EU-China conference tests ties in difficult times

According to Jonathan Story, a professor  at INSEAD business school  in Fontainebleau, the further transformation of China's business system is key to its insertion, satisfactory or otherwise, into world trade. 

"That transformation spells further adaptations, which in the longer run amount to regime change towards constitutional governance - China-style," he said. On the other hand, he observed that for the rich powers of the developed world, the choice was "between putting up the barriers against China, as the anti-globalisation forces at work in their societies want, or treating China as a pillar of the global system, and agreeing on a gradualist policy of transition to a fully fledged market -democracy". 

David Scott  of Brunel University dwelled on China's positions on climate change. "The technology angle remains central for China, with the EU able to provide technology transfer and supportive research for green technologies in China, which are then able to be manufactured on a relatively cheap mass scale in China; to the benefit of China, but also of the EU," Scott argues. 

"The way forward is to strengthen and expand (1) EU-China environmental cooperation projects, and (2) strengthen and expand appropriate technology development-and-transfer and effective mechanisms like a reformed-redirected CDM Clean Development Mechanism, which push clean alternative non-hydro renewable energy sources. Such environmental avenues are worthy, achievable and may be a particular win-win path for the EU and China to push forward on. Environmental issues are thus a strategic key in China-EU relations, if handled correctly and if pushed forwards more from their present base. They are too important for the EU and China to fail on. That is the biggest imperative for the future," said Scott in his presentation. 

Alejandro Carballo  of the University of Valencia analysed Chinese sovereign wealth fund (SWF) strategies. The China Investment Corporation (CIC), officially launched in September 2007, attracted a lot of criticism from concerned Western countries. As a result, the US and some European countries such as Germany (contrary to the position of the European Commission) are drafting tighter regulations for SWF investments, Carballo recalled.

"WFs have been operating for more than 50 years without giving raise to any special concern or creating problems to the global economy […] The recent appearance of the CIC cannot be considered as a different case […] Therefore, instead of blindly focusing on imposing tight regulations on the CIC, the European Unionshould open a bilateral dialogue with China in order to reach a common agreement in drafting best-practice guidelines for bilateral investments," Carballo argued. 

Antoine Sautenet, a research fellow at the Institut Français des Relations Internationales (IFRI), focused his contribution on intellectual property rights (IPR). 

"Intellectual property rights theft remains a huge problem for European businesses in China. Almost 60% of all counterfeit goods seized at European borders in 2006 came from China […] In 2007, European manufacturers estimated that IPR theft cost them 20% of their potential revenues in China," Sautenet said. 

He then reviewed efforts by the Chinese authorities to take aboard WTO rules also in the IPR field, observing that "while the objectives of the Chinese authorities are perfectly understandable and welcomed, the means used to achieve this end are not always legitimate". He further explains: "Methods employed by the Chinese government can be both direct and indirect. Direct absorption of foreign IP includes the flat refusal to pay royalties to foreign patent owners and the forced disclosure and dissemination of secret data. The more indirect method on the other hand, relies on the use of government procurement practices where foreign companies are selected initially in order to pass their technological know-how to a joint venture partner and are then excluded from successive rounds." 

Professor Dai Bingran of Fundan University in Shanghai was confident about the EU's ability to face the current huge trade imbalance with China, saying the solution was "to increase EU exports to China" instead of curbing Chinese exports to Europe. 

"The EU has an advantage in high tech products," said Bingan, citing low-carbon technologies as an example. Increasing exports of these types of products "would address a great part of the imbalance," said the scholar, who won the EU's Jean Monnet prize in 2008. He cited energy, transport and financial services as areas where China could benefit from the expertise of European firms. 

Bingran was also critical of the EU's attitude towards China on trade policy. The EU refused to grant market economy status to China but did so with Russia, he noted, saying this amounted to "double standards" and "discrimination". 

On human rights, Bingran admitted that the situation was "not as good as it should be". But he stressed things had improved tremendously over the past 30 years and the Cultural Revolution. "I would not be here to say things like that today," without the Cultural Revolution, Bingran noted, asking Europe to be "a little patient" and "a little tolerant".