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Building a Common Future

Image source/description: The European Union (EU)–China Summit plenary session at the Great Hall of the People in Beijing on 12 July 2016. Copyright © HOWHWEE YOUNG/AFP/Getty Images.
EU–China Economic Relations to 2025

Directors’ Statement

In the four decades since China and the European Economic Community (EEC) established bilateral relations in 1975, both have changed enormously. China has risen to become the world’s largest economy in purchasing power parity terms, and the EEC has been transformed into the European Union, the world’s largest single market, with a common currency and free movement of goods, capital, services and labour. Given this process, it was perhaps inevitable that the EU has become China’s largest trading partner, and that China is the EU’s second-largest export market and main source of imports.

Nonetheless, there is a general sense on both sides that decision-makers in Beijing and Brussels, as well as in other EU capitals, are yet to bring to fruition the full potential of their relationship, be it in trade and investment, industrial cooperation or global governance, and in respect of climate change in particular. Against a background in which the United States is increasingly drawing into question its commitments to free trade and the global commons, and with the uncertainty resulting from Brexit, there clearly exists a need for China and the EU not only to increase the breadth and depth of their cooperation, but also to act more strategically in the way they relate to each other.

Strengthening EU–China relations will not be easy. In fact, this report documents the hurdles and differences in views that exist as well as the opportunities. The continued difference in economic systems poses challenges for further collaboration, and policymakers need to be frank about this if they wish to harvest the huge potential of deeper trade and investment linkages. Perhaps the best starting point where broad agreement could be found is in the area of climate policies. Both China and the EU are concerned by the issue. The topic is of such importance that it cuts across many other aspects of the relationship. For example, increasing connectivity through China’s Belt and Road Initiative (BRI) and the EU’s Juncker plan for strategic investments offers the opportunity to immediately build infrastructure in a climate-friendly way. Greater cooperation in science and innovation, as well as exchanges of people, also holds promise as an area in which progress can be made relatively easily.

Over the past 18 months, staff from each of the four institutions we lead have assessed relations between the EU and China from a variety of different angles, from the broad to the specific. This report synthesizes the main insights and conclusions from the collective workshops in Beijing, Brussels, Hong Kong and London, and from the various papers produced by the individual researchers. It offers a series of recommendations on ways to maximize opportunities and minimize the risks facing this bilateral relationship that is crucial to the health of the global economy.

We are delighted, therefore, to present this report to policymakers and the public, and hope that it might provide a useful point of departure for both sides to think creatively about how to bring their indispensable relationship to the next level.

We would like to thank the staff of our four institutes for all their hard work on the EU–China 2025 project. We are also very grateful for the support of the members of our Senior Advisory Group, chaired by Romano Prodi, President of the European Commission (1999–2004) and Zeng Peiyan, Vice Premier of the People’s Republic of China (2003–08), who provided invaluable input and are listed overleaf.

Professor Lawrence J. Lau, The Chinese University of Hong Kong

Dr Robin Niblett, Chatham House

Dr Guntram Wolff, Bruegel

Mr Zhang Xiaoqiang, China Center for International Economic Exchanges (CCIEE)