sectors, such as machinery, automobile, chemicals and pharmaceuticals, and on the other hand, will provide better market environment and growth prospect for European companies in China.

Second, China will build a more open economy and technology-based industrial complex. The Plan blueprints a reshaped economic structure, a modernized industrial mix and a more vigorous opening-up policy. There are initiatives to make service industry thrive, so that its contribution to GDP growth will rise by 4%. More investment, up to 2.2% of the GDP as is prescribed, will be directed to back innovation through hi-tech and R&D projects. As Europe keeps its edge in the high-end service sectors, such as finance, insurance and consultancy, and the hi-tech industries, such as telecommunication, aviation and aerospace, it is foreseeable that once European enterprises in the above high added-value business find their niche in China's economic restructuring, they will gain more orders, revenue, profit and market share in China, and on a mutually beneficial basis, will engage more deeply with their Chinese counterparts.

Third, China will focus on green growth and environment protection. It is proposed in the Plan to reconfigure China's energy pie, promote the use of clean energy and increase the share of non-fossil fuel in the primary energy consumption to 11.4% by 2015. Meanwhile, energy intenisity per unit of GDP is set to decrease by 16%. Major polluntant discharge must go down by 8% to 10%, and CO2 emission per unit of GDP by 17%. Europe, for long an advocator and forerunner of green and recycle economy, is now well positioned to explore China's green market potential and achieve export-oriented growth in sectors related to new energy and environment. China's green drive will also shore up cooperation with the EU in addressing issues on climate change. Through active coordination and effective collaboration, and particularly by jointly working out an energy-saving, planet-friendly economic growth model, the two parties will contribute more substantively to the effort of international community in securing sustainable natural environment and human development.

Fourth, China will strengthen social services and improve people's welfare. Being a major theme of the Plan, nation-wide targets are set. In the next five years, 45 million jobs will be created to curtail unemployment; 36 million subsidized homes will be built to improve housing conditions; social safety net will become more extensive, with special input attending to vulnerable groups such as the handicapped; public service will be made equally and fairly accessible to all citizenry, mending most existing discrepancies between urban and rural areas. More projects and efforts in poverty alleviation, pension, health, culture, education, sport and other social undertakings are all designed to improve people's living and sense of happiness, which underpins harmony and stability. The Europe 2020 enshrines the same goals of higher employment, stronger social cohesion and broader equality and justice, not least in the spirit of "inclusive growth". China and Europe, on tackling identical pending societal problems, should intensify dialogue and exchange, identify effective policy measures and learn from each other's best practices, so as to build up a system for social development that conforms to our respective conditions, which will in the end benefit mankind's progress.

Major progress has been achieved over the past 35 years since China and the EU set up diplomatic relations. Both the scope and substance of the bilateral cooperation have been expanding. History saw the trajectory of China and Europe growing in proximity in development. Today, in view of the directions as charted in China's Five Year Plan and Europe 2020 Strategy, the two entities are drawing closer at an accelerated velocity. Such opportunity is not to be missed. But it takes tremendous effort to build rapport and remove barriers. If successfully done, the partnership between China and the EU will further consolidate and deepen. It will benefit our peoples. It will serve world peace and prosperity.

The Author is Song Zhe, Ambassdor of the People's Republic of China to the European Union.

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