Powerhouse for recovery
MA XUEJING/CHINA DAILY
China and the EU are strengthening cooperation to uphold the multilateral trading system
This year marks the 20th anniversary of China's accession to the World Trade Organization, which has proven to be a milestone event in world history as it not only expedited globalization, but also made the WTO a genuine global trade organization.
Since its accession to the WTO, China's trade with the European Union has registered rapid growth. According to EU figures, in 2000, China imported $25.2 billion worth of goods from the EU and exported $69.7 billion worth of goods to the EU.From 2000 to 2019, Chinese goods imports from the EU surged nine times to $225.2 billion, with an average annual increase of 12 percent, and Chinese exports to EU member states surged six times to $420.7 billion, with an average annual increase of 10 percent.
The China-EU trade relations hold both unprecedented opportunities and challenges. Over the past few years, China and the EU have signed a bilateral agreement on civil aviation safety and a horizontal aviation agreement to strengthen their aviation cooperation, signed a bilateral agreement on geographical indications, completed their negotiations on a comprehensive bilateral investment agreement, and agreed to develop a green partnership and a partnership on digital cooperation.
The China-Switzerland Free Trade Agreement and China-Iceland Free Trade Agreement are functioning well. In 2020, trade in goods and services between China and European countries reached nearly $1 trillion, with two-way cumulative investments exceeding $250 billion.
Since the outbreak of the novel coronavirus, China and the EU have been assisting each other with increasing economic and trade collaborations. At the end of 2019, the two sides signed an agreement protecting geographical indications, boasting the great potential for their trade in high-quality farm produce.
China was also quick to restart its economy and became the only major economy to register positive growth in 2020 by coordinating prevention and control measures with social and economic development.
Despite headwinds, China-EU trade grew by 3.5 percent from January to November last year, demonstrating the strong resilience of their trade cooperation.
Moreover, two-way investment has become a significant bond between China and the EU. Cumulative foreign direct investment from the EU to China reached $137.9 billion by the end of 2019, while that from China to the EU totaled $102.1 billion. Nearly 60 percent of EU companies plan to expand their China operations in 2021, up from 51 percent last year, according to the Business Confidence Survey 2021, released by the European Union Chamber of Commerce in China.
About 68 percent of the respondents are optimistic about the future growth in China. Amid the pandemic and the global economic recession, relevant statistics in the report fully demonstrate the resilience, vitality and prospects of economic and trade cooperation between China and the EU.
There is no such thing as "divergence of fundamental interests" between China and the EU, and there should not be any such man-made divergence. China needs the EU and vice versa. Cooperation between China and the EU is beneficial to China, to the EU and to the entire world.
The successful operations of EU companies in China are too many to list. Germany's largest carmaker Volkswagen Group China's income has already exceeded that of its home country. Volkswagen Group China, together with its Chinese partners, invested over 4 billion euros ($4.7 billion) in China in 2020, with around 40 percent of this investment going toward e-mobility. By 2025, Volkswagen Group China plans to deliver up to 1.5 million new energy vehicles per year.
Another example is the global beauty giant L'Oreal Group, whose global sales and operating profit decreased by 6.3 percent and 6.1 percent respectively in 2020 compared to 2019 amid the COVID-19 pandemic. However, in the second half of 2020, the group recorded notable growth in the China market, with operating revenue surging by 27 percent year-on-year.
In 2020, BSH Home Appliances Corp, a wholly-owned subsidiary of the Bosch Group, not only scored 7 percent turnover growth in China, but also achieved major breakthroughs in product design, production and e-commerce. In particular, BSH has seized the opportunity from a significantly growing demand for dishwashers and dryers in China.
The global economy has undergone profound changes over the past few years, with economic globalization impeded by the resurgence of unilateralism and protectionism, frequent trade war outbreaks, and the multilateral trading system severely undermined and challenged. However, both China and the EU have chosen to stand on the right side of history, supporting economic globalization, holding high the banner of supporting the multilateral trading system, and resisting trade protectionism.
The entire world was stunned when the Donald Trump administration threatened to withdraw from the WTO as most countries were not prepared for a multilateral trading system without US leadership. China and the EU, however, strengthened coordination at all levels and jointly guided WTO members through the US withdrawal crisis. Moreover, the dispute settlement system at the core of the WTO has been paralyzed as a result of US deliberately blocking the selection process for new members of the Appellate Body. To that end, China and the EU have worked closely with each other and submitted a joint proposal on the reform of the Appellate Body while defending its core values. The joint proposal has received support and acclaim from a large number of WTO members and given hope to the revival of the Appellate Body.
China and the EU are duty-bound to strengthen their cooperation in the multilateral trading system to promote global economic recovery in the post-pandemic era. The EU has recently submitted a proposal to the WTO on medical product and services cooperation that could assist the global fight against the pandemic. China could participate in and support the discussion. In the meantime, to cope with plastic pollution in the environment and the sea, China has led the efforts to put forth an initiative on dealing with single use plastics in trade.
A sound and strong multilateral trading system is not only the cornerstone of China-EU economic and trade ties, but also serves as the powerhouse for a post-pandemic global economic recovery.
The author is former deputy director-general of the World Trade Organization and former vice-commerce minister of China. The author contributed this article to China Watch, a think tank powered by China Daily.
The views do not necessarily reflect those of China Daily.