China | Brussels, 25 October 2013
Fourth meeting of the EU-China High Level Economic and Trade Dialogue (HED) in Brussels
The EU and China held their fourth High Level Economic and Trade Dialogue (HED) on 24 October in Brussels. The overarching theme of the meeting was how the EU and China can address challenges and create opportunities through open economies and cooperation.
At a time when the EU and China are both engaged in serious economic reforms, the two sides met in the context of the HED4 to make the case for more balanced trade, increased business opportunities and further economic cooperation. A broad and ambitious agenda with a range of economic and trade issues confirmed the importance of our bilateral cooperation and provided an opportunity to intensify it. There was a strong political commitment to ensure the HED continues as a forum for strategic discussion that sets the direction for future engagement as well as a mechanism to manage cooperation and competition between the two economies.
Among the issues discussed were: the international economy and major economic developments within the two economies, future sources of growth; trade and investment; industrial policy and technology cooperation; and customs cooperation.
On the EU-side the HED was co-chaired by EU Commission Vice-President for Economic and Monetary Affairs Olli Rehn, and Trade Commissioner Karel De Gucht; and on the Chinese side by Vice Premier MA Kai. Further members of the EU delegation were Taxation and Customs Commissioner Algirdas Šemeta and Deputy Director-General for Enterprise, Antti Peltomaki. The Chinese delegation consisted of 7 Ministers and Vice-ministers: Vice-Minister of Commerce, China International Trade Representative ZHONG Shan; Vice-Minister of Finance SHI Yaobin; Vice Minister of Industry and Information Technology YANG Xueshan; Vice Minister of National Development and Reform Commission HU Zucai; Vice Foreign Minister SONG Tao; Vice-Minister General Administration of Customs ZOU Zhiwu; and Deputy Secretary of General Office of the State Council XIAO Yaqing
The High Level Economic and Trade Dialogue was set up to discuss strategic issues in the EU-China economic and trade relationship and provide a forum for resolving frictions that may arise. The HED complements a number of dialogues between the EU and China. In particular it is a forum to discuss preparations for the EU-China Summit. The HED also allows for discussions to coordinate efforts regarding global trade and economic issues. The HED held its first meeting in Beijing on 25 April 2008.
General exchange on key themes
The EU and China welcomed the open, forward-looking, and strategic exchanges at the High Level Economic and Trade Dialogue that have significantly furthered EU-China cooperation in a broad range of economic and trade areas with the overall aim of deepening a strategic partnership for the future, at the same time constructively dealing with a number of specific issues between the two economies. The EU and China also prepared the economic and trade elements for the forthcoming 16th EU-China Summit where both sides expect to launch negotiations for an investment agreement.
Discussions focussed on recent developments in the EU and Chinese economy, as well as progress in reforms necessary to secure strong, sustainable and balanced growth. While the euro area has emerged from recession, the environment remains challenging and much remains to be done. The HED provided the opportunity to assess recent developments and plans for completion of monetary and economic union
China also faces significant challenges, needing to adapt their growth model from being investment driven, and very resource and capital intensive, to one that is more based more on rising consumer demand, with a higher quality of investment and growth. Discussions therefore also covered reforms that China is undertaking to ensure a more balanced pattern of growth in the future.
The two sides also highlighted the importance of the G20 as a forum to develop cooperative responses to global economic challenges, particularly in a time of heightened economic uncertainty, and stressed the commitment making the G20 an even more effective forum for economic policy coordination.
Future Sources of Growth
Discussions on future sources of growth focussed on how rules, standards and public procurement and how these rules can foster innovation and boost growth in both economies if they are transparent, convergent, non-discriminatory and open. Discussions also addressed Green Growth which will be at the top of the EU-China Summit agenda.
Trade and investment cooperation
Discussions reaffirmed a strong commitment to open trade and investment as essentials to the EU-China bilateral relationship. The HED focused on the planned EU-China Investment Agreement and arrangements for the formal launch of negotiations. Discussions addressed the need for reciprocity in access for EU and Chinese investors to each other's markets and how this would increase two-way investment flows. Both sides stressed a common interest in ensuring a successful WTO Ministerial Conference in Bali and the need to build consensus on key issues such as customs cooperation. Discussions addressed the need to work towards a more balanced trade relationship and practical solutions to foster bilateral trade, including through well-enforced intellectual property rights. The HED also discussed the management of trade frictions, and how to better manage our trading relationship more generally.
Discussions addressed how industrial policies, including subsidies policies and financing of State-Owned Enterprises, can affect international trade and investment relations. Avenues were explored for working together to reach common understanding on contentious issues and provide a framework for increasing transparency and dealing with subsidies behaviours which cannot be addressed constructively through WTO mechanisms.
Both sides agreed that greater convergence of regulation is mutually beneficial: it facilitates trade and reduces burdens on enterprises. Effective market access requires a predictable and transparent regulatory framework and minimal red tape. Transparency of the standardisation systems and convergence towards international standards is particularly important in this regard. Specific discussions took place on raw materials and the automotive sectors. Regarding Raw Materials, both sides agreed to enhance their dialogue and had an exchange on the question of global governance in this domain.
Regarding automobiles, the need for regulatory cooperation and convergence towards a common international approach was stressed. Special attention was devoted to the standardisation setting and policies to promote the development of e-vehicles.
Discussions highlighted the important contribution of customs cooperation to the development of EU-China trade. Cooperation has developed strongly in recent years. A new Strategic Framework for Customs Cooperation for 2014-2017 is expected to be agreed soon.
This will comprise: implementing a more ambitious Action Plan on customs enforcement of Intellectual Property Rights; achieving mutual recognition of the EU and China Authorised Economic Operator programme in 2014; expanding work on Smart and Secure Trade Lanes; expanding exchanges of information in the fight against fraud and deepening cooperation in tackling tobacco product smuggling and valuation fraud; working to address illicit trade in waste and examining and eliminating discrepancies in respective statistics regarding EU-China trade.
The EU-China High Level Economic and Trade Dialogue
The High Level Economic and Trade Dialogue was launched in the November 2007 EU-China Summit by President Barroso and Premier Wen, signalling the agreement to address the imbalance in bilateral trade flows between the EU and China. The 2007 EU-China Summit Joint Statement states that the Dialogue will: "discuss strategies in EU-China trade, investment and economic cooperation and coordinate bilateral projects, studies and develop plans in priority sectors. It will cover issues affecting the trade imbalance, including inter alia effective market access, intellectual property rights, environment, high technology and energy in order to find concrete means to increase trade in a balanced way." The HED is of strategic and forward-looking nature.
The broad remit of the HED covers, among others, the following issues:
The multilateral global trading system: In particular, the HED will focus on the role of EU-China economic and trade relations in the wider framework of the global trading system.
Strategic bilateral trade and trade-issues including market access for goods and services, and consumer protection. At the 2007 EU-China Summit the two sides agreed on the need to work towards more balanced trade flows. The HED will look at ways to enhance cooperation in addressing technical and regulatory barriers to trade. This will cover issues ranging from product standards to restrictions on service providers.
Investment issues including strategic discussions on the bilateral investment issues including both portfolio investments and specific sectors
Innovation, including IPR, and technology. The effective protection and enforcement of Intellectual Property Rights is key for both the EU and China, and necessary for China's efforts to transform its economy. China has made efforts to set up the right legal framework for this. The HED will focus on ways to improve effectiveness of this framework, benchmark progress, enhance customs co-operation and foster technology transfer through better intellectual property protection.
EU-China economic cooperation. This will include close coordination on energy, sustainable development, including environmental and social pillars and regulatory and sectoral policy issues, transportation, and cross cutting issues such as better regulation.
The EU-China economic and trade relationship
In 2012, China was the second largest economy and biggest exporter in the world. Over the last ten years China has been one of the fastest growing economies in the world, a remarkable feat given the size of the country. At the same time China – along with the EU – is at an important juncture. The EU is gradually emerging from the sovereign debt crisis and is undertaking important structural reforms, while in China, the growth model is showing increasing strains, and the Chinese leadership has itself highlighted the need for further reform.
The HED represents an opportunity to discuss, at the highest political level, ongoing reforms as well as the need for continued bilateral and multilateral cooperation in the G20 and elsewhere:
- China now accounts for about 12% of world trade in goods.
- Bilateral trade in goods with the EU has gone from €4 billion in 1978 to €432 billion in 2012. That means that the EU and China trade well over €1bn a day.
- Since joining the WTO, China has become one of Europe's fastest growing export markets. In 2012 our exports to China increased by 5.6% to reach a record €143.9 billion, and they have more than doubled in the past five years, contributing to rebalancing the relationship. The EU is also China’s main export destination, with €289.7 billion in goods in 2012. This produced a trade deficit of €145.8 billion with China, down by 13.9% compared to the 2010 record of €169.3 billion. Europe´s trade deficit with China is mainly caused by sectors like office and telecommunication equipment, shoes and textiles, iron and steel. Through better market access, European exporters should be well placed to increasingly sell their products on the rapidly expanding Chinese consumer market.
- Total bilateral trade in goods reached €433.6 billion in 2012. Trade in services, however, is still about ten times lower at €49.8 billion and remains an area full of potential if China were to open its market more.
- Over the first 8 months of 2013, EU exports to China remain flat compared to last year and amount to €96.8 billion. By contrast, EU imports from China are down by 5.8% to €181.2 billion, indicating to a further decrease of the bilateral deficit over 2013.
- Investment flows also show vast untapped potential. EU companies invested €9.9 billion in China in 2012, with Chinese FDI into the EU amounting to €3.5 billion. Yet China accounts for just 2% of overall European investments abroad, while in 2012 Chinese investments into the EU only counted for 2.2 % of total foreign direct investment flows into the EU - so there remains much potential.
For further information
Press statements of Commissioner Rehn and Commissioner De Gucht following the meeting, 24 October 2013 (SPEECH/13/854)
EU and China to hold high-level economic and trade talks, 22 October 2013 (IP/13/982)
On the EU's trade relations with China