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China-EU pragmatic cooperation injects strong momentum into post-epidemic global economy


The emergence of the "black swan" of the new coronary pneumonia epidemic in 2020 has caused economic globalization to encounter more countercurrents, and the simultaneous contraction of the scale of global trade and investment and the total economic output has aroused concern. In its Trade and Development Report 2020, the United Nations Conference on Trade and Development called for the recovery and resilience of the global economy to come under enormous pressure without radical policies to reactivate trade and capital flows.
 

This call received a powerful response at the end of 2020. Following the formal signing of the Regional Comprehensive Economic Partnership Agreement (RCEP) on November 15, 2020, the leaders of China and the EU jointly announced the completion of the China-EU Investment Agreement negotiations on December 30, which undoubtedly injected strong momentum into the post-epidemic global economic development.

This will strengthen the economic, trade and investment cooperation between the world's two largest economies.
 

In recent years, China-EU bilateral trade cooperation has been ahead of investment cooperation. In 2019, the EU surpassed the United States to become China's largest trading partner. However, in the same year, the stock of EU direct investment in China accounted for only 5.6 per cent of China's foreign investment stock, and the stock of Chinese direct investment in the EU accounted for 4.3 per cent of the total foreign investment stock.

The EU-China Chamber of Commerce believes that the technological advantages of China and the EU are complementary and there is great potential for investment cooperation between the two sides. The EU and China have their own advantages in emerging fields such as artificial intelligence, 5G and cloud computing. At the same time, the two sides have strong demands for cooperation in the field of industrial technology. According to the Business Confidence Survey 2020 of the EU-China Chamber of Commerce, 62 per cent of members said they were willing to increase investment in China if China further expanded market access, with nearly half of them prepared to reinvest 5 to 10 per cent of their annual income, and nearly 1/3 said they would invest more. A breakthrough in the EU-China Investment Agreement negotiations will help create a transparent, consistent and predictable business environment bilaterally.

Looking ahead to the development of the world's major economies in 2021, major institutions are generally concerned that insufficient policy support may delay the recovery process of the world's major economies. However, the breakthrough of the EU-China Investment Agreement provides more certainty for the uncertain global economy.

From the perspective of the European Union, the American Asia Society research believes that through this agreement, European companies have obtained important business opportunities, especially important market access. In the foreseeable future, Europe will share the dividends of China's opening up in financial services, electric vehicles, telecommunications and other fields. Previous research by the EU-China Chamber of Commerce showed that although global economic growth has slowed in recent years, European companies with operations in China have made a lot of money. Thirty-nine percent of members said their 2019 revenue grew 20 percent year-on-year; 11 percent said their China business grew even more. Therefore, the EU-China Chamber of Commerce believes that the Chinese market contains unlimited potential, and European companies hope to share the development dividend. The conclusion of a follow-up agreement will undoubtedly help repair the EU economy after the epidemic.

According to Reuters, China has made breakthroughs in the RCEP and the China-EU Investment Agreement at the end of 2020, which on the one hand reflects China's determination and confidence in promoting a high level of opening up to the outside world, and on the other hand lays a good foundation for China to build a new development pattern. The Spanish Foreign Bank believes that this breakthrough has multiple dividends for China. A more convenient, transparent and open bilateral investment environment will effectively promote bilateral investment and add new momentum to China's medium-and long-term economic development. More EU enterprises will invest in the Chinese market and the policy agenda of the Chinese government's structural reform will further enhance the international competitiveness of Chinese enterprises.

In particular, it should be emphasized that the spirit of cooperation demonstrated by the promotion of investment agreements between China and the EU is what is urgently needed for the global economic recovery after the current epidemic.
 

After the completion of the negotiations, Woodk, chairman of the European Union-China Chamber of Commerce, expressed the hope that the two sides will maintain the current spirit and posture of advancing the completion of the negotiations and reach relevant agreements as soon as possible, and said that "a strong agreement will be a strong statement that shows that constructive contacts Can produce results".
 

The EU-China Chamber of Commerce previously stated that some people in the market have encouraged foreign-funded companies to take the initiative to "decouple" from China, but European companies are looking forward to further consolidating their position and participating in market share competition. The conclusion of a strong China-EU investment agreement shows that deepening cooperation is still the best development path, which can also refute the international "zero-sum game" noise.

 

The Spanish Foreign Bank said that in the post-epidemic era, the China-EU investment agreement will be a "breaker", showing that countries in Europe and Asia have abandoned the Cold War mentality and are using economic and trade rules to seek closer relations. Under the new bilateral and multilateral trade and investment framework, promoting global recovery requires the perseverance of all countries. (Wang Chutian)

Source: Economic Daily