Eastern Promises

China's Stake in a Strong Europe

Li Keqiang_imago_Sven Simon
Li Keqiang.
  • Why it matters

    Why it matters

    China wants to deepen trade and investment ties with Europe despite the euro-zone debt crisis.

  • Facts

    Facts

    • The European Union is China’s largest trading partner with a total volume of $600 billion last year.
    • Beijing and Brussels are implementing the China-E.U. 2020 Strategic Agenda for Cooperation which covers 100 different fields.
    • China and the European Union are currently negotiating an investment treaty. Beijing also wants to discuss a free trade agreement.
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  • Audio

    Audio

  • Pdf

While Greece flirts with an exit from the 19-nation euro zone, a move that could plunge the continent into crisis, the Chinese government is banking on deeper economic integration with Europe.

The scope of bilateral investment between two of the world’s largest economic powers is “hardly satisfying” at the moment, Chinese Prime Minister Li Keqiang said in an interview with Handelsblatt and seven other European newspapers. The prime minister hopes Brussels and Beijing will agree to more cooperation in areas like infrastructure, industry and science.

His comments in a written interview with European media come ahead of the China-E.U. summit in Brussels this week. Both sides are hoping to use the talks to explore the potential for closer economic and political cooperation.

The Chinese have even dangled the prospect of further opening their markets before European companies. According to China’s prime minister, the summit is about shepherding this cooperation into a new era.

If true, this would be good news for European companies, which have long complained the Chinese market presents major hurdles, such as a requirement to cooperate with local partners when entering certain industries.

The offer of an interview with Handelsblatt and other select European newspapers came via the Chinese embassy. Such a request for a written interview is unusual, but Handelsblatt agreed to the terms. Mr. Li has a lot to say.

Europe has China's support when it comes to dealing with the challenges of the international financial crisis and the debt problem in Greece.

Handelsblatt: Europe is still struggling with high levels of debt and the financial crisis. What consequences does a weaker Europe have for relations with China?

Li Keqiang: Europe has a strong economy and is a technological leader in the world. Despite the debt and financial crisis, Europe remains a driving force. I am pleased to see that the economic recovery has picked up steam since the beginning of the year.

The macroeconomic data are improving. Inflationary pressure has decreased, and the confidence of consumers and investors has improved. This all shows that the reforms of the E.U. and its member states are having an effect. What’s even more important is that the European economy is resilient and you can assume that it will recover through its own strength.

This improved situation is good for Europe, and it also contributes to the recovery of the global economy.

Does European integration need to be accelerated?

China has always supported the European integration process. China was on the side of Europe in difficult times. And Europe has China’s support when it comes to dealing with the challenges of the international financial crisis and the debt problem in Greece.

I have emphasized more than once that China wants to see a flourishing Europe, a united European Union with a strong euro because that’s in the interest of China. We will celebrate the 40th anniversary of diplomatic relations between China and the E.U. this year. This cooperation has achieved considerable results over the past four decades. Mutual political trust has been strengthened. The E.U. is now China’s largest trading partner.

And we’re making progress in many other areas, for example when it comes to investments, infrastructure and finances, as well with innovations in science and technology. China and the E.U. are in close contact about international and regional issues. Relations between China and individual E.U. member states are also making progress.

What do you expect to gain from the summit in Brussels?

Relations between China and the E.U. have a chance to grow further. The China-E.U. 2020 Strategic Agenda for Cooperation covers more than 100 fields and is oriented toward the future. China and the E.U. are tackling structural reforms and have made big and strategic steps to advance their agenda.

I will be in Brussels for the 17th summit between China and the E.U. and will meet with the E.U.’s new leadership. Above all, we want to find new ways in the next five years to strengthen cooperation between China and the E.U. in a new era, and thereby advance our comprehensive strategic partnership.

Tackling climate change is one of the most important topics on the global agenda. What is China prepared to do?

China stands firmly behind its responsibility to combat climate change. Finding an active answer to climate change is China’s responsibility. This will also allow the country to engage in steering global issues, to build a community of shared destiny and further the development of all. The fight against climate change also meets China’s research development needs. As an important, responsible country, China is working in the fight against climate change under the principle of common but differentiated responsibilities, as well as on the principles of fairness and differing capabilities. China is taking on international commitments that are consistent with its national conditions, its pace of development and its real capacity.

Does China view negotiations between the European Union and United States over a free trade and investment agreement, known as TTIP, as a threat?

Regional trade agreements should be open and transparent and TTIP should not be an exception. China would welcome progress in the talks. In this sense, there could be a closer exchange of information between China, the E.U. and other negotiating partners.

 

modern container terminal at dusk ,the busy logistics background_zhang zhiwei_ddp images
Shanghai Port in one of China’s modern container terminals. Source: zhang zhiwei/ddp images

 

Do you view the proposed free-trade pact between the United States, Japan and 10 Asia-Pacific states, known as TPP, as more problematic?

In principle China is open to TPP. China has also concluded many trade agreements in the Pacific area as well as in Southeast Asia. I am convinced that bilateral and regional treaties on the one hand and the Word Trade Organization on the other hand are like two wheels of a cart. They should progress in tandem and strengthen one another.

Isn’t it about time that Europe and China deepened their economic integration?

China and the E.U. are currently negotiating an investment treaty. Economic and trade cooperation are a fundamental pillar of relations between China and the E.U. A comprehensive, balanced investment treaty with high standards would give both sides the chance to combine their respective strengths and enter into a new model of cooperation. The result would be more imports and exports of greater value. This would give new impetus to our cooperation.

What does that mean concretely?

Cooperation has been flourishing particularly in the field of investment for some years. The partnership between Geely and Volvo is an example of this success. But the scope of bilateral investments, just $20 billion in 2014, is hardly satisfying. That’s the point where I see clear room for improvement. I hope that we will agree to more cooperation projects – in infrastructure, industry, the sciences, technology and other areas.

This requires both sides to make an effort. Should China and the E.U. agree to conclude an investment treaty early and begin examining the feasibility of a free-trade agreement, this would strengthen ties between Asia and Europe and counteract protectionism. It would be a major contribution to an open global economy.

 

This is an abridged version of an interview that appeared in the Handelsblatt newspaper in German on Monday. The co-editor in chief of Handelsblatt, Sven Afhüppe, was one of eight European journalists who interviewed the Chinese prime minister. Handelsblatt was the only German publication granted the interview. Mr. Li’s interview also appeared in The Financial Times (Great Britain), Dépêche du Midi (France) , Le Soir (Belgium), YLE (Finland), La Agencia EFE (Spain), Rzeczpospolita (Poland) and Jutarnji List (Croatia). 

To contact the author: afhueppe@handelsblatt.com 

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