China's rapid economic development over the past 20 years has had a significant impact upon Sino-EU trade and economic relations.

With European integration, in particular, and the launch of the euro, the EU has fundamentally changed the world's economic structure and successfully brought new cooperative opportunities to Sino-EU economic relations. The total trade volume has increased more than 40-fold since 1978, reaching US$125 billion last year.

China is now the EU's second largest trading partner. The EU was China's third largest trading partner last year and the second largest during the first two months of this year. The EU is China's biggest technology and equipment supplier. There were nearly 2,000 technology import projects last year from the EU worth more than US$3.3 billion. The EU is also an important foreign investor in China, ranked fourth in foreign direct investment.

China has emerged as a global major trading power more than 20 years after it began its economic reforms. During the same period, Europe's integration has reached significant heights and profound changes have taken place, especially the forming of a European single market, which has greatly enhanced the EU's overall competitiveness and leverage in world markets.

As the biggest developing country in the world, China has rich human resources and an enormous market. As a region with the largest numbers of developed countries, the EU boasts abundant capital and advanced technology. The two sides are highly complementary in economics, trade, scientific and technological fields. They can learn from one another and make improvements together in such fields as the natural sciences, social sciences, culture and arts. This will help lay a solid foundation for the establishment and development of a Sino-EU partnership.

China and the EU are important forces on the international stage and share wide-ranging interests in safeguarding world peace and stability and promoting common economic development. China is dedicated to reforms and its opening-up, while the EU is working hard to build on its own integration. This has given a new impetus to increased friendly exchanges and cooperation. There is no doubt that, presently, perhaps the most harmonious period in the history of Sino-EU relations exists.

For political reasons, China supports European integration for enhancing the EU force in restructuring international multipolar patterns. European integration and its development not only are matters inside Europe, but also have strong regional and global impacts. Perhaps the only one force able to compete with United States at the present stage, the EU has the means to redefine the role of Europe in the world.

On the economic front, China benefits from a unified market with the EU in foreign trade. Entrance costs have been greatly decreased. China can save a great deal of transaction costs by avoiding holding numerous bilateral negotiations with each single EU countries.

China would welcome more EU development aid, especially in such fields as environmental protection, poverty-alleviation, public health and hygiene as well as education. China would also welcome a stronger and more active role played by the EU in human resources development, in particular, personnel training for China's central and western regions and helping build China's capacity to participate in multilateral trade regimes.

China successfully entered the World Trade Organization (WTO) in 2001 after 15 years of tough negotiations. Membership is bringing benefits both to China and to its trading partners, cementing China's place in the global economy and ensuring a greater degree of certainty for international businesses here and around the world.

The EU has paid great attention to China's implementation of its pledges in a timely and comprehensive manner. The monitoring of China's WTO compliance will thus be a major EU priority in the years to come. The EU has already put in place several projects aimed at helping China meet its WTO obligations.

Despite the great development and fruitful achievements towards Sino-EU economic relations, there are two difficult and sensitive areas for Sino-EU economic relations: EU trade deficits and technology barriers for China.

Accompanied with the euro appreciation since 2001 and harmonious bilateral relations development, Sino-EU trade has rapidly grown and EU trade deficits with China has skyrocketed, which the EU blames on China's market obstacles.

On the contrary, China attributes the situation to EU's contemporary protectionism policies against China, saying they have very strong negative impacts on China's exports to the EU. Currently, there are 37 anti-dumping cases lodged by the EU against China. In addition, the EU has just changed its trading list for general favorite goods, which is mainly considered targeting China and few other developing countries. Finally, the technology barriers were the main reason causing EU's trade deficit with China.

Those barriers contain two parts: one blocking Chinese products exported to the EU and the other, barriers for EU high-tech products exported to China.

It's not surprising that the EU and China have differences in social systems, development levels, cultural traditions, values and divergent views on some issues. These differences should not become obstacles impeding the Sino-EU relationship. Instead they should serve as a driving force for promoting Sino-EU dialogue and enhancing mutual understanding and cooperation.

As long as the two sides pragmatically and prudently handle their relations from a strategic and long-term point of view and in a spirit of mutual respect, seeking out common ground while shelving differences, a dynamic Sino-EU constructive partnership, which has already been established, can be furthered.

It is reasonable to be optimistic that Sino-EU economic relations will continue developing smoothly. For China's part, the domestic market will keep enlarging as the economy grows at about 8 percent annually. Moreover, China will be fully committed to complying with WTO rules, according to the timetable agreed upon in its accession agreement.

On the other hand, the EU has been enlarged to 25 countries. Although the combined gross domestic product (GDP) of new members only accounts for 7 percent of the overall EU GDP and its population accounts for just 20 percent, it will surely have some negative impacts for China's economic and trade cooperation with those countries during their transition period. Yet from a long-term point of view, it will offer more opportunities and enlarge the EU unified market, which will benefit the two sides.

(China Daily November 2, 2004)