COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 25.03.1998 
COM(1998) 181 final 
COMMUNICATION FROM THE COMMISSION 
Building a Comprehensive Partnership with China 

Table of contents 
Page 
Summary 3 
A. Engaging China further in the international community 5 
A.l Upgrading the EU-China political dialogue 5 
A.2 Building upon the ASEMprocess 5 
A.3 Addressing global issues 6 
A,4 Fostering dialogue on Asian regional issues 7 
A. 5 Underpinning autonomy in Hong Kong and Macau 8 
B. Supporting China's transition to an open society 9 
based on the rule of law and the respect for human rights 
B.1 Promoting human rights through open debate... 9 
8.2 ... and through cooperation 10 
C. Integrating China further in the world economy l \ 
C. 1 Bringing China into the world trading system ! \ 
1. Supporting China's accession to the WTO 12 
2. Strengthening the bilateral trade agenda 14 
3. Promoting investment 16 
4. Developing bilateral agreements 16 
5. Making financial liberalisation and regulation go hand in hand 17 
6. Promoting the euro 18 
C.2 Supporting economic and social reform 19 
1. Side-effects of company restructuring 19 
2. Financial reform 20 
3. Industrial cooperation 20 
4. Business dialogue 20 
5. Legal and administrative reform 20 
6. Training 20 
7. Science and technology 21 
8. Environment 21 
9. Energy 21 
10. Regional disparities, poverty alleviation and social cohesion 21 
D. Making Europe's funding go further 22 
E. Raising the profile of the EU in China 24 
Conclusion 25 
Summary 
China's development since embracing economic reform under Deng Xiaoping twenty 
years ago has been remarkable. The country is undergoing a dramatic internal 
transformation from a centrally-planned economy, largely closed off to the world, 
towards an increasingly market-driven one engaged in global commerce. This has 
been accompanied by a significant evolution in China's civil society, even if the full 
respect for universal standards in the field of human rights remains incomplete. 
In 1995, the European Union responded to the economic and political challenges 
posed by the changes in China by drawing up a comprehensive policy for the future 
development of the EU's relations with China. It adopted, in the spirit of the "new 
Asia strategy" endorsed by the Essen European Council, a Communication on a long-
term policy for China-Europe relations1 that has served the EU well, providing a 
useful roadmap for the future. 
Most of the initiatives within the 1995 strategic document are already underway, 
while others have yet to mature. The analytical foundations of the 1995 
Communication still hold true, and it therefore remains the platform on which the 
EU's policy towards China is built. However, several developments of such 
significance have occurred since 1995 that the EU should respond by upgrading and 
intensifying that policy further. 
Firstly, the Chinese Government recently gave its strongest endorsement of market 
reform and global integration since reform was launched in 1978. The XVth Chinese 
Communist Party Congress in 1997 ushered in the post-Deng era by endorsing an 
ambitious economic and social reform agenda for the next five years. This can be seen 
as a clear signal of China's intention to consolidate, accelerate and complete the 
transition already underway. 
Secondly, China has become at once more assertive and more responsible in its 
foreign policy, both regionally and globally. China's role in promoting peace in Korea 
and Cambodia reflects its renewed commitment to the development of Asia as a 
whole. An unprecedented series of summits between China and some of its key world 
partners over the last year have demonstrated China's wish to be recognised as a 
world power while reflecting a common perception among these partners that 
constructive engagement with China should become a key policy priority. The smooth 
and successful handover of Hong Kong to Chinese sovereignty in July 1997 was a 
particularly clear expression of China's increasingly mature and responsible approach 
to its changing role in the region and on the world stage. 
Thirdly, the financial crisis that began to spread across Asia in 1997 has exposed 
serious structural weaknesses in the economies of some of China's neighbours and 
will inevitably have some impact on China itself. It could be seen as an early warning 
for China since it highlighted the risks associated with certain aspects of the 
COM (95) 279 du 5.07.95. 
dcvdoment paths followed by other Asian countries. The crisis underlines the need 
for further reform and liberalisation within China to guard against similar problems 
arising in its own economy. 
Finally, the EU itself is changing in ways that will lead China to adjust its own 
strategic vision of the European continent. The EU stands on the threshold of a single 
currency and enlargement eastwards, and with the Treaty of Amsterdam has equipped 
itself with new means to assert itself on the world stage. 
Such developments call both for long-term vision and for active engagement. 
Engaging China's emerging economic and political power, as well as integrating 
China into the international community, may prove one of the most important external 
policy challenges facing Europe and other partners in the 21st century. 
This Communication seeks to meet that challenge by building upon the analysis of 
China's political and economic development set out in the 1995 document in order to 
set the priorities for a new, comprehensive EU-China partnership. 
The new EU-China partnership will aim at: 
• engaging China further, through an upgraded political dialogue, in the 
international community 
• Supporting China's transition to an open society based upon the rule of law 
and the respect for human rights 
• Integrating China further in the world economy by bringing it more fully into 
the world trading system and by supporting the process of economic and 
social reform underway in the country 
• Making Europe's funding go further 
• Raising the EU's profile in China. 
*** 
A. Engaging China further in the international community | 
China's emergence as an increasingly confident world power is of immense historic 
significance, both to Europe and to the international community as a whole. China has 
become a major partner in a world increasingly bound together by the forces of 
globalisation. The EU's prime objectives must be to see China integrated rapidly and 
fully into the international community, both politically and economically, and to 
support its transition towards an open society based upon the rule of law: this will 
facilitate both development in China and greater global stability. 
The EU is committed to a strategy of comprehensive engagement with China. This 
should be achieved through a renewed and upgraded EU-China bilateral political 
dialogue, as well as through the greater involvement of China in both regional and 
multilateral initiatives of global interest. 
A. 1 Upgrading the EU-China political dialogue 
China's willingness to play a greater role on the world stage has been demonstrated 
recently by an unprecedented series of bilateral summits with Japan, Russia and the 
US, giving each of these key partners the chance to display publicly their shared 
commitment to China. 
Up until 1994, the EU's political dialogue with China was limited to short annual 
meetings in the margins of the United Nations General Assembly. The EU has 
steadily intensified this political dialogue, following an exchange of letters in 1994. 
The time has now come for the EU and China to raise the status of their relationship 
by holding annual summits at Head of State and Government level, encouraging 
contacts at ministerial level, and by holding meetings between Political Directors in a 
similar vein to contacts with other key partners. Annual EU-China Summits would put 
the EU-China relationship on a commensurate footing with the EU's approach 
towards other major international partners such as the US, Japan and Russia, raise the 
profile of the EU in China and vice versa, as well as injecting added momentum into 
the negotiation and resolution of key issues in the EU-China relationship. 
A, 2 Building upon the ASEMprocess 
The Asia-Europe Meetings (ASEM) process, launched in Bangkok in 1996, has 
developed into a broad forum for in-depth consultations between European and Asian 
partners at political and expert level, and has stimulated a wide series of cooperation 
initiatives. By virtue of its informal nature and the variety of issues addressed in its 
framework, ASEM has added a new dimension to the EU-China relationship. China 
has taken a constructive approach in the process and has been particularly active in all 
AS EM economic cooperation initiatives. 
Dialogue with China should be upgraded in the context of the EU's broader regional 
strategy towards Asia as embodied in ASEM. The EU should aim to encourage 
China's continued commitment to taking an active part in ASEM and the ASEM 
follow-up process. Promoting dialogue with China on sustainable development in the 
Asia region, addressing the issue of maritime security in the Asia region, combatting 
illegal drugs trafficking, coping with the effects of the Asian financial crisis and 
addressing the issue of arms control and non-proliferation are prime examples where 
the EU should seek China's active involvement in ASEM. 
A. 3 Addressing global issues 
Over recent years China has been forging a more coherent and outward-looking 
foreign policy to match its growing economic weight. The EU should build on this by 
encouraging China to play a proactive and responsible role in global issues. 
The EU should engage China, a permanent member of the United Nations Security 
Council, in dialogue on major UN developments, in particular UN reform. 
The EU should endeavour to raise issues related to China more regularly during G7/8 
meetings. It should also work to intensify the increasingly substantial dialogue with 
China launched by the OECD in 1995. 
China's status as a nuclear power gives particular importance to its disarmament and 
non-proliferation policy. In recent years, China has taken the welcome steps of joining 
the Nuclear Non-Proliferation Treaty, the Chemical Weapons Convention, the 
Biological Weapons Convention and the Zangger Committee (a nuclear export control 
regime), as well as respecting key provisions of the Missile Technology Control 
Regime. It also signed the Comprehensive Nuclear Test Ban Treaty. Continued 
support and encouragement should be given to Beijing's greater involvement in 
multilateral negotiations on such issues. Europe should also establish dialogue with 
China on the anti-personnel landmines issue, urging it to adopt a permanent export 
ban and to engage positively in the international process to eliminate these weapons. 
Illegal immigration and international crime are issues of grave concern both to China 
and the EU. The EU should promote a substantial dialogue and encourage cooperation 
with China on combatting illegal drug trafficking, money-laundering, organised crime 
and illegal immigration. Previous EU experience in other third countries on such 
issues could constitute a useful platform on which to consider launching specific 
cooperation initiatives in China. 
The EU will continue to take every opportunity, within the political dialogue, to raise 
human rights issues in addition to the specific bilateral dialogue on human rights 
detailed in section B of this communication. 
The way China's economy develops, its energy demand increases, and the pace of 
rapid industrialisation continues, is having a profound environmental impact at the 
national, regional, and global level. The EU should aim to ensure China's continued 
commitment to addressing world environmental challenges such as global warming 
and greenhouse gas emissions, not least through EU funded cooperation projects 
mentioned in section C2. In particular, the EU should encourage China's further 
involvement in the pursuit of global environmental objectives in the context of the 
1992 Rio Earth Summit and its follow up, notably in the area of climate change. 
A, 4 Fostering dialogue on Asian regional issues 
The EU has a role to play in maintaining stability in the Asian region through the non­
violent resolution of conflicts there, notably as a participant in ASEAN-sponsored 
regional fora. China shares its frontiers with fourteen countries and has unresolved 
border disputes with some of them. The growing demand for a multilateral security 
dialogue in East Asia provides opportunities for Europe to increase its overall 
influence in the region. As the ASEAN Regional Forum (ARF)1 develops further, and 
as China shows willingness to engage further in confidence-building measures in 
Asia, the EU should use this forum more systematically to discuss security issues with 
China. 
Europe, a key contributor to the Korean Peninsula Economic Development 
Organisation (KEDO) and a major provider of food aid to North Korea, has a clear 
interest in the peaceful resolution of the Korean question, as does China. The Korean 
peninsula should be among key issues that feature in the EU's regular dialogue with 
China. 
Likewise, the EU and China could consider launching a dialogue on other countries in 
the region, such as Cambodia, Vietnam and Burma, where China has strong influence. 
China's increasing reliance on energy imports from Central Asia is bound to make it 
perceive stability in the region as a strategic priority. Given the EU's own strategic 
interest in Central Asia and privileged relationship with Russia, developments in 
Central Asia should be addressed at the appropriate time and in the appropriate forum. 
Recent indications of an improvement in relations across the Taiwan Straits and the 
prospect of a more open and direct dialogue between Beijing and Taipei are 
encouraging. As before, the EU should welcome any steps which can be taken to 
further the process of peaceful reconciliation. 
The ASEAN Regional Forum (ARF) was established in 1994 as a forum bringing 
together intra and extra regional powers to examine issues of security in the Asia-
Pacific region with a view to maintain peace and stability. It comprises the nine 
ASEAN member States, the ten ASEAN dialogue partners (Australia, Canada, China, 
South Korea, United States, India, Japan, New Zealand, Russia and the European 
Union) and the two ASEAN observers (Cambodia and Papua New Guinea). 
A. 5 Underpinning autonomy in Hong Kong and Macau 
Strong economic links and historical ties with Hong Kong and Macau make it 
inevitable that Europe will continue to take an active interest in the two territories, not 
least in view of the hitter's handover in 1999. In the spirit of ils 1997 Communication 
entitled "The European Union and Hong Kong: Beyond 1997"", the EU should seek 
to underpin further the autonomous responsibilities of the Hong Kong Special 
Administrative Region, following the smooth handover in July 1997 and the 
successful management of the post-handover period so far. The Commission will 
publish an annual report on EU-Hong Kong relations. It will also aim to ensure that 
the EC-Macau Trade and Cooperation Agreement remains fully implemented after 
Macau's handover to support Macau's autonomous responsibilities. Hong Kong and 
Macau have important roles to play as gateways to other regions of China, and the EU 
should develop bilateral cooperation initiatives with both territories. 
The EU considers the continued expression of differing opinions through the media 
and other channels in Hong Kong to be a healthy sign of political maturity. The EU 
will continue to watch the electoral process in Hong Kong closely, placing particular 
emphasis on the EU's support for the eventual development of universal suffrage in 
the SAR. 
Proposed initiatives: 
Propose annual EU-China Summits and other top-level meetings as well as 
EU-China Political Directors' meetings 
Enhance still further China's involvement in ASEM 
Cooperate on the future of the UN 
Raise awareness of China-related issues within G7, and encourage further 
dialogue between China and OECD 
Propose dialogue on non-proliferation and cooperate on reinforcing related 
export controls 
Urge Chfna to integrate fully into the global arms control process, notably to 
introduce a permanent ban on the export of anti-personnel landmines 
Cooperate on combatting drug trafficking, money-laundering, crime and 
illegal immigration 
Raise the issue of human rights within the political dialogue 
Develop dialogue on environment and sustainable development 
Discuss Asian regional security with China 
Develop dialogue with China on Korean peninsula, Central and South-East 
Asia 
Work to underpin autonomy of Hong Kong 
Ensure a smooth transfer of sovereignty in Macau in 1999 and develop 
cooperation with Macau 
COM (97) 171 final, 23.04.1997. 
B. Supporting China's transition to an open society 
based on the rule of law and the respect for human rights 
China is still far from meeting internationally accepted standards on human rights. 
Serious shortcomings in China's human rights record remain, including in such areas 
as the suppression of freedoms among certain ethnic minorities and political 
dissidents, use of enforced prison labour, a still under-developed system of rule of 
law, and the extensive use of the death penalty. These remain matters of grave concern 
to the EU, its Institutions and public opinion at large. 
Nonetheless, the situation of human rights in China has improved over the last twenty 
years. Economic reform has introduced greater freedom of choice in education, 
employment, housing, travel and other areas of social activity. China has passed new 
civil and criminal laws to protect citizens' rights and has signed several key 
instruments bringing the country closer to international norms. It has also taken steps 
to develop the electoral process at local level, allowing villagers to designate their 
local authorities. 
A commitment to universally recognised human rights and fundamental freedoms lies 
at the heart of the EU's policy worldwide. Full respect for these principles is 
inextricably linked to economic development and prosperity, as well as the long-term 
social and political stability of any country. 
The challenge for China now is to sustain economic growth and preserve social 
stability while creating an open society based on the rule of law. If Europe wishes to 
have a role in this process, it should continue to use all available channels to promote 
the cause of human rights in China in an active, sustained and constructive way. The 
resumption of the EU-China human rights dialogue without any pre-conditions gives 
the EU a real opportunity to pursue intense discussions which, coupled with specific 
cooperation projects, remains at present the most appropriate means of contributing to 
human rights in China. 
B. 1 Promoting human rights through open debate... 
The EU believes in the merits of dialogue, in all appropriate fora, over confrontation. 
The EU and China should therefore tackle their differences in a frank, open and 
respectful manner. 
An EU-China specific dialogue on human rights was launched in 1995 and interrupted 
in the Spring of 1996. Since its resumption in November 1997, China has shown a 
new-found willingness to engage in a serious and results-oriented dialogue. All 
subjects of concern, even the most sensitive ones, have been addressed during the 
discussions and the prospect of continued, regular dialogue has now been established. 
Furthermore, this dialogue has enabled the EU to obtain China's agreement in 
principle on a cooperation programme designed to strengthen the rule of law and 
promote civil, political, economic and social rights. Since the dialogue resumed, 
China has given a series of encouraging signals, including its decision to sign the UN 
Covenant on Economic, Social and Cultural Rights. China has also given an 
underlaking lo examine the I IN Covenant on Civil and Political Rights with a view to 
signing it, and has increased dialogue with the UN authorities in the field of human 
rights. 
The EU will continue to urge China to sign and ratify the UN Covenant on Civil and 
Political Rights, to ratify the UN Covenant on Economic, Social and Cultural Rights 
and to fully implement both covenants. Furthermore, the EU will encourage enhanced 
cooperation with specialised UN bodies and raise all issues of concern, including the 
plight of certain Chinese citizens. 
As it attaches great importance to the respect for the cultural, linguistic and religious 
identity of ethnic minorities, the EU will continue to raise issues relating to these 
matters in Tibet within the bilateral dialogue on human rights. 
Finally, the Commission will continue to press, within the International Labour 
Organisation, for the ratification by all members, including China, of the ILO 
conventions on core labour standards, including those on freedom of association, the 
right to collective bargaining, the prohibition of forced labour, of exploitative child 
labour and anti-discrimination. 
B. 2 ...and through cooperation 
The resumption of the EU-China dialogue on human rights has placed renewed 
emphasis on the constructive resolution of differences. This gives the European Union 
a chance to put its good intentions into practice and deliver tangible assistance. Two 
major priorities should be pursued: 
• Promoting the rule of law. The EU should help China's efforts to develop a 
society based on the rule of law. Developing a sound and transparent legal 
framework, both in the civil and criminal sphere, providing rights to Chinese 
citizens - including the right to a fair trial - making them aware of those rights, and 
training lawyers and judges, would help achieve this goal as a first step. The EU is 
currently devising an ambitious programme of legal and judicial cooperation with 
these objectives in mind which will be discussed with Chinese authorities and 
ready for implementation by Autumn 1998. 
• Strengthening civil society. The EU should aim to strengthen those practices 
which make up the fabric of a strong civil society. It should promote civil and 
political rights through initiatives such as the support for a training centre in China 
for officials engaged in the implementation of the village governance law. It could 
also allow for assistance to the most vulnerable groups in society, including ethnic 
minorities, women - as a follow up to the Beijing 1995 conference on Women - and 
children. Initiatives aimed at promoting consumers' rights and at supporting 
consumers' organisations could also be a way of strengthening civil society. The 
role of Non-Governmental Organisations in implementing projects aimed at 
strengthening civil society should be fully exploited. 
Proposed initiatives: 
Urge China to sign, ratify and fully implement UN Covenants on human 
rights and ILO conventions on core labour standards 
Reinforce bilateral human rights dialogue with China 
Back up dialogue with concrete cooperation programmes 
Promote rule of law 
Strengthen civil society 
C. Integrating China further in the world economy 
The scale and speed of China's economic growth are making it one of Europe's major 
economic partners. China's trade with the world has almost doubled in value over the 
last five years, and it now runs a massive trade surplus both with Europe and with the 
United States. It has become the second largest recipient of foreign direct investment 
in the world after the United States, and the tenth largest trading nation. It is forecast 
by the World Bank to become one of the top three traders in the world by 2020. 
China's unprecedented economic development has required a delicate balance 
between rapid economic growth, far-reaching reforms and the need to preserve social 
cohesion. This process has potential repercussions both for China and for the world 
economy, and it is in Europe's overwhelming interest that this transition be nurtured 
right through to its fruition, making China a strong, stable and open partner. 
It is the EU's view that the objective of assisting China to become a global economic 
player fully integrated in the world economy and able to comply with common rules 
should be achieved through a combination of trade discussions and targeted 
cooperation initiatives. This strategic approach should seek to accelerate and 
consolidate China's integration into the world trading system while supporting the 
reforms that are so vital for China to thrive within that system. 
C.l Bringing China into the world trading system 
EU-China trade has increased more than twenty-fold since the beginning of the 
reforms, making China the EU's third extra-European trading partner and creating 
vast potential for European trade and investment there. The EU's trade deficit with 
China reached 20 billion ECU in 1997, reflecting China's growing export capacity as 
well as the obstructive effect of market barriers in China itself. The EU should use all 
available channels, notably China's WTO accession process and the EU's bilateral 
11 
trade negotiations, to iron out such barriers and help create an open Chinese economy 
that benefits European and global interests alike. Improving the climate for European 
investment in China should also be one of the EU's top objectives. 
1.1. Supporting China's accession to the WTO 
The EU remains one of the keenest advocates of China's early accession to the WTO. 
It will provide an important boost for China's economic reform and will signal 
strenghtened international confidence in the reform process. It will also cement 
China's place in the global economy and provide traders and investors with greater 
certainty when doing business in China. Furthermore, striking the right terms of 
accession for China will be a determining factor in the pace and scope of further 
multilateral trade Rounds. 
Financial turbulence in Asia has triggered a crisis of confidence in several Asian 
economics which could have spillover effects in China. Against this background, 
China has a prime interest in demonstrating its continued commitment to the WTO 
accession process as a means of sustaining outside confidence in the fundamental 
health and dynamism of the economy. Closing markets or delaying reforms would be 
a misguided and counterproductive response to financial market instability. 
China has made significant progress in recent years to liberalise its trade regime and 
open its economy to the world. Whether on tariff cuts, currency reform or the 
development of the legal system, the pace of change has been remarkable, and 
together, the EU and China are progressing towards a trade relationship which should 
culminate in China's membership of the WTO. However, for this goal to be achieved, 
sustained efforts still need to be made by China to respect the following 
commitments: 
• Meet key WTO principles such as: 
transparency, including prompt publication of all relevant laws and 
regulations, clear licensing criteria and better identification of the authorities 
responsible for granting licences. 
national treatment, notably by offering the same operational conditions to 
foreign companies as to domestic ones. 
non-discrimination against EU companies vis-à-vis those of other trading 
partners. 
• Offer real market access for industrial and agricultural goods by cutting tariffs 
significantly - including the removal of tariff "peaks" (duties of 15% and higher) 
and adherence to the Information Technology Agreement - and by removing all 
quotas, unjustified technical barriers to trade and other non-tariff measures. This 
should be achieved as a follow-up to the conceptual breakthrough negotiated by the 
European Commission with China in October 1997, in which a series of precise 
principles were agreed which provide clear parameters in which the negotiations on 
China's detailed tariff commitments are being pursued. 
12 
• Rapidly remove the current monopolies on foreign trade so that all Chinese or 
foreign nationals in China can engage in import and export. 
Provide substantial opening of China's services market in distribution, télécoms, 
financial services, professional services, tourism, travel and medical services. 
China is today moving into a new phase of economic development in which 
services will be the engine of future growth. Foreign companies would bring vast 
assets to China in terms of jobs, technology, on-the-job training and management 
skills. 
Open the financial sector (banking, securities and insurance) in a more systematic 
and comprehensive, if gradual, manner. This would boost China's long-term 
growth and outside confidence in the economy, and can be pursued without 
prompting uncontrollable capita! movements and excessive volatility. It is also in 
China's interest to set up a proper regulatory framework and independent 
supervisory authority. 
Improve the conditions for foreign companies establishing in China. This includes 
removing all restrictions on the legal form of establishment (whether as a joint 
venture or a wholly-owned company), lifting geographic restrictions and those on 
the scope of permitted activity, and removing pre-establishment conditions. It also 
includes the removal of export performance requirements and export subsidies. 
Eliminate WTO-incompatible measures designed to promote priority industries. 
Rapid implementation of the WTO TRIPS Agreement and full enforcement and 
protection of intellectual property rights. 
® Establish a transparent, open and competitive procurement regime. A key objective 
in this regard would be to secure China's membership of the WTO Agreement on 
Government Procurement as part of the WTO accession package. China has the 
largest procurement market in the world and failure to obtain access to that market 
would significantly reduce the overall value of the market access package. 
• Join the WTO-related Civil Aircraft Code. 
The EU's approach during the accession negotiations should continue to be 
characterised by the following features: 
Firstly, the EU must negotiate resolutely to secure firm and viable market opening 
commitments commensurate with China's stage of development, potential and size, in 
order to make China's accession a lasting success. 
Secondly, the EU has developed the concept that part of the final package may require 
the use of clearly defined transition periods for sectors where China needs to phase in 
its WTO obligations beyond the date of accession while adjusting its laws and • 
13 
practices. This approach has been put forward by the EU to respect China's own 
policy of implementing reforms gradually. 
Thirdly, the EU should encourage China to anticipate accession by setting as an early 
priority the amendment of domestic laws and regulations that affect foreign 
investment, the aim being to make its investment regime less restrictive, more unified 
and its evolution more predictable. 
Finally, the EU should be on hand to assist China as it makes the necessary 
adjustments, whether through cooperation or by offering practical assistance during 
the negotiations themselves. The EU is already drawing up a series of cooperation 
programmes designed to support China's reforms during and beyond the accession 
process, especially while it is adapting to WTO disciplines during transition periods. 
This initiative will include programmes to raise awareness of WTO principles - such 
as on intellectual property, public procurement, norms and standards, and customs -
among Chinese officials at all levels of government and business executives, as well 
as aligning China's legislative and regulatory framework with WTO rules. WTO will 
also be a central theme in a broader training programme for the Chinese 
administration. Furthermore, the EU will develop a specific post-accession dialogue 
with China to ensure the implementation of its WTO commitments both during the 
phasing-in period and beyond. 
The EU is ready to conclude the negotiations as soon as China shows it can offer 
genuine market opening, if necessary phased in gradually according to an agreed 
timetable, and ensure that the country becomes an open, proactive and forward-
looking WTO member ready to participate in further liberalisation. Above all, China's 
WTO accession should not be seen as a new constraint imposed by the outside world 
on China, but rather as a supportive process which will strengthen its own internal 
reform programme. 
1.2. Strengthening the bilateral trade agenda 
The EU has a long history of trade relations with China, as embodied within the 1985 
EC-China Trade and Cooperation Agreement1 and the EC-China Joint Committee 
meetings. Bilateral trade discussions should be pursued alongside the WTO process as 
an effective means of exchanging information and resolving bilateral issues. They 
provide a useful forum for ensuring strict adherence to the principle of non­
discrimination, for example in fields such as maritime transport and financial services. 
Issues pursued within this bilateral dialogue should dovetail with the EU's Market 
Access Strategy, launched in 1996 to target the removal of obstacles to EU exports 
and investments worldwide. In parallel, the EU should use this bilateral channel to 
gain information concerning the implementation of China's WTO commitments and 
to ensure that these commitments are given concrete effect. 
OJECL 250/1, 19.09.1985. 
14 
China is, by far, the main beneficiary of the EU's Generalised Scheme of tariff 
Preferences (GSP), with more than 30% of the value of all beneficiaries' imports in 
1997. However, the implementation of the scheme's graduation mechanism (in which 
GSP advantages for certain sectors are withdrawn due to the high level of industrial 
development in those sectors) will necessarily reduce the advantages previously 
enjoyed by China. Nevertheless, the new GSP special incentive arrangements (social 
and environmental clauses)1, will allow beneficiary countries to obtain an additional 
preferential margin, provided they meet international standards of labour rights 
(International Labour Organisation standards on child labour, freedom of association 
and rights of bargaining) and environmental protection (International Timber 
Organisation standards on sustainable management of tropical forests). In the event of 
applications from China, the Commission will examine carefully if China meets the 
requested standards. 
The European Commission has proposed amendments to the EC anti-dumping 
legislation vis-à-vis China that take account of the market reforms underway in the 
country. The proposal2 includes the removal of the label "non-market economy" 
which applies to China under the current legislation, by instituting a new case-by-case 
approach in anti-dumping proceedings whereby Chinese exporters, who are found to 
operate within clearly defined market economy conditions, will be granted market 
economy treatment. This means that the domestic prices and costs of such exporters 
will be used to establish normal value rather than information from a market analogue 
third country. 
The proposal also introduces a more systematic approach to the granting of individual 
treatment and calculation of comparative advantage. The proposal will reflect the 
specific behaviour and operating conditions of individual firms, whilst at the same 
time acting as an incentive for further reforms among Chinese companies. As such, it 
will interact positively with the ongoing WTO accession negotiations. 
The EU has confirmed to China that it is ready to phase out its quantitative restrictions 
on Chinese products as rapidly as China is able to remove its own. The removal of 
both sets of quantitative restrictions should be pursued as part of an overall market 
opening strategy and in the context of the WTO accession negotiations. 
The Commission and Member States need to be fully updated at all stages on 
commercial legislation and administrative practice governing trade in goods and 
services in China. A strengthening of coordination and the regular exchange of 
detailed information between the Member States' Embassies and the Commission's 
Delegation in Beijing would make for a more efficient and focused bilateral trade 
dialogue. 
COM (97) 534 final, 29.10.1997. 
SEC (97) 2290. 
15 
1.3 Promoting investment 
The development of Foreign Direct Investment (FDI) has been a key element of 
China's economic growth since it engaged in reforms in 1978. For several years, 
China has been the largest recipient of FDI among developing countries, and has now 
become the second largest recipient of FDI, after the United States. Investments 
originating in the Asia-Pacific region, notably from Hong Kong and Taiwan, 
dominate FDI in China, thus highlighting the regional dimension of China's 
integration into the world economy. The Asian financial crisis, which will reduce 
incoming FDI in China, makes it all the more important for China to further attract 
investment from its other partners, especially Europe and the United States. 
The EU should aim at improving the investment environment for European companies 
in China. The construction of a sound and transparent regulatory framework for 
investment and a better enforcement of Chinese regulations on intellectual property 
rights are prime examples to achieve this objective. 
The EU trade policy must be backed up by a comprehensive strategy to promote 
investment, as well as business and industrial cooperation with China, so as to 
strengthen the European presence in the Chinese market. The EU should launch such 
a strategy, focusing primarily on those industrial sectors - such as 
telecommunications, energy, environmental technology and services, transport and 
financial services - where Europe has a clear competitive advantage (see also section 
C.2). The EU should strengthen the EU's export and investment promotion facilities 
for China, in particular the European Community Investment Partners (ECIP) 
programme, which aims at supporting the creation of joint-ventures between European 
and Chinese companies in China, and the Asia-Invest programme, which aims at 
helping European small and medium-sized enterprises identify potential partners in 
China. The EU should continue to devote particular attention to small and medium-
sized enterprises in its business and investment promotion strategy in China. 
1.4 Developing bilateral agreements 
The EU-China trade dialogue could be further strengthened through the conclusion of 
specific bilateral agreements in areas of particular interest, such as: 
• Maritime transport. A sectoral agreement on maritime transport, for which the 
Commission has a negotiating mandate, should aim to strengthen cooperation with 
China and improve market access conditions for European operators in China. The 
EU intends to base this agreement on the principles of freedom to provide maritime 
services, free access to cargo activities and unrestricted access to ancillary services. 
The agreement may provide for the establishment of a Working Party which could 
report to the Joint Committee set up under the EC-China Trade and Economic 
Cooperation Agreement. 
• Air transport. The conclusion of a Memorandum of Understanding between the 
Commission, China and the European Association of Aeronautical Industry on 
16 
• Industrial Cooperation in the Aeronautical Sector could be a starting point for 
cooperation in the field of air safety, environment and infrastructure. This 
cooperation should be accompanied by the commencement of a dialogue in 
aviation matters. 
Nuclear trade and safety. The Commission should study the merits of 
negotiating a bilateral agreement with China in areas related to nuclear trade and 
nuclear safety in the framework of the Euratom Treaty. China's policy on nuclear 
non-proliferation is a key issue that should be taken into account in such an 
analysis. 
Customs. The Commission has been authorised to negotiate an agreement on 
customs cooperation and mutual administrative assistance. This will serve the dual 
purpose of facilitating trade between the EU and China on the one hand, and 
creating a framework through which to fight customs-related fraud on the other. 
Science and technology. A specific EU-China science and technology agreement 
should be concluded in order to enhance and expand cooperation in fields such as 
energy, environment, life sciences, material sciences, transport, telematics, 
information and communication technologies. It will strengthen the presence of 
European economic operators in China. 
1.5 Making financial liberalisation and regulation go hand in hand 
The creation of a sound financial environment is vital to sustain the confidence of 
investors and traders in China. The financial crisis that has struck some of China's 
neighbours in 1997 can be seen as an early warning signal from which China can 
learn. It throws into sharp relief the need for China to build a solid, transparent and 
open financial and banking system, and to make bank lending market-driven and 
commercially viable in order to avoid exposure to weaknesses similar to those of other 
Asian economies in future. 
Together with the reform of its State-owned enterprises, China has embarked on an 
ambitious reform of its financial system. This includes the creation of a sound 
regulatory framework for financial activities. The EU fully supports this and is ready 
to offer China, through cooperation projects, its own expertise in financial regulation 
and prudential supervision. This should also be pursued through any initiative which 
could be taken within ASEM. 
At the same time, the EU should seek to persuade China that liberalisation of its 
financial services markets - notably market access for foreign financial service 
providers in banking, insurance and securities - would strengthen the wider banking 
reforms. It would increase liquidity, prompt a more viable and effective allocation of 
credit within the economy, raise standards and increase available expertise, boosting 
jobs and growth in the process. An early commitment to include financial services 
within China's WTO offer would increase investor confidence at a time when it is 
severely lacking in some of China's neighbours. This would not entail any sudden 
17 
exposure to market risk, as the EU has not suggested that China should introduce full 
freedom of capital movement in the near future. 
1.6 Promoting the euro 
The advent of Economic and Monetary Union makes it important for the EU to inform 
China of the major changes EMU will bring to its economic ties with Europe, as well 
as to the international monetary system itself. In parallel with its commitment to the 
construction of a sound and open financial and banking system in China, the EU 
should establish a regular EU-China macro-economic dialogue. This dialogue should 
aim, inter alia, at informing China - which already has the world's second largest 
foreign currency reserves - about EMU and about the potential of the euro as a stable 
reserve currency. 
Within the information actions on the euro aimed at third countries which the 
European Commission will develop, special attention should be given to China. 
Proposed initiatives: 
Give continued impetus to WTO accession negotiations until a viable 
accession package is achieved 
Allow China to benefit from transition periods while certain sectors adapt to 
WTO obligations 
Offer China cooperation projects to help its economy adapt to WTO 
obligations 
Re-activate bilateral trade talks to exchange information and resolve issues of 
mutual concern 
Use bilateral trade talks to cement commitments made in the WTO process 
and improve synergy of these talks with the EU's market access strategy 
Adopt the Commission's proposed new anti-dumping regulation towards 
China and Russia 
Pursue gradual and reciprocal removal of EU and Chinese quantitative 
restrictions 
Develop a comprehensive EU investment promotion strategy and business and 
industrial cooperation in China 
Develop bilateral agreements in specific sectors 
Urge China to liberalise financial services in step with reform of its financial 
system and provide relevant EU expertise 
Inform China about the importance of the Euro as a stable reserve currency 
18 
C.2. Supporting economic and social reform 
China's reforms are radically changing the economic and social landscape of the 
country. The pace of reform is impressive, but the process remains fragile and 
incomplete. The challenge for China is to pursue its economic transition whilst at the 
same time integrating the concept of sustainability into economic growth and 
guarding itself against social instability. The EU should therefore not just seek to 
negotiate the removal of trade and investment obstacles, but also help China build the 
institutions, policies, human resources, management techniques and other flanking 
instruments that constitute the fabric of a modern, outward-looking economy. 
The resources available for this process will always be small in comparison with the 
needs. If the EU is to maximise the impact of these resources, cooperation needs to be 
concentrated on a small number of key objectives. 
The five traditional pillars of EU-China cooperation set out in the 1995 
Communication - human resources development, administrative and social reforms, 
business and industrial cooperation, environmental cooperation, rural and urban 
poverty alleviation - have stood the test of time through the successful implementation 
of a range of projects, and the principles behind the 1995 long-term strategy will 
continue to underpin the EU's approach to its cooperation programme. This approach 
was further developed in the EC-China Memorandum of Understanding on the 
programming of EC-China cooperation projects signed in Beijing in October 1997 
between the Commission and the Chinese Authorities. 
Given the pace of change in China, it is important to further update the objectives of 
the EU-China cooperation programme in keeping with the reforms taking place in 
China. The following specific priorities - to which must be added WTO-related 
cooperation projects (section C.l.l) and human rights cooperation projects (section B) 
- should be highlighted: 
1. Side-effects of company restructuring. China is restructuring many of the State-
Owned Enterprises (SOEs) which still form the core of its industry. This process of 
unprecedented scale and complexity could have major social and political side-
effects. The EU should not try to address all aspects of a reform process of this 
magnitude, but rather focus on limited priorities, in close coordination with other 
donors, notably the World Bank. From its experience with restructuring and 
privatisation, both within the EU and in Central and Eastern Europe and the New 
Indépendant States, the EU would be well placed to offer its expertise as China 
introduces new models of ownership, corporate governance, accounting and 
management. The EU could also help China address welfare reform, which is one 
major fall-out of SOE restructuring since the Chinese welfare system in urban 
centres is largely taken care of by SOEs themselves. In keeping with China's desire 
to minimise the social side-effects of economic reform, and in order to contribute 
to urban poverty alleviation, the EU could help China in its search for new models 
of welfare, including medical care, social security, unemployment insurance and 
pensions. 
19 
2. Financial reform. China has wisely embarked on the reform of its financial 
system, whose fate is closely linked to that of the debt-ridden state-owned 
enterprises. A sound, transparent and market-driven banking system is 
indispensable for the creation of a sustainable economy. The EU - in close 
cooperation with both international and Member States' financial institutions 
responsible for financial supervision and prudential standards - should help China 
to develop the kind of rules, supervisory mechanisms and prudential standards that 
will enable it to guard against structural weaknesses exposed elsewhere during the 
Asian financial crisis. 
3. Industrial cooperation. Sectoral cooperation schemes focusing on those sectors 
where EU industry has clear competitive and technological advantages and China 
has specific needs should be developed as a way of tackling issues such as 
regulation, the definition of common norms and standards, the development of 
mutually recognised certification procedures, the integration of cleaner production 
processes, as well as industrial and commercial training. Administrations, 
regulatory bodies, and industries from both sides should be involved in this 
exercise. Small and medium-sized enterprises should be encouraged to participate 
in this process. Priorities for forthcoming initiatives could include 
telecommunications, information technologies and aeronautics. 
4. Business dialogue. The EU should support a greater involvement of European 
business and industry in China. A business dialogue should bring together EU 
executives and Chinese businessmen and policy-makers in order to increase 
awareness of China's transition process and provide expertise on market reform. 
The results of this dialogue should also be used to identify further priorities for EU 
trade policy and cooperation initiatives. 
5. Legal and administrative reform. The EU should back up its bilateral and 
multilateral trade negotiations with concrete assistance to China in reforming and 
modernizing the overall legal and administrative framework of its economy. 
Definition and enforcement of legislation - for example in intellectual property, 
company law and public procurement - as well as administrative organisation and 
management should be among the specific targets. The EU's continued support to 
the construction of a sound and competitive procurement regime would, in 
particular, increase industrial competitiveness and help China establish a modern 
and efficient public sector. 
6. Training. Cooperation should help China strengthen its own training capacities by 
proposing modern professional training standards and practices. This should 
address the needs of both administration and industry. Vocational training 
programmes for industry would both help up-grade the quality of manpower in 
China and promote European management practices, technical know-how and 
standards, thus facilitating European investment. Likewise, training initiatives for 
public servants would help them face the challenges of a market-driven economy 
open to the world. 
20 
7. Science and technology. Scientific and technological cooperation should be used 
more actively as a means to strengthen European companies' position on the 
Chinese market as well as supporting China's own economic development. It 
should focus on agriculture, information and communication technologies, 
biotechnology, material sciences, transport, energy, the environment and natural 
resources. A specific EC-China Science and Technology Agreement should be 
negotiated rapidly (see Section CI.4), and a web of partnerships should be created 
to allow the exchange of young scientists, managers and engineers in selected 
economic sectors. 
8. Environment. China has become increasingly aware of the environmental cost of 
its former industrial model, and of its impact on the global environment. It is now 
seeking to reconcile rapid growth with sustainable production and consumption 
patterns. The EU should, along the lines set out in the Communication on a 
Europe-Asia Cooperation Strategy in the Field of Environment I develop 
cooperation projects focusing on clean production methods, waste minimisation, 
environmental standards and training, and environmental management capacities as 
well as appropriate technology transfer. The EU should in particular help China 
integrate environmental priorities - such as the prevention of industrial pollution 
and greenhouse gas emissions, and the conservation of biological diversity - further 
into national economic policy-making processes and into development schemes at 
regional and local levels. Where desirable, and in line with the Chinese objective of 
reducing poverty, environmental conservation and poverty alleviation projects 
should be integrated together. 
9. Energy. Europe should offer its environmental and energy know-how to China to 
help it develop efficient and clean industries and also to establish a presence in its 
potentially lucrative market for green technology, along the lines set out in the 
Commission's Communication on a Europe-Asia Cooperation Strategy for 
Energy? Promoting energy efficiency, as well as developing clean coal 
technologies and alternative energy resources, notably natural gas, should be top 
priorities. The EU should seek to develop synergies with international financing 
institutions (IFIs) on these issues. 
10.Regional disparities, poverty alleviation and social cohesion. Despite a 
significant rise in living standards, China is still a developing country. Rural and 
urban poverty are rife, China's vast floating population presents a serious threat to 
social stability and lasting economic prosperity, and disparities between advanced 
coastal regions and less developed inner provinces have become a key concern for 
both Chinese local and central authorities. The EU should help China accelerate the 
spread of prosperity across the country and improve regional and social cohesion 
through, inter alia, projects aimed at developing all communication links between 
coastal and less developed inland regions. This could in particular increase the 
attractiveness of inner regions for both Chinese and foreign investment. 
COM (97) 490 final, 13.10.1997 
COM (97) 308 final, 18.07.1996 
21 
Proposed initiatives: 
• Provide expertise to reduce side-effects of company restructuring, notably 
welfare reform 
• Provide expertise for financial sector reform 
• Strengthen industrial and business cooperation 
• Cooperate on legal and administrative framework 
• Develop human resources cooperation with focus on professional training and 
exchange schemes 
• Expand scientific and technological cooperation 
• Promote sustainable development and help China integrate environmental 
policy concerns 
• Foster transfer of know-how and technology in energy sector 
• Develop cooperation to reduce regional disparities, alleviate poverty and 
improve social cohesion 
D. Making Europe's funding go further 
A comprehensive policy for relations with China needs to be backed up with the 
appropriate financial means to implement it. The EU's budgetary resources for China 
have more than tripled as a direct result of the policy launched in 1995, rising to 
around 70 million ECU per year up to 1999, from an annual average of 20 million 
ECU over the 1991-1994 period. This has enabled the EU to demonstrate its 
commitment to cooperation with China by pushing forward with the vast majority of 
new ideas proposed. As such, the current envelope appears sufficient at this stage to 
finance both the shorter and longer-term initiatives outlined in this Communication, 
so long as the budget is maintained for the 2000 to 2006 period. 
Nevertheless, the EU should consider all possible avenues for improving the 
efficiency of its activities. 
One key message of this Communication is that EU-funded cooperation programmes 
need to be even more closely linked with the EU's broader China policies. From the 
human rights dialogue through the WTO accession negotiations to questions relating 
to China's economic development, the EU should seize the chance to underscore its 
policies with concrete assistance projects where at all possible. The EU is emerging as 
one of the most important grant donors in China, and every effort should be deployed 
to maximise this advantage. Giving projects direct relevance to key policy objectives 
is one of the best ways of improving their efficiency. It is a simple exercise in value 
for money which could be achieved without increasing the overall budget allocated 
for China. 
22 
Like other international donors, the EU is continually looking for ways to improve the 
delivery of projects. So far, it has tended to concentrate on relatively high-budget 
programmes spread over several years. This maximises the impact of a cooperation 
budget which will remain small in relation to the needs of a country the size of China. 
Nevertheless, there are five important refinements that should be introduced: 
Firstly, the EU faces an ever-increasing demand for supporting small but highly 
visible projects. Some of these initiatives - such as making European expertise 
available rapidly for the development of new legislation, professional training, 
networking with EU counterparts, organisation of seminars, and the production of 
information and communication material etc - have a potential impact going way 
beyond the small budget involved. The European Union should develop a facility 
whereby a selection of the very best of these smaller projects could be funded directly 
and rapidly from the Commission's Delegation in Beijing. 
Secondly, synergy between the EU and Member States' cooperation programmes is 
still underdeveloped. Mechanisms for improving coordination, complementarity and 
possible joint projects should urgently be considered. 
Thirdly, in view of the limits imposed by a relatively modest cooperation budget, the 
Commission has been exploring ways of collaborating more closely with international 
financing institutions. New opportunities have opened up for using EU grant-funded 
projects to prepare the way for larger funding from organisations such as the World 
Bank. In addition, the EU should envisage funding European experts in some of the 
Bank's policy related discussions with the Chinese government. This benefits all 
partners concerned and is particularly well suited to sectors like welfare reform, 
energy and the environment. 
Fourthly, the European Investment Bank (EIB), which has a mandate for intervention 
in Asia up to the year 2000, has currently a modest degree of involvement in China. 
Up to now, it has launched one project - in the field of energy - with a budget of 50 
Mccus. It appears, however, that there is room to improve the EIB's involvement in 
China within the existing mandate. This is even more important in the context of the 
World Bank's intention to scale down its development assistance through 
concessional financing and to abolish all concessional financing from 1999 onwards. 
The issue of the size and allocation of the EIB's financial envelope in Asia after the 
expiry of its present mandate remains open. 
In order to ease the EIB's entry into China, make its lending more competitive and 
strengthen its implementing capacity, the Commission is ready to consider 
apportioning part of its cooperation budget to the EIB in order to fund feasibility 
studies and pre-investment analysis which would prepare the ground for EIB loans for 
projects of common interest implemented by institutional borrowers in China. An 
improved intervention of the EIB in China would increase the visibility of its 
cooperation work in China and raise the profile of its relations with the country more 
generally. 
23 
Fifthly, it is essential to continue close dialogue with the Chinese authorities in order 
to ensure that project development responds to shared objectives. This dialogue 
should encompass all phases of the project cycle, with particular attention put to the 
programming phase, as illustrated hy the Memorandum of Understanding on 
programming of 1998 and 1999 cooperation signed in October 1997 between the 
Commission and the Chinese Authorities. 
As a result of this dialogue, an early discussion and exchange of information with 
Member States on the basis of multiannual programming would also contribute to 
increased synergies with Member States programmes. The same applies for the EIB, 
World Bank and other donors. 
Proposed initiatives: 
Facilitate rapid funding of small, short-term projects out of Beijing 
Increase synergy between EU's China policy objectives and cooperation 
programmes 
Improve synergy with EU member states 
Investigate different means and approaches for collaboration with World 
Bank and other lenders 
Cooperate with I.IB to expand EIB activities in China within existing mandate 
Strengthen regular dialogue with China on programming and project cycle, 
and ensure early information of Member States and IFIs 
E. Raising the profile of the European Union 
The reemergence of China is having a profound effect on public opinion. Few 
businesses, institutions or individual people outside China are not aware in some way 
of its rapidly growing profile on the world stage. For some it is perceived as an 
inexhaustible source of opportunities, others are more cautious in their assessment; 
most see it as a broadly positive development that requires a carefully balanced but 
decisive response from their public authorities, including the European Union. For 
such a response to be effective, it must be visible, not just in Europe, but in China and 
the world at large. Greater visibility will give the EU added weight in its dealings with 
China. 
Close coordination within the EU itself will be needed if the EU is to raise its profile 
in China succssfully. Annual summits and other high-level meetings with the Chinese 
leadership, of the kind recommended in section A.l of this Communication, would go 
some way to improving visibility, and should be given adequate exposure to the 
media. 
The EU should also upgrade its information policy towards China substantially. As a 
first step it should draw up its first-ever information strategy devoted solely to EU 
relations with China. The strategy should identify key target audiences within 
business, government, academia, NGOs, the media and other groups in order to 
diffuse information about the relationship. Such audiences should, where possible, be 
24 
sought in China as well as in Europe. A new information strategy could include the 
following actions, among others: 
Proposed initiatives: 
1 Set up a Commission Press and Information Service (SPI) in Beijing, to add to 
those already existing in Washington and Tokyo 
Expand the number of Chinese visitors travelling to Europe i.e. through the 
EU Visitors' Programme 
Increase the intensity of cultural exchange through schools, universities and 
other educational establishments 
Organise cultural initiatives such as exhibitions and explore means to develop 
future cooperation in the cultural field 
Increase the presence of the EU at conferences devoted to Chinese affairs and 
organise seminars and conferences on the subject of EU-China relations 
Expand cooperation with existing EU Studies Centres in Chinese universities 
and with the Chinese Society for EU Studies 
Conclusion 
China's growing political and economic self-confidence should serve as an incentive 
for the EU to engage the country more fully. Its growing strength has been matched, 
by and large, by a growing sense of responsibility. China's increasing assertiveness on 
the world stage therefore deserves a positive response from Europe. It also requires 
vision. This Communication seeks to set out that vision by laying the ground for a 
comprehensive partnership based on a set of specific, action-oriented initiatives. 
The focal point of that vision must be to ensure the successful and lasting integration 
of China as an equal partner in the world economy. This should be coupled with an 
active commitment to creating a strong and open civil society based on fundamental 
freedoms and human rights, in step with China's move towards a market economy. 
China's WTO accession process, as well as the EU's bilateral trade agenda with 
China, remain key instruments, together with Europe's elaborate cooperation 
programme with China, to bring this to fruition. At the same time, the EU must be 
ready at short notice to adapt its policy to any unforeseen changes prompted by the 
speed and scope of China's transition. 
Europe and China both stand on the threshold of critical change. This should give the 
former the added incentive to craft its own genuinely European strategy towards the 
latter. 
The Council is invited to endorse the initiatives laid out in this Communication, and 
to invite the Commission, the European Parliament, Member States, business and 
other actors to cooperate in pursuing the approach outlined. The Commission stands 
ready to move forward with the initiatives outlined in the months ahead. 
25 
The Commission will regularly report to the Council and the European Parliament 
about the progress made in the implementation of the proposals of this 
Communication. A yearly report will be produced to this end. 
26 
ISSN 0254-1475 
COM(98) 181 final 
DOCUMENTS 
EN 11 02 10 
Catalogue number : CB-CO-98-212-EN-C 
ISBN 92-78-32897-9 
Office for Official Publications of the European Communities 
L-2985 Luxembourg