Recent Developments In Sino-EU Relations: 2014 And 2015 State Visits By Xi Jinping And Li Keqiang

On June 28, 2015, Chinese Premier Li Keqiang arrived in Belgium for the 17th China-European Union (EU) Leaders’ Meeting. This was followed by his state visit to France which included a visit to the headquarters of the Organization for Economic Cooperation and Development (OECD).1 The timing for the premier’s trip was significant as 2015 marks the 40th anniversary of the establishment of diplomatic relations between the People’s Republic of China and the European Economic Community, the forerunner of the EU. China and the EU upgraded their bilateral relationship to a comprehensive strategic partnership in 2003, shortly after China’s ascension to the World Trade Organization in December 2001.2

Since the turn of the millennium, trade between China and the EU has soared. China has been the EU’s second largest trading partner for the past 12 years, and the EU has been China’s largest trading partner for the past 11. The value of trade between China and the EU increased from US$2.4 billion to US$615 billion between 1975 and 2014.3 The EU currently has a cumulative investment of almost US$100 billion in China, while China has a cumulative investment of more than US$50 billion in the EU.4 These bilateral investment flows are—in the eyes of the Chinese government at least—paltry given the much larger scale of Sino-EU trade. As such, Premier Li has called on the EU to quickly conclude a bilateral treaty that would facilitate Chinese acquisitions in Europe, and proposed that China and the EU begin studying the feasibility of establishing a free trade zone.5

At the 17th China-EU Leaders’ Meeting in Brussels, which Premier Li co-chaired, China and the EU agreed to align China’s “Belt and Road” development framework with the EU’s recently announced €315 billion Juncker investment plan, to stimulate synergistic growth for both regions. The European Fund for Strategic Investments (EFSI), a financial vehicle for high risk ventures that is part of the Juncker plan, will eventually be linked to a Chinese initiative for international cooperation on production capacity, thereby allowing China and Europe to leverage their respective strengths in manufacturing capacity and advanced technology for the purposes of practical cooperation. Such practical cooperation will go beyond the traditional pattern of Chinese and EU foreign direct investment in each other’s economies, and will instead see Chinese and European firms linking up to expand into key emerging markets. Trilateral cooperation between China, its European partners, and third countries from emerging regional markets in projects like equipment manufacturing can accelerate industrial development and bring increased growth to not just the three partners but their respective regions as well, potentially accelerating global economic growth.6

China’s “Belt and Road” development framework offers opportunities for such trilateral cooperation to take place, and the involvement of 18 European countries in the Asian Infrastructure Investment Bank (AIIB)—the primary financing instrument for the “Belt and Road”—highlights European interest in the “Belt and Road” projects. The AIIB and the Silk Road Fund, the secondary financing instrument for the “Belt and Road,” will both offer funding for Chinese and European joint ventures on “Belt and Road” projects.7 Outside of the “Belt and Road” framework, China and Europe can extend their existing practical cooperation on climate change.8 China and the EU have agreed to cooperate on developing a sustainable low-carbon economy through technological innovation. Beyond technological research, China and the EU will also further their cooperation in emissions trading and the carbon market, as well as city-level partnerships in climate change mitigation projects.9 In recent historical perspective, this proliferation in practical cooperation can be connected to the 2005 decision at the 8th EU-China Summit in Beijing for China and the EU to develop their strategic relationship through “concrete actions.”10

Belgium and France

In his visit to Belgium, Premier Li and his Belgian counterpart Prime Minister Charles Michel signed cooperative agreements worth €18 billion, in sectors ranging from finance to telecommunications. Premier Li also stated that China will help Belgium develop into a key distribution and logistics node between Asia and Europe. China and Belgium will also cooperate on industrial joint ventures in key emerging markets like those in Africa.11

Following Belgium, Premier Li traveled to France and met with French Prime Minister Manuel Valls. China and France agreed to expand their cooperation in the civilian nuclear energy sector including cooperation in the development of nuclear technology. In particular, Areva and China National Nuclear Corporation agreed to cooperate on a series of projects including uranium mining. In addition, China and France signed over 50 business agreements, including the Chinese purchase of 45 A330 passenger jets from Airbus. In turn, Airbus, which already has an A320 Family Final Assembly Line and Delivery Center in the Chinese city of Tianjin, agreed to set up an A330 Completion and Delivery Center in that same city, its first wide-body aircraft factory outside of Europe. Significantly, China and France also agreed to cooperate on ventures in Africa’s and Asia’s emerging markets. As noted earlier, such trilateral cooperation will boost economic growth in not just the emerging market concerned but also the Chinese and French economies. Africa, for example, hosts seven of the world’s fastest growing economies, and foreign direct investment in this high-growth region offers significant growth potential for foreign investors. In the telecommunications sector, Alcatel-Lucent won a deal worth €1.3 billion to supply telecommunications equipment to Chinese firms operating in Africa. China and France will also form joint ventures and other cooperative ventures in sectors like agriculture, aviation, and green energy in emerging markets in Africa and Asia.12

While in Paris, Premier Li also visited the OECD headquarters. During this visit, the Chinese delegation officially accepted the OECD’s invitation for China to join its Development Center. This gives China an important international forum to share the knowledge and expertise it has learned from its recent decades of rapid economic growth. Involvement in the OECD Development Center will also provide China with a wealth of practical research on economic restructuring and sustainable development, which should prove useful as China transitions from its previous decades of double-digit growth to a “new normal” of single-digit growth. Apart from its new role with the OECD Development Center, China will also enhance its two-decade long partnership with the OECD with strengthened cooperation in areas like sustainable development and the management of the macroeconomic environment.13

President Xi Jinping’s 2014 European Tour

Premier Li’s European tour built on cooperation agreements achieved by Chinese President Xi Jinping during his state visit to Europe the previous year.

President Xi started that tour on March 22, 2014 with a state visit to the Netherlands, one of China’s key European economic partners. The Netherlands has been China’s second-largest trading partner in the EU for over a decade, and Sino-Dutch bilateral trade reached US$70.15 billion in 2013. During President Xi’s visit, China and the Netherlands signed cooperation agreements in a range of economic sectors including agriculture, energy, and finance. Both countries also agreed to cooperate in emerging sectors like green energy and smart cities.14 During his visit to the Netherlands, President Xi attended the Nuclear Security Summit, in which he voiced China’s view that the benefits of civilian nuclear technology should be equitably distributed among the world’s populations for global sustainable development; and that international cooperation is required to establish a global system of nuclear security that can successfully avert the threat of nuclear terrorism.15

President Xi followed this with a state visit to France, which was timed to commemorate the 50th anniversary of Sino-French diplomatic relations. Indeed, France was the first Western power to establish diplomatic relations with the People’s Republic of China, and their bilateral ties have since been upgraded to a comprehensive strategic partnership. Sino-French bilateral trade reached US$50 billion in 2013, and President Xi sought to strengthen this economic relationship. Chinese and French enterprises have long been cooperating in sectors like finance, nuclear energy, rail transportation, and civil aviation, and President Xi encouraged these enterprises to cooperate in new sectors like green technology, and he also encouraged Sino-French joint ventures to seek trilateral cooperation in emerging markets.16 As noted earlier, Premier Li’s 2015 tour of Europe offered further encouragement to such trilateral ventures.

President Xi followed his state visit to France with state visits to Germany and Belgium. Germany is China’s largest trading partner in Europe, with bilateral trade amounting to US$161.6 billion in 2013. President Xi called for an expansion of Sino-German trade and investment, especially in infrastructure projects in Eurasia and Central Asia that will be constructed under the Silk Road Economic Belt development framework. China and Germany are already linked by transcontinental rail connections, including the Chongqing-Xinjiang-Europe International Railway which was launched in 2011. Infrastructure development under the Silk Road Economic Belt will add to the existing transportation and logistics linkages between Asia and Europe.17 President Xi ended his tour of Europe with a state visit to Belgium, where he and his Belgian counterpart Prime Minister Elio Di Rupo officially strengthened Sino-Belgian relations to an all-round partnership of friendship and cooperation, and agreed on a range of cooperative ventures in sectors like science and technology, telecommunications, and trade.18 In Brussels, President Xi visited the headquarters of the EU, the first Chinese president ever to do so.19 President Xi also witnessed the opening of the EU-China Research Center at the College of Europe, and in his address to the College on April 1, 2014, he highlighted the opportunities afforded by cooperation between China and Europe.20 As he observed:

“China and Europe may seem far apart geographically, but we are in fact in the same time and the same space. I even feel that we are close to each other, as if in the same neighborhood. Both China and Europe are in a crucial stage of development and facing unprecedented opportunities and challenges. As I just said, we hope to work with our European friends to build a bridge of friendship and cooperation across the Eurasian continent. For that, we need to build four bridges for peace, growth, reform and progress of civilization, so that the China-EU comprehensive strategic partnership will take on even greater global significance.”21

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Notes
1. “Chinese premier arrives in Brussels for China-EU leaders’ meeting,” Xinhua, June 28, 2015, accessed July 4, 2015, http://news.xinhuanet.com/english/2015-06/28/c_134363153.htm. “Li’s visit to boost China-France practical cooperation, mutual trust,” Xinhua, June 29, 2015, accessed July 4, 2015, http://news.xinhuanet.com/english/2015-06/29/c_134364886.htm.

2. “China, EU, exchange congratulations, diplomatic ties,” Xinhua, May 6, 2015, accessed July 4, 2015, http://news.xinhuanet.com/english/2015-05/06/c_134214353.htm. “China-EU ties in past 40 years,” Xinhua, June 29, 2015, accessed July 4, 2015, http://news.xinhuanet.com/english/2015-06/29/c_134365378.htm.

3. “Premier Li’s visit opens new chapter in China-EU economic ties,” Xinhua, July 1, 2015, accessed July 4, 2015, http://news.xinhuanet.com/english/2015-07/01/c_134372782.htm.

4. “China-EU ties.”

5. James Kynge and Christian Oliver, “Li Keqiang pushes for China-Europe investment treaty,” Financial Times, June 29, 2015, accessed July 4, 2015, http://www.ft.com/cms/s/0/f0b923c0-1e67-11e5-ab0f-6bb9974f25d0.html.

6. “Production capacity cooperation opens new opportunities for China, Europe,” Xinhua, July 2, 2015, accessed July 4, 2015, http://news.xinhuanet.com/english/2015-07/03/c_134377077.htm. “Chinese premier’s Europe visit sets new stage for bilateral cooperation,” Xinhua, July 3, 2015, accessed July 4, 2015, http://news.xinhuanet.com/english/2015-07/03/c_134380243.htm. “EU agrees details of 315 billion euro investment plan,” Reuters, May 28, 2015, accessed July 4, 2015, http://www.reuters.com/article/2015/05/28/eu-investments-idUSL5N0YJ2ES20150528. Robert Ash, “Europe’s Commercial Relations with China,” in China-Europe Relations: Perceptions, Policies and Prospects, ed. David Shambaugh, Eberhard Sandschneider, and Zhou Hong (New York: Routledge, 2008): 210-213. Zhang Zuqian, “China’s Commercial Relations with Europe,” in China-Europe Relations: Perceptions, Policies and Prospects, ed. David Shambaugh, Eberhard Sandschneider, and Zhou Hong (New York: Routledge, 2008): 234-235.

7. “Premier Li’s visit.” “Production capacity cooperation.” Alvin Cheng-Hin Lim, “The US, China and the AIIB: From Zero-Sum Competition to Win-Win Cooperation?” Eurasia Review, April 19, 2015, accessed May 14, 2015, http://www.eurasiareview.com/19042015-the-us-china-and-the-aiib-from-zero-sum-competition-to-win-win-cooperation-analysis/.

8. Richard Balme, “Global Warming Politics: The EU, China, and Climate Change,” in Europe and China: Strategic Partners or Rivals? ed. Roland Vogt (Hong Kong: Hong Kong University Press, 2012): 168-171.

9. “Chinese premier’s.” “China, EU pledge closer cooperation on climate change,” Xinhua, June 29, 2015, accessed July 4, 2015, http://news.xinhuanet.com/english/2015-06/30/c_134366471.htm.

10. Xinning Song, “Challenges and Opportunities in EU-China Relations,” in Europe and China: Strategic Partners or Rivals? ed. Roland Vogt (Hong Kong: Hong Kong University Press, 2012): 24.

11. “China, Belgium sign cooperation deals, agree to explore third-party market,” Xinhua, June 29, 2015, accessed July 4, 2015, http://english.cntv.cn/2015/06/30/ARTI1435624526378809.shtml.

1.2 “Chinese premier’s.” “Airbus A330 Completion and Delivery Center to be built in China’s Tianjin city,” Xinhua, July 3, 2015, accessed July 4, 2015, http://news.xinhuanet.com/english/2015-07/03/c_134379253.htm. “China, France pledge closer cooperation in civil nuclear energy,” Xinhua, July 1, 2015, accessed July 4, 2015, http://news.xinhuanet.com/english/2015-07/02/c_134373609.htm. “France woos Chinese investors as PM wraps up fruitful trip,” AFP, July 2, 2015, accessed July 4, 2015, http://news.yahoo.com/france-woos-chinese-investors-pm-wraps-fruitful-trip-145616158–finance.html. “China, France to team up on projects in Asia, Africa,” AFP, July 2, 2015, accessed July 4, 2015, http://www.dawn.com/news/1191785/china-france-to-team-up-on-projects-in-asia-africa. Alvin Cheng-Hin Lim, “Africa and China’s 21st Century Maritime Silk Road,” The Asia-Pacific Journal 13 (2015), accessed June 28, 2015, http://japanfocus.org/-Alvin_Cheng_Hin-Lim/4296.

13. “China joins OECD Development Centre,” Xinhua, July 1, 2015, accessed July 4, 2015, http://news.xinhuanet.com/english/2015-07/01/c_134373533.htm. “Premier Li welcomes OECD’s role in China’s modernization,” Xinhua, July 1, 2015, accessed July 4, 2015, http://news.xinhuanet.com/english/2015-07/02/c_134374544.htm. “China, OECD eye closer partnership,” Xinhua, July 1, 2015, accessed July 4, 2015, http://news.xinhuanet.com/english/2015-07/02/c_134375395.htm. Alvin Cheng-Hin Lim, “China’s Transition to the ‘New Normal’: Challenges and Opportunities,” Eurasia Review, April 2, 2015, accessed June 28, 2015, http://www.eurasiareview.com/02042015-chinas-transition-to-the-new-normal-challenges-and-opportunities-analysis/.

14. “President Xi begins Europe visit,” China Daily, March 23, 2014, accessed July 4, 2015, http://www.china.org.cn/world/2014-03/23/content_31873114.htm. “Xi arrives in Netherlands for state visit, nuclear summit,” Xinhua, March 23, 2014, accessed July 4, 2015, http://www.china.org.cn/world/2014-03/23/content_31873177.htm. “China, Netherlands to build pragmatic partnership,” Xinhua, March 24, 2014, accessed July 4, 2015, http://www.china.org.cn/world/2014-03/24/content_31877376.htm.

15. “President Xi calls for fair system of global nuclear security,” Xinhua, March 26, 2014, accessed July 4, 2015, http://www.china.org.cn/world/2014-03/26/content_31902801.htm. “China’s role ‘constructive’: NSS chief negotiator,” Xinhua, March 26, 2014, accessed July 4, 2015, http://www.china.org.cn/world/2014-03/26/content_31917547.htm.

16. “Xi’s visit to open new chapter with France,” Xinhua, March 25, 2014, accessed July 4, 2015, http://www.china.org.cn/world/2014-03/25/content_31897832.htm. “China, France vow to boost financial, nuclear cooperation,” Xinhua, March 27, 2014, accessed July 4, 2015, http://www.china.org.cn/world/2014-03/27/content_31919223.htm. “Xi’s France visit inspires Sino-French green cooperation,” Xinhua, March 28, 2014, accessed July 4, 2015, http://www.china.org.cn/environment/2014-03/28/content_31933382.htm.

17. “Chinese president arrives in Berlin,” Xinhua, March 28, 2014, accessed July 4, 2015, http://www.china.org.cn/world/2014-03/28/content_31937046.htm. “Chinese president calls for further cooperation with Germany,” Xinhua, March 30, 2014, accessed July 4, 2015, http://www.china.org.cn/world/2014-03/30/content_31945999.htm. Zhou Wa, “Rail route to Europe improves freight transport,” China Daily, September 13, 2013, accessed July 4, 2015, http://usa.chinadaily.com.cn/epaper/2013-09/13/content_16968074.htm. “Xi calls on China, Germany to build Silk Road economic belt,” Xinhua, March 30, 2014, accessed July 4, 2015, http://www.china.org.cn/world/2014-03/30/content_31946001.htm. Alvin Cheng-Hin Lim, “China and the Eurasian Economic Union: Prospects for Silk Road Economic Belt,” Eurasia Review, May 14, 2015, accessed June 28, 2015, http://www.eurasiareview.com/14052015-china-and-the-eurasian-economic-union-prospects-for-silk-road-economic-belt-analysis/.

18. “Xi expects his visit to boost China’s ties with Belgium, Europe,” Xinhua, March 30, 2014, accessed July 4, 2015, http://www.china.org.cn/world/2014-03/30/content_31953264.htm. “Xi leaves Brussels for Beijing after Europe trip,” Xinhua, April 2, 2014, accessed July 4, 2015, http://www.china.org.cn/world/2014-04/02/content_31974014.htm.

19. “Xi Jinping becomes first president to visit EU HQ for top-level talks,” AFP, March 31, 2014. Accessed July 4, 2015. http://www.scmp.com/news/china/article/1461724/xi-jinping-becomes-first-president-visit-eu-hq-top-level-talks.

20. “EU-China Research Center opens in Belgium,” Xinhua, April 2, 2014, accessed July 4, 2015, http://www.china.org.cn/world/2014-04/02/content_31977292.htm.

21. “President Xi’s speech at the College of Europe,” Foreign Ministry of the People’s Republic of China, April 4, 2014, accessed July 4, 2015, http://www.china.org.cn/world/2014-04/04/content_32004856.htm