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EU Ramps Up Engagement with China
Europe’s Anti-Fraud Commissioner Algirdas Šemeta is in talks with Chinese officials with a view to enhancing customs co-ordination and securing the supply chain between the two countries. Meanwhile Commission foreign policy chief Catherine Ashton has opened a fifth round of EU-China strategic dialogue with trade, climate change and nuclear proliferation all high on the agenda for discussion. Trade ties between the two sides are flourishing, with China now Europe's second-biggest trading partner after the USA. China also ranks Europe's fastest-growing export market. "The booming trade between the EU and China is extremely positive. However, the downside is that we have seen a parallel increase in illegal trade, which must be stopped…the EU has an enormous problem with illegal goods entering the European market from China”, said Šemeta.
China accounted for about 60% of all products detained by customs last year suspected of infringing intellectual property rights. Cigarette smuggling is another key area of concern. Over 5 billion illegal cigarettes originating from China were seized by EU customs in 2009 and this is estimated to be only 5-10% of the real volume of trade. According to Šemeta, it is in China's interest to show it takes counterfeiting and piracy seriously. "This is the only way to increase global trust in Chinese products and to protect their own companies that play by the rules," he explained. Meanwhile Ashton has described China as a “key strategic partner for Europe in a globalised world" and expressed confidence that “bilateral ties will be deepened”. Nevertheless she will still be raising EU worries that China has been back tracking on pledges to ensure a level playing field for European firms doing business in the country. Understanding China’s Advisory Council will shortly be releasing a report, “Winning China’s markets – an SME investment guide”, which contains policy recommendations to improve SME access to Chinese markets. EurActiv: Šemeta: EU and China must fight cigarette smuggling Xinhua: China, EU open fifth strategic dialogue Balkans: Šemeta visits China to boost cooperation in custom controls and tackling counterfeit goods


China outstrips Japan to become world’s 2nd largest economy
China overtook Japan as the world’s second-largest economy last quarter, marking the nation’s three-decade rise from Communist isolation and consolidating its increasingly dominant footing within the global economy. The news will increase pressure on China to play a more central role in world affairs and to assume “developed nation status” during climate change negotiations. “The symbolism of this moment is far greater than its actual significance. In terms of both influence and dynamism, China outstripped Japan a long time ago,” said former IMF China Division Chief Eswar Prasad. According to the IMF statistics, China overtook Japan in 2001 on the basis of purchasing power and exchange rate differences. Japan’s unexpectedly slow growth in the last quarter came on the back of stalling consumer spending, falling public investment and fewer exports. Its nominal GDP for the period totalled only $1.288 trillion, which is significantly below China’s $1.337 trillion. However, many economists warn that measuring growth differences on a quarterly basis between China and Japan can be misleading as the two countries follow different seasonal patterns.
The Chinese government has been keen to downplay the news and to re-affirm China’s “developing nation” status. Ma Jiantang, head of China’s statistics bureau, pointed out that, “China has a large population, a weak economic foundation, relatively few resources and a large poverty population, and therefore everyone should also have a sober understanding that China remains a developing nation.” Friends of Europe and Understanding China will be releasing a report containing policy recommendations entitled “Winning China’s Markets – An SME Investment Guide” on August 29. Bloomberg: China overtakes Japan as world’s second biggest economy FT: Chinese economy eclipses Japan’s WSJ: China overtakes Japan. Do Japanese care?

A lot of research is currently being conducted in Europe to look into China’s rapid economical development of the last 30 years. “China” has indeed become a hot topic in both economical research and political debates alike and nearly every research institution and business school currently feels the need to “do something on China”. However, this keenness to “do something” is not necessarily resulting in high quality new findings, nor always based on the latest innovative methodology or focussing on unchartered domains. A Europe-wide level-playing field to benchmark and disseminate Europe’s research on China is needed.

The main focus of Understanding China is not to produce numerous new research studies. Instead we will be focussing on:

aggregating the existing research on China that can be of interest to businesses,
allow Community members (that is YOU!) to submit new, comment on and give quality ratings to these research pieces,
promote and disseminate the popular research pieces on China amongst the European business and scientific community,
and stimulate further networking amongst the China Ideas Community members with the aim to improve Europe's understanding of China and the dynamics at play.

China breaking promises to EU firms, report says

Thu, 02 Sep 2010

Chinese leaders are routinely breaking their promises on opening up the internal market to EU companies, a new business report published during a high-level EU visit to the country has said.

The plea for help from EU companies comes during a high-level visit by EU foreign relations chief Catherine Ashton to China.

EUOBSERVER / BRUSSELS - Chinese leaders are routinely breaking their promises on opening up the internal market to EU companies, a new business report published during a high-level EU visit to the country has said.

The European Union Chamber of Commerce in China in its annual survey out Wednesday (1 September) listed a series of technical barriers to EU investment in the airline reservation, automotive, construction, insurance, oil refinery, research and innovation and telecommunications sectors.

In one example, EU companies seeking a wholesale licence to sell petrol in China must first own a refinery and get an import licence. But another law forbids foreign firms from owning a majority stake in Chinese refineries, while in practice, Chinese bureaucracy has never issued an import licence to a foreign company.

In another example, Chinese state purchases of IT gives nakedly preferential treatment to products developed by native researchers.

As a result EU firms invested just €5.3 billion in the vast country last year, amounting to less than 3 percent of EU foreign investments, the study noted.

The paper took China's leaders to task for failing to live up to commitments in the World Trade Organisation. The business lobby's chief, Jacques de Boisseson, also gently criticised the authoritarian country's top economic official, Premier Wen Jiabao, who in April said foreign firms can compete on a level playing field with Chinese ones.

"I do believe the words of Premier Wen when he says that foreign investment is welcome," Mr de Boisseson told Reuters. "[But China] would probably be satisfied with a lower level of foreign investment and a higher share for Chinese companies."

The plea for help - which, among other things, called for "a more coherent approach" to China diplomacy from EU member states, whose policies it dubbed "fragmented and uncoordinated to the detriment of European business" - comes during a high-level visit by EU foreign relations chief Catherine Ashton to China.

Ms Ashton is not responsible for trade but did on Wednesday discuss a wide-ranging EU-China strategic partnership with the country's most senior foreign affairs official, Dai Bingguo, and will on Thursday meet Mr Wen.

"China expects the EU to treat it as an equal," Mr Dai told Ms Ashton, according to the Xinhua state news agency.

Ms Ashton so far on her trip has also visited EU pavilions, such as the Bulgaria and Romania stands, at the Shanghai "Expo 2010" fair and toured an ethnic Miao village in the country's Guizhou province. "I have seen the beauty of Beijing and the splendor of Shanghai, and I have the great opportunity to see this part of China," she told Xinhua.

The EU foreign affairs chief declined to go to the re-launch of Middle East peace talks taking place in Washington on Thursday in order to complete her China itinerary, attracting criticism from some quarters.

"If the EU wants to play an international role compatible with its political and economic weight, it must clearly understand its priorities!" Portuguese centre-right MEP Mario David said in a statement on Wednesday.

EU to hold 'partnership dialogue' with China

Mon, 30 Aug 2010

Ahead of an informal meeting of EU foreign ministers next Friday, the EU's foreign policy chief Catherine Ashton is paying a six-day visit to China.

EU, China to hold their first high level 'partnership dialogue'

Ahead of an informal meeting of EU foreign ministers at the end of next week, the bloc's foreign policy chief Catherine Ashton began a six-day visit to China on Monday (29 August).

After a day spent visiting the EU pavilions at the World Expo in Shangai, Ms Ashton will co-chair the first EU-China high-level strategic dialogue with state councillor Dai Bingguo on Tuesday and Wednesday in the Guiyang region.

During the meeting they will "address issues of concern and mutual interest," Ms Ashton's office wrote in a statement. These include foreign and security matters such as the Korean Peninsula, Iran, Africa and piracy in the Gulf of Aden.

"Today, EU-China co-operation and exchanges form a rich tapestry of interwoven issues and interests. Inevitably, a relationship such as ours needs constant attention if we are to maintain and build confidence," Ms Ashton said in a written interview with a state-owned newspaper China Daily, published Sunday.

"We need to communicate to speak frankly to exchange ideas and to recognise there have been and will be some difficult moments as our relationship matures. That is why I am in China this week, to coordinate closely our policies and to develop further our cooperation on important international issues," she added.

She went on to highlight some of the areas of dispute including trade and the environment. The EU has upbraided China several times for not protecting intellectual property rights while EU business leaders have increasingly complained about the obstacles they face to doing business in the country. Meanwhile, Beijing has taken a tough line on environmental issues arguing that countries that are catching up on the industry front should not have to pay for the environmental sins of fully industrialised countries.

"Part of China's success comes from the open global economy with common rules. If this system is going to continue it needs active efforts by all the important countries and of course China is now one of the most important ones. This is true in trade, but it is also true in the area of banking, security and the environment," Ms Ashton said.

With the EU-China summit on the agenda on 6 October, Ms Ashton will meet Prime Minister Wen Jiabao and foreign minister Yang Jiechi in Beijing during Thursday and Friday.

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EU Ramps Up Engagement with China

China outstrips Japan to become world’s 2nd largest economy