On September 17th, Bruegel, the most influential financial think tank in Brussels, and China Center for International Economic Exchanges (CCIEE) jointly held a seminar under the theme of “China-US-EU Trade Relations: Crisis and Potential”. Experts from China and the EU gathered together to discuss the current international economy and trade, new changes and countermeasures, and the China-EU cooperation.
The Chinese delegation has a strong lineup and is headed by Zhou Xiaochuan, president of the China Finance Association and advisor of CCIEE. The delegation will continue its exchanges with international think tanks in Geneva and Berlin after this seminar.
Below is a summary of the speeches delivered by the Chinese and European delegates.
“The global free trade and trading system face common threats brought by rising protectionism. Trade is not a zero-sum game and all the participants should benefit from transactions,” said Guntram B.wolff, Director of Bruegel. He also expressed his concern about the trade statement issued by the current US government and pointed out that the trade model between China and Western Europe is worth discussion.
Wei Jianguo, Vice-Chairman of CCIEE said in his speech that China and Europe play a very important role in the global economy. The current global trade is full of uncertainties and thus, China and Europe should jointly look for a path to achieve a win-win outcome.
Herman Van Rompuy, former President of the European Council and former Belgian Prime Minister: the EU is seeking a positive agenda to promote bilateral relations with China. China and the EU will work together to maintain the openness and stability of the world economy.
The China-EU Summit promised to increase employment by three times. They must demonstrate that there are many alternatives to resolve differences rather than trade wars. Actually, there are two common challenges facing Europe and China: lack of energy and a sharp decline in population.
We must connect climate change with the digital revolution and actively promote innovations such as electric vehicles. Asian societies should focus on improving productivity and creativity to avoid risks resulted from the labor shortage.
The EU and China now shoulder a major responsibility for resolving global tensions and confrontation. This requires not only hard work but also a sense of special responsibilities.
Zhou Xiaochuan, President of China Finance Association and Advisor of CCIEE: the trade war between China and the United States has become the focus of the international community. The process of trade negotiation has always been a game: the United States makes the first move and China follows. Lies and threats are often involved during the negotiation, which is not surprising. Sometimes, the goal of the game is not about economic and trade relations but domestic politics.
The current situation is indeed not so satisfactory but in our opinion, this is only the beginning. We hope that this kind of game will gradually return to rationality and both parties can see a bigger picture and focus on global interests.
In addition, this kind of game has never been bilateral but includes many other stakeholders. Therefore, we also expect to communicate and coordinate with the EU and European countries to achieve the result we expect.
We do not know what will happen in the future for trade conflicts and negotiations between China and the United States, but I personally feel that I can make the following two hypotheses:
The first hypothesis is that the United States still wants to establish a free trade system that will benefit itself, and a modified multilateral system. After all, America’s tradition has developed in a free market economy. The communication and consensus between the EU and Asia will help to facilitate the game and try to prevent the global economy from suffering excessively in the uncertain process.
The second hypothesis is that the US leaves the free trading system and chooses trade protectionism. It will abandon multilateral trade and choose bilateral negotiations. In other words, the US chooses to distort the market, including the US market itself, leading to an inefficient resource allocation. It is also possible that the US will use tariffs to compensate for the growing fiscal deficit.
If the second hypothesis becomes a reality, we shall feel very sorry for the business community and consumers in the United States. China, the EU and Asia to should work together to promote trade liberalization, make up for the missing market, and reform the WTO.
I personally believe in the first hypothesis. No matter what happens, the communication, consensus and cooperation between China and Europe will be necessary and beneficial.
Yan Zongze, Executive Vice President of China Institute of International Studies: the US-China relations have reached a critical moment because the United States has launched a trade war with China, China has no choice but to fight back. I actually feel that the current US government is trying to reverse the attitudes of past US administrations toward China. China and the US have reached a consensus since their established the diplomatic relation in 1979: China-US relations should be mutually beneficial and win-win. As the world’s two largest economies, China and the United States will have a severe impact on the world economy if they start any kind of war or trade conflict.
In fact, the relationship between the United States and the EU has not been so smooth in recent years. Not long ago, Trump said that Europe is the biggest enemy of the United States. Of course, European leaders said that it was fake news and Europe is still America’s best friend.
This shows that the United States and Europe are also repositioning their relationship due to their different views on globalization, multilateralism and other global issues. Europe regards globalization and integration as the most important strategy and believes that multilateralism will unite Europe, bring prosperity, strengthen its competitiveness and create more job opportunities. Thus, I believe that Europe will adhere to multilateralism in the future.
Miguel Ceballos Barón, Deputy Head of Cabinet at Cabinet of EU Trade Commissioner Cecilia Malmstrom: the conflict between traditional big powers and emerging countries could easily become armed conflicts in the past. Now, however, the conflict is more about economy and trade, or trade war, like the people often call it.
The rise of China’s economy initially made some countries nervous. In order to eliminate this kind of anxiety in the international arena, China put forward the concept of “peaceful rise”, which means that China’s rise is not to seek global military dominance, nor to adopt a radical approach.
Initially, the “Belt and Road Initiative” is a regional initiative proposed by China, with the aim of enabling China to make more friends. Today, this initiative is open to the entire world and any country that is willing to deepen cooperation with China is welcome to join the initiative.
Zhang Yansheng, Principal Researcher of CCIEE: Chinese people believe that we are experiencing an unprecedented change, and the scene of 1918 is still vivid in our mind: the damage caused by protectionism, populism and unilateralism. In 2018, the world economy is improving but the trade war broke out.
I keep thinking of three questions. The first question is about fair trade rules. Who should play a leading role in global governance in the future, the United States or the entire world.
The second question: who is responsible for the sharing of global public goods if the big countries do not want to shoulder their responsibility? Will the future of the world go out of order if this problem remains unsolved?
The third problem is that we emphasize rule-based globalization but no one is satisfied, American people are not satisfied, British people are not satisfied, and developing countries are not satisfied because we cannot solve the problem related to fairness, balance and Coordination. Five years and ten years later, what kind of rules can satisfy everyone?
Alicia García-Herrero, Senior Researcher of Bruegel Institute: the trade war is good for nobody, interestingly, Europe is still involved in the trade war despite its reluctance. However, in some ways, this may imply opportunities for Europe.
For China, the attitude of Europe is very important.
At present, our exports to the United States far exceed those of China. If China can have more cooperation with Europe during its further opening up, the relationship between China and Europe will be closer and closer.
I am very optimistic about the future development of the relationship between China and Europe. In order to strengthen the EU-China relationship, China really needs to be more open and come up with strategic decisions that really help its allies and the EU to resolve its urgent problems.
Of course, as European, we may also need to learn from China’s policies and a relaxed market access will help European companies to really understand the Chinese market.
For a long time, we have been discussing bilateral investment agreements and free trade agreements, but no one hardly raises the issue of market access. In fact, we have not reached any consensus on the economic model behind these three different relationships.
Wei Jianguo, Vice Chairman of CCIEE: China needs the EU to become its ally in the trade war, but there are misunderstandings between China and Europe. First of all, Europe believes that the reform of China’s state-owned enterprise is not transparent and has not been fully implemented. The second misunderstanding is about government subsidies and lastly, the intellectual property protection, especially the “Made in China 2025” strategy. Chinese people also do not understand Europe very well. For example, they think that Europe did not explicitly state that it is on the side of China. More importantly, China does not really know which direction Europe will go in the future.
It is understandable that these questions have been raised by Europe and China needs time to offer a satisfactory answer.
The high-end think tanks in China and European should continue to strengthen their exchanges, and come up with solutions. The seminar is only the beginning and there are many more important tasks ahead of us.