An essential partnership

Strengthening economic cooperation between China and the European Union is more important today than ever before

The economic hurricane triggered by the novel coronavirus outbreak has affected all countries, doing serious damage to the global economy. The International Monetary Fund projects that global economic growth will shrink by 4.9 percent this year, and it expects the eurozone economy will contract by 10.2 percent, which means that Europe will face the fiercest economic shock since World War II, while China is expected to achieve 1 percent economic growth and may become the only major economy that is able to expand during the pandemic. Hence, China will become the European Union's means of recovery due to its rosy economic outlook and its huge high-quality market.

The strong engagement and close bilateral relations between China and the EU are deeply rooted in their economic cooperation, and this is even more crucial today.

In fact, economic cooperation between China and the EU has demonstrated its resilience amid the pandemic. According to data from Eurostat, the EU's exports to China decreased by just 3 percent in the first half of this year compared with its exports to the United States which dropped by 9.3 percent and its exports to the United Kingdom which declined by 21.5 percent. China's exports to the EU even increased by 5.1 percent. Freight trains between China and the EU have played an important role amid the pandemic, with the number of freight trips between China and Europe in the first half of the year rising to 5,122, an increase of 36 percent year-on-year. All of which demonstrates that China and Europe have huge economic interdependence and common interests that cannot be undone by pandemic.

Nowadays, both China and the EU are important global players. Together, they account for 38 percent of the world's GDP, 30 percent of the global trade volume and 39 percent of the global foreign direct investment. Therefore, China-EU cooperation has not only bilateral significance, but also global implications.

However, we have to acknowledge that there is also some divergence and competition between the EU and China. For a long time, the EU has been calling for reciprocity, a level-playing field and fair state subsidies, at the same time the bloc has also intensified its investment screening and released a white paper on amending its competition policy, which will create more barriers for Chinese enterprises. In contrast, China is further opening-up to the world, because the Chinese government continues to believe that opening the country's door means attaining more opportunities as well as providing greater momentum for the world economy. Coexistence and cooperation are the pragmatic ways to overcome the common challenges. Further integration of the Chinese and the EU economies would undoubtedly benefit both sides.

There are three major cooperation priorities for the EU and China.

First, China and the EU should continue to push forward their negotiations on a bilateral investment treaty. Agreement on an investment treaty would provide the necessary framework for building a friendly business environment for both sides' enterprises, stimulating more investment between China and the EU. China and the EU have successfully negotiated the EU-China Geographical Indications Agreement which protects the interests of both sides. Currently, China is seriously taking the EU's concerns about market access and industrial subsidies into consideration, while advancing its reform and opening-up.

Second, China and the EU can connect each other's development and recovery initiatives. Since the pandemic, the two sides have proposed a series of plans aimed at post-pandemic recovery and development. The EU has launched its recovery fund of 750 billion euros ($885 billion), which focuses on a green transition and digitization as the twin drivers of recovery. The fund is also related to the European Green Deal, which is an comprehensive framework for climate change policy, energy transition and sustainable development. China is also advancing its own sustainable development initiatives.

With their respective plans, China and the EU have the common goal of promoting a new type of development model and the integration between them can provide huge demand and cooperation space for the businesses of both sides.

Third, China and the EU can explore third-party cooperation. For instance, Africa's stability and prosperity are essential for the EU's security, while African countries are striving for better development and modernization to improve the well-being of more than 1 billion people. The EU and China should seize the opportunities presented by cooperation on business projects in Africa.

Amid the pandemic and other global challenges, only cooperation can solve the problems and realize sustainable development. The EU and China will need each other to address the common crisis and inject more momentum into the recovery of global economy.

The author is an assistant researcher with the Institute of European Studies at the China Institutes of Contemporary International Relations. 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.