EU and China discuss trade, investment, overcapacity & cooperation on state aid control
The EU and China held their 6th annual EU-China High-level Economic and Trade Dialogue (HED) in Brussels this week.
The meeting was co-chaired by Jyrki Katainen, European Commission Vice-President for Jobs, Growth, Investment and Competitiveness, and Chinese Vice-Premier Ma Kai.
Participating Commissioners and ministers discussed a range of strategic issues under the theme "Strengthening Policy Coordination, Promoting Sustainable Growth". Topics included macro-economic challenges, global economic governance and ongoing reforms in China and the EU. Bilateral issues included negotiations on investment, questions related to overcapacity in the steel sector and how to manage bilateral trade frictions in compliance with WTO rules.
At the conclusion of the meeting, Vice-President Jyrki Katainen said: "I believe our exchanges today allow us to see the wider picture and provide an effective, cooperative response to current challenges in the EU, China and globally. It is clear we share a commitment to strong, sustainable and balanced growth and our cooperation in all economic and trade issues will continue".
Main outcomes of the HED
Production overcapacity in the steel sector
Both sides followed up on the last Summit's agreement to establish a dedicated bilateral platform on steel and the Global Forum set up at the G20 summit in Hangzhou. A first meeting of the EU-China platform on steel overcapacity, co-chaired by Commissioner Malmström and Chinese Minister of Commerce Gao Hucheng will take place shortly.
China has committed to make its steel industry more responsive to market forces, and to reduce its excess production capacity and to ensure that its policies and support do not target the net expansion of steel capacity. Vice-President Katainen called on China to activateurgently all relevant policy tools to address the trade-related aspects of steel overcapacity.
China and the EU further committed to make operational the Global Steel Forum on Excess Capacity, which was announced at the G20 Summit in Hangzhou in September. In this Forum, all G20 and interested OECD economies - including China and the EU - will not only enhance communication and cooperation, but also take effective steps to address overcapacity. The EU welcomes China's efforts to finalise discussions on the basis of the facilitating role by the OECD.
The EU and China also agreed to continue the dialogue on overcapacity so that we can achieve reciprocal benefits, avoid the emergence of new barriers and future overcapacity in advanced industrial sectors.
Trade and Market access
The HED covered the need to see significantly improved market access for EU companies as well as a level playing field for business and investment. The EU handed over a list of the key concerns on market access and encouraged China to provide a list of their key concerns. The EU and China agreed to work together on addressing structural market access problems to ensure that the key barriers affecting both sides are eliminated. Both sides agreed to review progress at the Joint Committee on Trade in 2017.
The EU pushed to conclude negotiations on an agreement on Geographical Indications in the first half of 2017. The Chinese side reconfirmed its commitment to conclude the negotiations as soon as possible and both sides will meet shortly to that effect.
The HED welcomed the growth in two-way investment flows and took stock of the negotiations towards a bilateral investment agreement between the EU and China. Vice-Premier Ma Kai and Vice-President Katainen encouraged the negotiating teams to reach broad agreement as soon as possible on the core provisions needed for the exchange of market access offers, and proceed with the exchange thereafter.
Both sides agreed to continue exploring synergies between the Investment Plan for Europe and the Belt and Road Initiative. The expert working group co-chaired by NDRC and the Commission and including the EIB and the Silk Road Fund, and other Chinese sovereign banks will report on progress at the next HED.
EU-China Connectivity Platform
The HED also welcomed the progress of the EU-China Connectivity Platform, since the Memorandum of Understanding was signed in the margins of last year's meeting. Both sides acknowledged the work done towards the identification of an initial list of pilot projects and towards setting up an Expert Group on financing and investment. This will identify different financing options and opportunities for cooperation relating to these pilot projects, as mandated by the Chairs' Meeting of the Connectivity Platform. The Expert Group will meet before the end of the year to discuss how to practically implement this commitment in areas such as public procurement and export credit.
State aid control
A positive exchange took place about China's announced economic reform programme, particularly those reforms aimed at giving the market a more decisive role through, for example, the reform of State Owned Enterprises. The EU believes all actors in the market need to be subject to the same rules to build a fair and level playing field.
The EU and China agreed to explore further how to boost sustainable economic and societal development in line with the strategies for the Digital Single Market for Europe and Digital China. Both sides noted partial progress made in the implementation of the Joint Declaration on EU-China strategic cooperation in the field of 5G and support the extension of Chinese and European enterprises' reciprocal participation in scientific research and innovation programmes. At the same time, the Commission stressed that more needs to be done to ensure access to the digital markets, research and innovation programmes and standardisation bodies.
The European Commission's upcoming Circular Economy Mission to China will offer the possibility to reflect jointly on what can be done in the context of the EU-China bilateral cooperation to ensure a transition to a more resource efficient growth model and to launch practical cooperation encouraging our businesses to work together in establishing more sustainable supply chains.
Today, the EU is China's biggest trading partner, while China is the EU's second largest trading partner after the United States. Trade in goods between the EU and China is worth well over €1.5 billion a day, with EU exports amounting to €170 billion and imports to €350 billion in 2015.
The EU continues to be a top recipient of Chinese investment. There are indications that transactions could reach €27 billion in 2016, which would mean a growth of around 33% year-on-year. In the meantime, EU Foreign Direct Investment to China continues to drop as it remains below €1.8 billion for the fourth quarter in a row.
The EU and China have a significant stake in each other's prosperity and sustainable growth.
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