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China and Europe: Working Together for New Progress in China-EU Relations

Updated: Jul 1,2015 11:10 AM     english.gov.cn

- Keynote Speech by H.E Li Keqiang

Premier of the State Council of the People’s Republic of China

At China-EU Business Summit

Brussels, 29 June 2015

President Jean-Claude Juncker,

Friends from the Business Community,

Ladies and Gentlemen,

I am glad to attend this China-EU Business Summit. This year marks the 40th anniversary of diplomatic relations between China and the European Union. As an old saying in China goes, at the age of 40, one shall be free from confusion. This means that a grown man with 40 years of experience is bound to have clearer and more rational views of the world around him. Having gone through an eventful 40 years, China-EU relations have become more stable and mature. We are now in a crucial stage where we could plan for a future of much more progress. This is also what our two peoples expect of us.

Last year, Chinese President Xi Jinping paid a successful visit to the EU headquarters. The decision was made to build the partnerships for peace, growth, reform and civilization between China and Europe. Friendship and cooperation between China and the EU entered a new stage. I have now come to Europe to enhance political mutual trust with the new EU leadership. We will discuss with the business community ways to promote global cooperation on production capacity, and strengthen our people-to-people exchanges. This, I believe, will help China-EU relations make new progress.

As the world’s largest developing country and emerging economy, China is playing an important and constructive role in international affairs. The European Union, the largest grouping of developed countries and the biggest economy in the world, is a major pole on the global political arena. Cooperation between China and Europe brings enormous benefits to our two peoples. It has a deep impact on the global political and economic landscape and will surely benefit the whole world. China-EU relations, since its start 40 years ago, have on the whole enjoyed all-round, steady and sound growth. We do not shy away from differences and disagreements. Nevertheless, win-win cooperation has remained the defining feature of China-EU relationship. This has indeed been a rich heritage to support the future development of our relations.

Over the past 40 years, China and the EU have always respected each other and treated each other as equals. There exist no geopolitical conflicts or clash of fundamental interests between the two sides. A long-term and stable relationship serves the fundamental interests of both sides. China supports European integration, and the EU respects China’s independent choice of development path. Both sides stand for a multi-polar world, a world of cultural diversity, and both believe that differences should be addressed through dialogue and consultation. From “constructive partnership” to “comprehensive partnership”, and now to an elevated “comprehensive strategic partnership”, China-EU relations have achieved much historical progress. Exchange mechanisms at different levels have been established, including the Leaders’ Meeting, the Strategic Dialogue, the High-level Economic and Trade Dialogue, and the High-Level People-to-People Dialogue. China-EU relations have become one of the most important, stable and constructive partnerships in today’s world.

Over the past 40 years, China and the EU have been committed to the same goals and to seeking win-win progress. Together, China and EU member states account for 1/4 of the world’s population and 1/3 of the global economy. Interaction of the two markets certainly generates considerable energy. China and Europe may be different in terms of the political system and guiding principle. But given Europe’s long tradition of commercial diplomacy, there are many areas where the two sides can have practical cooperation. Europe has offered many advanced technologies to help China’s modernization, and trade with China has become an important basis for the stable growth of Europe and the wider world. Last year, China-EU trade exceeded 600 billion US dollars, 250 times that of 40 years ago. This has greatly bolstered the world economy while recovery and demand remain sluggish. The EU has been China’s biggest trading partner for 11 consecutive years, and China is now the EU’s second largest trading partner. The China-EU 2020 Strategic Agenda for Cooperation, covering more than 100 areas of cooperation, has enabled the two sides to better align their strategies.

Over the past 40 years, China and the EU have worked together to promote dialogue, exchange and mutual leaning among civilizations. The Chinese and European civilizations both represent outstanding achievements in human history, and both values openness and inclusiveness. As we speak, people-to-people exchange between China and Europe has flourished through diverse mechanisms and channels. There are now more than 280,000 Chinese students in EU countries, and over 45,000 EU students and scholars in China. 24 official EU languages are being taught in Chinese universities, and as many as 300 Confucius institutes and classrooms are now operating in different EU member states. Dialogue between the Chinese and European civilizations has set an example for different civilizations to engage and interact with each other for common progress.

Facing the new and complex situation, we the leaders of China and the EU need to adopt a long-term perspective, and take solid steps to cement the basis of our political mutual trust. China and the EU should continue to view each other as a force for peace and an opportunity for development. China will continue to be a long-term holder of European bonds, and hopes to see a united European Union and a strong Euro. China supports Europe in resolving regional conflicts through negotiations and political means. China also hopes that the EU would observe the principle of sovereignty, and support Asia in peacefully resolving disputes left from history. This year marks the 70th anniversary of the founding of the United Nations and of victory of the world’s anti-Fascist war. China and Europe need to resolutely defend the post-war international order, continue to work towards a multi-polar world and democracy in international relations, and jointly uphold enduring peace and development of the world.

Ladies and Gentlemen,

As I travel from the east end of the Eurasian Continent to its west end, I have been thinking of what plans we could make to facilitate common development of China and Europe. The world economy is still in deep adjustment and faces downward pressure and challenges. To fully emerge from the international financial crisis, it is most urgent that we take measures to address the mismatch between the amount and structure of supply and demand. What has happened in recent years in some countries shows that QE policy alone is not enough. Such a policy has failed to address the problem of insufficient growth momentum, and may easily trigger inflation. It has not helped SMEs or created more jobs, nor has it truly benefited those people at the middle-to-lower end of the income spectrum. To remove the structural obstacles restricting growth, it is important to focus our policies on strengthening the real economy. It is necessary to promote structural reform and enhance global cooperation on production capacity. And it is important to act in the spirit of cooperation so as to enlarge our common interests and find new models for economic cooperation and development.

The timing could not be better to advance global cooperation on production capacity. The ongoing process of industrialization and urbanization in developing countries and “re-industrialization” in developed countries generates considerable demand for infrastructure development and industrial investment. Many developing countries may want to buy high-end equipment and technologies directly from the West, but the prices are too high. Meanwhile, a lot of developed countries may have found it hard to find the proper market for their high value-added products. China, with a complete industrial system, is strong in equipment manufacturing and integration capacity. In fact, a lot of advanced technologies have already been introduced to China from the West. Today, China still buys a lot of key equipment and components from developed countries. Apart from that, Chinese goods are low in cost but high in quality. We are fully capable of providing cost effective products to meet the need of developing countries. This, in turn, will boost exports of high-end equipment and technologies from developed countries.

By carrying out global cooperation on production capacity, developing countries may elevate the level of development with lower cost and at faster pace. For China, which is at the middle level of industrialization, this will be a chance to promote industrial upgrading. Developed countries, which are at the higher end of industrialization and in the post-industrialization stage, may get a chance to increase their share in the international market. In other words, all parts of the global industrial chain will all benefit from such cooperation. Developing countries combined represent a big market with several billion population and huge market demand; China has a large industry that covers various sectors; and developed countries are in urgent need to find a way out for their equipment and technologies. So this does point to broad prospects for tripartite cooperation on production capacity. For example, 15% of China’s nuclear energy equipment and 30% of China’s high-speed rail equipment are purchased from developed countries. It is fair to say that global cooperation on production capacity will help increase North-South and South-South cooperation. It will facilitate global economic recovery and promote inclusive development in the world.

China and the EU are the world’s two key economies of major influence. We both have the responsibility and obligation to work together to advance global cooperation on production capacity, and contribute to strong, sustainable and balanced growth of the world economy. To deepen practical cooperation, particularly to carry out global cooperation on production capacity, China and the EU could endeavor to achieve breakthroughs in the following four areas.

China is willing to dock its development agenda with the EU’s Investment Plan for Europe, and make breakthrough in joint infrastructure development. Infrastructure development is the point of entry for global cooperation on production capacity. Many developed countries will renovate and upgrade infrastructure. To support Europe’s transportation and energy networks, among others, the EU recently launched the Investment Plan for Europe with a total investment of 315 billion Euros. China has strength in teamwork, technology and managerial expertise for infrastructure development. China possesses sufficient and quality production capacity, a complete production line and industry chain for construction material, and China’s machinery equipment are highly adaptable. We have both the ability and the willingness to get actively involved in Europe’s investment plan. We support strong and reputable Chinese enterprises to participate in the Trans-European Transport Networks, China-Europe Land-Sea Express Route, New Eurasian Land Bridge and other infrastructure projects. We also welcome European enterprises to take an active part in the “Belt and Road Initiative”. Cooperation between China and Central and Eastern European countries on connectivity projects may be fully integrated into the broader framework of China-EU infrastructure cooperation. This will help accelerate Central and Eastern Europe’s development as well as balanced development of the eastern, central and western parts of Europe, thus boosting Europe’s integration process.

China and the EU may achieve breakthrough on third-party cooperation with a focus on equipment manufacturing. Cooperation over equipment manufacturing is an important aspect of cooperation on production capacity. Infrastructure development requires construction and machinery equipment. Economic development also relies on railway, power, telecommunication and other high-end manufacturing equipment. While carrying out production capacity projects in developing countries and in Central and Eastern Europe, Chinese enterprises will need to purchase some equipment from European countries. At the same time, they will also leverage their own strength in equipment manufacturing and integration ability, improve the technology and capacity in energy conservation and environmental protection to provide reliable equipment for host country’s infrastructure development and industrial development. Such cooperation will certainly follow the rule of market economy and the principles of “company-led, commercially-based cooperation, public participation and government support”. It will involve various models such as joint venture, cooperatives, PPP and franchising, and emphasis will be given to technology transfer and personnel training. The Chinese enterprises will pay more attention to fulfill their social responsibilities in host countries. They would be willing to draw on European countries’ advanced technology and managerial experience, give priority to environmental protection, and ensure that economic returns are generated in ways that are environmental friendly.

China and the EU may focus on meeting the needs of industrial investment, and make breakthrough in financial cooperation. Global cooperation on production capacity is essentially about cooperation on the real economy. Financial cooperation should focus on serving the real economy. China’s purchase of bonds from developed countries with its foreign exchange reserve is just necessary, and if more of such funds could be used directly to serve the real economy, it will help quicken the pace of global economic recovery. China-EU investment and financing cooperation should orient towards production capacity cooperation with priority being given to the Investment Plan for Europe. China will actively consider establishing a China-EU joint investment fund to support the European Fund for Strategic Investment. China will increase the purchase of EIB bonds. We may fully tap the pan-European investment cooperation platform, China-CEEC framework for investment and financing, AIIB and other financial arrangements, and expand cooperation with Europe through the Silk Road Fund in high and new technology, infrastructure, financial departments and other areas. The two sides may make good use of the currency swap arrangement of over 700 billion yuan, give play to the role of the four Renminbi clearing banks in Europe and improve the RQFII scheme to ensure that financial cooperation become a bond that link our common interests.

China and the EU may also achieve breakthrough by raising the level of trade and investment liberalization. Global cooperation on production capacity is open, and needs to allocate resources at a global scale. The joint efforts by developing countries and developed countries to build industry chain must be supported by free trade. Inversely, promoting global cooperation on production capacity will contribute to trade and investment liberalization and facilitation of all countries. As long as China and the EU follow the principles of reciprocity and mutual benefit in properly addressing trade frictions and other issues, we will achieve the target of reaching 1 trillion US dollars of trade by 2020. High-tech trade is falling behind in overall China-EU trade. A little relaxation of EU export control on China will lead to a significant increase of China’s imports from Europe. It is hoped that the EU could take the opportunity of export control reform to readjust and relax restrictions on export of dual-use items to China. The two sides may step up cooperation in space technology, manned space programs and other high-tech fields. We may work to establish a China-EU joint funding mechanism for science, research and innovation cooperation, and share experience in innovation policy, technology transfer, and cultivation of talents. China and the EU may continue to boost two-way investment. Last year, China’s investment in the EU took over the EU’s investment in China by a big margin. China’s coordinated regional development means a need for European investment. Ongoing BIT negotiation is the highlight in the deepening of China-EU economic cooperation and trade, and should be pushed forward in an expeditious way. The two sides may launch at an early time the joint feasibility study on China-EU FTA, and try to be the first among major economies to reach investment liberalization and facilitation agreement.

Cultural and people-to-people exchange is an important pillar, or “the third pillar”, in China-EU cooperation. Together with political mutual trust and economic cooperation and trade, they complement and reinforce each other. The two sides may fully use the China-EU High-Level People-to-People Dialogue to provide overall guidance, and continue to ensure success of activities such as the China-EU Year of Intercultural Dialogue. The two sides may also step up exchange and cooperation in education, science and technology, culture, media, think tank, tourism, women, youth and other fields. China and the EU have now reached new agreement on personnel exchange facilitation. China has agreed that the EU may open visa application centers in 15 Chinese cities where there are no EU embassies or consular offices. This will benefit more and more people of both sides for purposes of tourism, business, and overseas study. The Chinese side is willing to develop China-EU legal affairs dialogue, so as to provide legal services to the two sides in their cooperation in various fields.

During my visit, China and the EU issued a joint statement on climate change, expressing the readiness to step up dialogue and communication in international talks on climate change. The commitment is reaffirmed to work for the conclusion of a new agreement as scheduled at the upcoming Paris Climate Conference. The Chinese government is implementing the national program to tackle climate change, and has identified action targets by 2030. We will work with other members of the international community to boost green development, advocate low-carbon way of life, emphasize sharing of energy-saving and environmental protection technologies, and foster a global climate governance system that is fair, reasonable, and focused on win-win cooperation.

Ladies and Gentlemen,

At present, despite downward pressure, the Chinese economy is running stable in general. Main indicators are stabilizing and improving. Structural readjustment has seen positive changes. China has a huge market, tremendous resilience, and great potential to leverage. We have the confidence to meet the main targets of economic and social development set for this year. China will maintain a mid-to-high speed of growth and move towards the mid-to-high end of development in the long run. China will continue to comprehensively deepen reform and open wider to the outside. This will not only add to the momentum of world economic recovery, but also bring new opportunity to help the development of other countries.

Gottfried Wilhelm Leibniz, the great philosopher of Europe, wrote in Novissima Sinica that the Chinese are good at observation, while we lead in thinking. It is good if those two strengths can combine and draw upon each other, and enlighten each other. While an ancient Chinese sage said that “it is better to rise and take action than to sit and talk” and that “one should honor his words with deeds”. Many of you present have witnessed the extraordinary journey of growth in China-EU relations over the past four decades. Not only should we observe and think, but we should also act and create. Let us join hands to foster an even better future of China-EU cooperation. I am confident that together China and Europe will witness an even more brilliant 40 years ahead.

Thank you very much.

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