Dr. Hans Dietmar Schweisgut – 欧盟驻华大使 – Ambassador of the European-Union to China.

2015 marks the 40th Anniversary of EU-China Relations. On the topic of “Opportunities for Closer Cooperation between the European Union and Guangdong”, Dr Hans Dietmar Schweisgut, Ambassador of the European Union to China, shares with Delta Bridges his wisdom.

DB: What is the role of the Delegation of the European Union to China in business activities between EU (European Union) and China?

Dr. Hans Dietmar Schweisgut: The EU-China trade relationship is a massive source of economic growth, job creation and investment for both sides. China is the EU’s second-largest trade partner, and the EU is China’s most important trade partner. Alone in goods, the EU and China exchange more than €1,2 billion every day. In fact, the
openness of the huge market of the EU has been crucial for China’s economic success in the past 30 years, which has been based on an export-led model.

In order for the trade to reach such volumes, you need two elements: good promotion activities which bring individual companies together to reach business deals, and effective rules which ensure that such deals can take place by keeping markets open and predictable. In the EU, our Member States take care of promotion activities—and EU institutions negotiate and manage the rules that make trade possible. The best example is WTO rules, covering goods, services, agriculture, customs…

On the basis of constant contact with EU business, the EU Delegation follows up the respect of those rules, engages which the Chinese authorities to discuss and solve
problems—such as market access barriers, discrimination, or infringements of IP rights. The EU Delegation also participates in the many negotiations of new rules to improve openness and predictability for companies on both sides. Right now we are negotiating further opening in WTO rules, but also in government procurement, environmental goods, and information technology. Bilaterally, we are negotiating a comprehensive investment agreement, which has the ambition to unlock trillions of € in bilateral deals—ensuring that the decades to come bring as much mutual benefit as the last 30 years.

DB: What are the highlights of the past 40 years for the European Union to China?

HS: The most important highlight is the explosion in trade—the engine of China’s growth and of its economic miracle. We basically did not trade at all 40 years ago—and now EU-China trade in goods accounts for over 6% of China’s GDP every year. Trade has generated an enormous amount of resources in China and helped improve the welfare of hundreds of millions of Chinese citizens.

Trade has also provided a solid bilateral foundation for a closer relationship between our peoples and our governments, which we can trace by looking at the history of our institutional developments. The establishment of diplomatic relations in 1975 was the first highlight. This was followed in 1985 by the Trade and Cooperation Agreement.

But our relationship now goes well beyond trade. It has gradually widened to new areas, notably human rights and a political dialogue in the 1990s, in 2003 we upgraded our relationship to a Comprehensive Strategic Partnership, following China’s accession to the WTO in 2001. In 2012 we launched the first High-level People to People Dialogue to promote more people-to-people exchanges. Finally, in 2013 we adopted the EU-China 2020 Strategic Agenda for Cooperation, our roadmap for relations to the end of the decade, with a focus on peace, prosperity, sustainable development and people-to-people exchanges.

In addition, President Xi Jinping’s visit to Brussels in March last year marked the first visit by a Chinese President to the EU institutions, which shows the importance China attaches to our relations. We must work hard in the coming years to keep the momentum going to realize the untapped potential.

DB: Why do you think Guangdong Province plays an important role in building a stronger connection between EU and China? And the Pearl River Delta region in Guangdong Province?

HS: Guangdong Province has much to be proud of. It has been at the heart of China’s economic miracle. The Pearl River Delta region is China’s economic powerhouse, accounting alone for one tenth of China’s overall economic output. And Guangdong Province plays a crucial role in our economic and trade relations. It accounts for almost one-fifth of EU-China bilateral trade and is home to some 3000 European companies. The EU’s openness has been a core factor in this success. To name an example, the openness of the EU market to Huawei is at the heart of the company’s global emergence.

The success of Guangdong has always been based on its ambition. Guangdong now endeavors to move from being the ‘world’s factory’ to a globally-renowned, competitive area for modern services and high-tech industries by 2020: a model in the Asia-Pacific region, and a global ‘high-tech hub’. The EU companies’ high-quality services, hi-tech products, know-how, innovation ability, and investment can make a fundamental contribution to this goal. Guangdong’s investment in the EU can also help the province’s companies acquire the tools they need to go global.

Many of China’s provinces will be competing with each other to enhance the relationship with the EU. The provinces that demonstrate the greatest openness, predictability, respect of foreign investors and of IP rights will also be the most attractive—and also have the best image when exporting to and investing in the EU. Guangdong has important tools to shine in this respect—such as specialized IP courts or the new FTZ. If Guangdong uses these and other tools to the fullest potential, I am sure it will be able to reap the many benefits of an even closer relationship with the EU. Individual Guangdong companies have also a large role to play. For example, cooperation in the digital field in China will only prosper if there is a two-way opening to research and innovation and standard-setting bodies like the ones the EU provides.

DB: What are the fields that EU to China is looking at for further cooperation? (Energy, IT, etc.)

HS: Let me mention five economic issues. A first challenge is to tap into the largely unexploited potential in trade in services and investments. The on-going negotiation of an ambitious, comprehensive agreement on investment is the vehicle of our collaboration. China is also welcome to participate in the EU’s Investment Plan, which provides important opportunities for investment in infrastructure, digital, and innovation projects, to name but a few.

We also have many solutions that China can apply to meet its urbanisation goals—creating smart, mobile, green and socially inclusive cities. The vehicle for this collaboration is the EU-China Sustainable Urbanisation Partnership. Guangzhou is with Bristol one of the 12 partnership forming part of the Urbanisation partnership. The EU is an innovation powerhouse and can share experience and efforts with China via our flagship project Horizon 2020 and our Innovation Dialogue. We would also like to see more connectivity between Europe and Asia and hope to be able to work with our Chinese partners as well as other regional partners to make this happen. The digital area can also be a fertile ground for collaboration. For collaboration to succeed in all of these areas, there is a common denominator: reciprocal openness and predictability. As growth slows down, it is essential that China’s reform process delivers that openness and predictability for foreign operators. It is fundamental to avoid the impression that China is closing up for foreign business.

On development cooperation, the EU is example supporting China’s efforts in establishing a country-wide Emission Trading System for Carbon Dioxide Emission. On social protection reform, we are planning to support a pilot action in Guangdong province on rural-urban migration. And among the environmental protection projects, we have a number of projects which undertake specific activities in Guangzhou, one project on recycling of electronic waste and another on improving drinking water quality.

Let me finish by underlining that I would hope to see much closer cooperation on strategic questions relating to important global issues. In a thoroughly globalised world, no major power will be big enough to deal with issues like terrorism, cyber technology, environment or climate change alone. I am confident Beijing and Brussels will be working much more closely on these and other questions.

DB: Can you introduce us to some ongoing cooperation that EU to China is recently involved? Can you please also share some exciting inside tease of what to expect in 2015 and the coming year of 2016?

HS: As I mentioned before, there is still huge unexploited potential in EU-China relations. This is notably the case for trade in services: the EU exports 6 times more services to the US than to China. Similarly, only 2% of EU’s foreign direct investments (FDI) go to China, while 30% of them go to the US. For this reason, the two sides have embarked on negotiations for a Comprehensive Investment Agreement, which is the “flagship project” of the EU-China trade relationship at the moment. This Investment agreement would facilitate and boost investments in both directions—unlocking possibilities for trillions of € in bilateral investment. This will be a key focus in the coming months and year.

Of course, we look forward to the high-level talks between our leaders to show the way for cooperation in the years to come. In this regard, the Summit and the High-Level Economic and Trade Dialogue are of great importance. I believe the 40th anniversary of our diplomatic relations provides a momentous opportunity to expand and deepen our bilateral cooperation.

As for Guangdong, the EU warmly welcomes the establishment of the China (Guangdong) Free Trade Zone (FTZ) which we hope will offer real and better market access for EU companies. The EU is very much looking forward to seeing that happening in 2015 and 2016, and is willing to cooperate closely with the new FTZ.

DB: Personally, what do you think is the charm and attractiveness of Guangdong Province?

HS: Historically, Guangdong Province has been at the forefront of China’s economic reforms and opening up and set the pace for the rest of the mainland. It is a wealthy province with long historical links with Europe, mainly due to its strategic location as a trading port. Over the last decades, Guangdong has attracted a lot of investments from Europe. There are also important sister-city relations with many European cities and regions.

I wish to see the attractiveness of Guangdong Province to European companies continue also in the future. As elsewhere in China, we want to see a level playing field to European companies operating in Guangdong, just as Chinese companies which are basing themselves in the EU.

Of course, Guangdong Province is home to Cantonese cuisine, which for a good reason remains one of the most appreciated in the world.