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Home / Opinion / Chen Weihua

Deeper Sino-EU cooperation can make bloc more competitive

By Chen Weihua | China Daily | Updated: 2024-09-13 07:27
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JIN DING/CHINA DAILY

The European Union's competitiveness report released by Mario Draghi, a former European Central Bank chief, on Monday is supposed to be a guideline for boosting the EU's economic growth. But it is also a critique of the bloc's policy failure over the past five years and more.

The report, in a way, is an acknowledgement of China's phenomenal transformation over the past decade toward a more sustainable and innovation-driven economy. The sheer fact that China is mentioned many times in the report and that the EU now sees a huge gap not just with the United States but also with China is telling, especially because many Europeans still see China as a country providing cheap labor — although that is no longer true, according to the Draghi report.

A decade ago, when China announced its strategic shift, from investment-driven quantitative economic growth to innovation-led high-quality development, not many people took it seriously. Today, China has become a global leader in research and development, renewable energy including solar and wind energy, and electric vehicles (EVs).

China is catching up fast with the industrialized world, partly by learning from the EU and other developed economies, but more importantly through massive investments in R&D. Who would have thought just a decade ago that China's robot density would rank fifth in the world, trailing South Korea, Singapore, Germany and Japan but ahead of the US and the average EU member state?

China is now competing with the EU and other industrialized economies in a number of fields, a fact that the EU should applaud, just as it should celebrate the progress of other emerging and developing economies.

The EU should not follow the US in adhering to McCarthyism to portray China's economic and technological rise as a threat. Instead, it should realize that a rising China means huge opportunities for the EU and the rest of the world.

The EU's description of China as a cooperation partner, economic competitor and systemic rival since 2019 has caused confusion and impacted Sino-EU relations, rendering their comprehensive strategic partnership, which they inked in 2003, somewhat ineffective.

In this regard, it is important to note that the Draghi report says the EU's "over-regulation" is a major obstacle to overall growth, including the growth of unicorns, or start-ups valued at $1 billion and above.

Similarly, the EU's excessive screening over the past few years, which has targeted Chinese investment, has greatly dampened the enthusiasm of Chinese investors to engage with Europe. This is sad, because Chinese investors could contribute to the massive 800 billion euros ($880.67 billion) annual investment target set by Draghi to boost the EU's economic growth.

Moreover, China and the EU concluded the negotiations on the Comprehensive Agreement on Investment in December 2020 after seven years, which was hailed by EU trade officials as "the most ambitious agreement that China has ever concluded". Yet the European Parliament's refusal to ratify the CAI has wasted many opportunities for EU businesses to cash in on the vast China market.

The EU's "de-risking" strategy, often under US pressure, is also thwarting the bloc's growth.

The European Commission's proposed punitive tariffs on Chinese-made EVs risk triggering a trade war between the two large economies, which would hurt the global economy. No wonder Spanish Prime Minister Pedro Sanchez told reporters in China on Wednesday that the EU should reconsider its plan to impose tariffs on Chinese-made EVs, reiterating that "we don't need a trade war".

The EU has often touted its landmark "Green Deal" as a great move toward mitigating the effects of climate change, but the program has been losing momentum of late, especially in terms of implementation.

Better collaboration with China on the green development front, for which EVs and solar and wind energy are indispensable, will not only help the EU achieve its 2050 climate neutrality target, but also set an apt example of global cooperation in the green economy to fight climate change.

There is no doubt deepening win-win cooperation with China will make EU more competitive. And that is precisely what seems to be missing from the Draghi report.

The author is chief of China Daily EU Bureau based in Brussels.

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