Commission Policy Paper for transmission to the Council and the European Parliament - A maturing partnership - shared interests and challenges in EU-China relations (Updating the European Commission's Communications on EU-China relations of 1998 and 2001)
Date: 2003-09-10
Institutions: European Commission
Subjects: China, EU relations, cooperation policy, economic reform, human rights, rule of law

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 10.9.2003
COM(2003) 533 final

COMMISSION POLICY PAPER
FOR TRANSMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT

A maturing partnership - shared interests and challenges in EU-China relations

(Updating the European Commission’s Communications
on EU-China relations of 1998 and 2001)

TABLE OF CONTENTS

Executive Summary ................................................................................................................... 3

1.

2.

3.

3.1

3.2

3.3

3.4

3.5

4.

Introduction.................................................................................................................. 5

A new maturity in EU-China relations ........................................................................ 6

Charting a course for EU action in 2003 and beyond .................................................. 7

The EU and China: shared responsibilities in promoting global governance.............. 7

Supporting China's transition to an open society based upon the rule of law and
the respect for human rights....................................................................................... 12

Promoting China’s economic opening at home and abroad....................................... 15

The EC-China Co-operation Programme – a mutually beneficial partnership
underpinning EU objectives....................................................................................... 21

Raising the EU's profile in China............................................................................... 23

Improving the mechanisms of the relationship .......................................................... 25

Annex 1: EU-China dialogue (overview)................................................................................. 27

Annex 2: Statistics on EU-China trade and investment ........................................................... 28

Annex 3: EU-China Co-operation Programme (overview)...................................................... 31

2

Executive Summary

Much has changed in Europe, China and the world since the  Commission’s last policy
paper was issued in early 2001. The Euro is now fully established, enlargement and major
internal  reforms  are  imminent,  and  the  EU  has  taken  on  new  responsibilities,  notably  in
justice and  home affairs (JHA) that have significant  domestic  and  international  impact.  The
draft European Security Strategy of June 2003 aims to reinforce the EU’s Common Foreign
and  Security  Policy,  and  recognises  that  China  is  one  of  the  EU’s  major  strategic  partners.
China has entered a new and challenging phase in its social and economic reform process. It
has also become increasingly involved in world affairs, especially in multilateral fora, and is
rapidly emerging as a major player in the world economy thanks to its dynamic growth and
accession to the WTO. Moreover, a new generation of leaders has recently taken the reigns in
Beijing  and  will  be  engaging  the  EU  at  the  highest  level  for  the  first  time  at  the  EU-China
summit in late October 2003. At the same time, both sides have to adapt to a fast moving
international  scene,  with  terrorism,  weapons  proliferation  and  other  concerns,  such  as  the
threat of SARS, rising to the top of the agenda. The sluggish world economy and concomitant
negative trends in protectionism and regionalism also loom as potential threats to global trade
and development.

Against  this  background,  the  EU  and  China  have  an  ever-greater  interest  to  work
together as strategic partners to safeguard and promote sustainable development, peace
and  stability.  Interests  converge  on  many  international  governance  issues,  notably  the
importance  both  attach to the  role  of  the  UN  in  physical  and  environmental  security  and  to
that of the WTO, where both have much to gain from further trade liberalisation. Indeed, the
growth  in  the  bilateral  trade  relationship  is  striking:  two-way  trade  exceeded  €115  bn  last
year, making China Europe’s third largest trading partner, albeit with a substantial surplus in
China’s favour. Moreover, EU firms remain important investors in China.

Mutually  beneficial  co-operation  in  the  JHA,  scientific  and  technical  fields  has  also  been
growing  apace  in  recent  years,  with  a  number  of  new  agreements  in  process,  and  the  EC’s
assistance programme continues at significant levels.

Europe thus has a major political and economic stake in supporting China’s successful
transition to a stable, prosperous and open country that fully embraces democracy, free
market  principles  and  the  rule  of  law.  The  EU  has  much  to  offer  here,  stemming  in  part
from its own experience in integrating accession countries from East and Central Europe.

Stock-taking is now required  of  our 2001 paper  to take account of  these developments
and of new shared interests and challenges that lie ahead. It is also noteworthy that China
will  shortly  be  issuing  its  own  strategic  paper  on  relations  with  the  EU,  the  first  ever
document of this kind.

This paper thus includes an  assessment of what has been achieved, and proposals  to update
our  approach  which  will  help  guide  EU  policy  and  action  in  the  course  of  the  next  two  to
three years. On Governance, proposals are made to improve political dialogue through more
clearly focussing existing mechanisms, which now cover regular sessions at six major levels,
and to systematically address global and regional governance and security issues within these
exchanges.  The  dialogue  on  illegal  migration  should  be  more  results  oriented  and  an
agreement on the readmission of illegal migrants should be concluded soon.

3

Political  dialogue  should  also  continue  to  pay  close  attention  to  Human  Rights  in  keeping
with the tenets of a maturing partnership of the kind we now enjoy, and in the conviction that
this  is  an  integral  part  of  ensuring  sustainability  of  the  reforms  and  long  term  stability.
Measures  to  increase  the  efficiency  and  impact  of  the  dedicated  EU-China  Human  Rights
dialogue include the raising of its level, greater focus on key issues, stronger continuity and
follow-through  on  issues  and  individual  cases,  maximising  synergies  with  existing  bilateral
Member State efforts, and raising the visibility and transparency of the dialogue. Moreover,
China’s developing  civil society has an important role to play in protecting the  welfare  and
rights of vulnerable people in general and in mitigating negative effects of reform.

In  promoting  China’s  economic  opening  at  home  and  abroad,  priorities  are  to  work
together  to  ensure  success  of  the  Doha  Development  Agenda,  monitor  and  assist  China’s
compliance  with  its  WTO  commitments,  and  monitor  new  regional  agreements  to  ensure
WTO-compatibility.  The  early  signing  of  an  ‘Authorised  Destination  Status’  agreement  to
facilitate  Chinese  tourism  in  Europe  is  a  major  priority.  Negotiations  on  a  long  delayed
customs agreement should begin as soon as possible.

Support  for  China’s  reform  process  and  sectoral  co-operation  should  be  strengthened
through:  the  launch  of  new  dialogues  and  co-operation  in  the  fields  of  intellectual  property
rights,  sanitary  standards,  competition  policy,  industrial  policy  and  human  resource
development;  and  through  the  reinforcement  of  existing  dialogues  and  agreements  on  the
regulation  of  industrial  products,  information  society,  environment,  energy  and  scientific  &
technological  co-operation.  New  agreements  covering  co-operation  in  research  and  related
peaceful use of nuclear energy and on the EU’s Galileo programme should be concluded.

The  EU’s  co-operation  programme,  which  supports  activities  in  many  of  the  above  areas
will  follow  the  aims  set  out  in  the  Country  Strategy  Paper  approved  in  2002,  although  the
National  Indicative  Programme  (NIP)  is  to  be  adjusted  this  year  to  take  account  of  some
operational changes. Outside of the NIP itself, China will continue to be a major beneficiary
of  the  EU’s  regional  co-operation  and  research  programmes,  where  new  initiatives,  for
example in the fight against SARS, will begin shortly.

The steering role of the EC-China Joint Committee should be reinforced not only as regards
trade and co-operation matters, but also for the various sectoral dialogues.

Last  but  by  no  means  least,  new  efforts  to  raise  EU  visibility  in  China  are  proposed,
involving better  understanding of the Chinese  audience, the  use  of  a  few  targeted  messages
and closer collaboration with EU Member States.

The course ahead is long and challenging, and given the depth and breadth of the partnership,
it could not be otherwise. If it is to be successfully navigated, it is essential that there is full
and lasting commitment from all players. On the EU side, close co-ordination of Union  and
Member State policies will be  required and China  will  have  to  ensure  that  all  branches  and
levels of its administration are on board. With the high stakes involved, we are confident that
all involved will play their part.

4

1.  INTRODUCTION

This  policy  paper  is  based  on  the  Commission’s  1998  Communication  “Building  a
Comprehensive  Partnership  with  China”1  and  the  resulting  Council  conclusions  which
stressed  the  Union’s  fundamental  interest  in  strengthening  relations  with  China.  They
established the following aims for the EU-China relationship:

(i)

(ii)

(iii)

(iv)

(v)

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, including in the context of sustainable development;

Making better use of existing European resources;

Raising the EU's profile in China.

The Commission undertook to report regularly about the progress made in implementing the
proposals of this Communication. A first report was issued in September 2000.2

In  June  2001,  the  Commission  in  its  Communication  “EU  Strategy  towards  China:
Implementation of the 1998 Communication and Future Steps for a more Effective EU
Policy”3  provided  a  review  of  EU  policy  and  charted  a  course  of  short  and  medium  term
action points aimed to make progress towards the long term aims defined in 1998.

Discussions  in  the  Council  in  the  spring  of  2003  confirmed  that  EU  global  and  long  term
objectives in relations with China as defined in 1998 remained largely valid, and  should
be  reaffirmed  vis-à-vis  the  new  Chinese  leadership  generation  which  took  office  in  March
2003. The action plan put forward in the 2001 Communication had proved useful to maintain
the  momentum  in  the  relationship,  and  should  now  be  updated,  in  view  of  recent
developments in the EU, China and the world at large.

The present policy paper addresses these aims, and reviews progress made in implementing
the  1998  Communication  and  the  2001  plan  of  action  points.  Its  objective  is  to  provide
further impetus for the relationship, and help guide EU policy and action over the next
two  to  three  years,  taking  account  also  of  EU  policy  objectives  towards  the  wider  Asian
region expressed in the Commission’s 2001 Asia Strategy4.

Finally, the paper intends to promote, the ongoing reflection in China about future policy
towards the EU, which is to find expression in a policy paper later this year, the first ever of
its  kind  in  China’s  foreign  relations.  The  appearance  of  this  paper  is  evidence  of  the  new
importance China gives to the relationship.

1

2

3

4

COM (1998) 181
COM (2000) 552
COM (2001) 265
“Europe and Asia: A Strategic Framework for Enhanced Partnerships”, COM (2001) 469.

5

                                                
2.  A NEW MATURITY IN EU-CHINA RELATIONS

The last decade has seen a dynamic growth of the relationship between the EU and China.
Relations  which  were  once  largely  confined  to  the  areas  of  trade  and  investment  and
financial/technical  assistance  have  expanded  to  cover  a  multitude  of  sectors.  A  robust  and
regular political dialogue  has  been  established.  A  number  of  sectoral  agreements  have  been
concluded, or are under negotiation. There are frequent and, in many cases, institutionalised,
exchanges  in  areas  ranging  from  global  challenges  such  as  the  environment  and  illegal
migration, through the field of basic and applied research and technological co-operation, to
the regulatory framework in key sectors of the economy. EU assistance under the EC-China
Co-operation  Programme  has  been  refocused  on  the  EU’s  China  policies  in  general.  These
changes  have  brought  about  a  new  maturity  in  the  relationship,  characterised  by
increasingly close policy co-ordination in many areas.

At  the  same  time,  events  since  2001  –  regarding  the  EU,  regarding  China,  and  in  global
affairs – create the need to take the partnership forward.

In the EU, the successful introduction of the Euro notes and coins at the beginning of 2002
was a landmark achievement in the history of European integration, soon to be  followed  by
the EU’s biggest enlargement ever in terms of scope and diversity,  with ten new members
set  to  accede  on  1  May  2004.  At  the  same  time,  the  internal  reform  of  the  EU  continues,
with plans for an EU constitution under discussion.

These  internal  challenges  notwithstanding,  the  EU  cannot  afford  to  be  inward-looking.
Internal developments in the EU as well as the European economy are closely entwined with
developments on the world scene. Moreover, the world community expects the EU to play a
role which is commensurate with its size and importance, not only in the economic area, but
also  on  issues  of  global  security  and  other  global  concerns.  These  expectations  will  grow
further as the EU enlarges, and streamlines its constitutional structures.

The EU is striving to live up to these expectations. It has proven itself as a leading partner in
the global coalition against terrorism in the aftermath of 11 September 2001, both through
international action and  through the use  of  its new powers in the field  of  Justice  and  Home
Affairs.  Following the  reinforcement  of  its  Common  Foreign  and  Security  Policy  (CFSP)
and European Security and Defence Policy (ESDP), the EU is playing an increasing role in
areas  such  as  conflict  prevention  and  crisis  management.  The  development  of  CFSP  and
ESDP over the coming years will lead to an increasingly significant EU role in shaping and
managing the world order. Key challenges and threats, and the EU’s strategic objectives are
summarised in the draft European Security Strategy.

China, on its side, has become  an increasingly energetic player in  world affairs.  Buoyed
by  its  dynamic  economy,  it  is  more  and  more  becoming  a  locomotive  for  regional  and
global  growth.  Following  its  accession  to  WTO  in  December  2001,  China  is  actively
engaged  in  both  the  new  round  of  multilateral  negotiations  under  the  WTO  Doha
Development  Agenda  and  in  regional  integration  initiatives.  Internally,  the  process  of
economic and social  reform  is  continuing,  although  it  is  facing  growing  challenges  in  the
form of unemployment, social and regional disparities, corruption and threats to the stability
of  the  financial  and  fiscal  systems.  The  new  –  fourth  –  leadership  generation  which  took
office in March 2003 is expected  to continue on the path  of domestic  reform and  economic
liberalisation.  However,  China’s  moves  towards  a  more  proactive  and  responsible  foreign
policy  continue  to  be  dominated  by  its  focus  on  domestic  stability  and  economic
development.

6

Both  the  EU  and  China  are,  since  2001,  engaged  in  a  process  of  adaptation  to  a  changing
global  environment.  International  terrorism,  as  well  as  growing  concerns  over  the
proliferation  of  weapons  of  mass  destruction,  have  brought  new  types  of  international
security concerns to the top of the global agenda. At the same time, global challenges such as
climate change and environmental degradation, illegal migration, international crime, but also
global health concerns such as HIV/AIDS which may pose a serious threat to China’s long-
term  development,  and  severe  acute  respiratory  syndrome  (SARS),  need  to  be  addressed.
Moreover, the sluggish state of the world economy is squeezing government budgets across
the world, and has led to worrying trends of protectionism. Regional trade initiatives, which
are  proliferating,  can  be  complementary  to  multilateral  liberalisation  and  rule-making,  but
only  if  they  are  WTO-compliant  and  do  not  detract  from  the  crucial  negotiations  under  the
WTO’s Doha Development Agenda.

Faced with these developments, it is in the clear interest of the EU and China to work as
strategic partners on the international scene. EU and Chinese interests converge on many
issues of global governance, in particular as regards the key role of multilateral organisations
and systems. Through a further reinforcement of their co-operation, the EU and China will be
better  able  to  promote  these  shared  visions  and  interests,  and  thus  to  shore  up  their  joint
security and other interests in Asia and elsewhere.

Moreover, the stability and development of China itself is a key concern also of the EU.
The  EU  has  a  clear  stake  in  China’s  successful  transition  to  a  stable,  prosperous  and  open
country that fully embraces democracy, free market principles and the rule of law. It should
thus do its utmost to support China’s transition and reform processes by reinforcing co-
operation and dialogue across the board. Notably, the EU’s experience, not least that from the
recent transition  processes of many  of  the EU  accession  candidates,  on  how  to  adapt  to  the
tremendous  socio-economic  challenges  that  opening  and  globalisation  entail,  and  on  the
economic and societal models developed in the EU in response to these, should be exploited
to  the  full.  Similarly,  the  EU  should  intensify  its  efforts  to  help  China  address  emerging
sustainability  challenges,  particularly  in  the  field  of  the  environment.  In  the  context  of  its
support  to  China’s  transition,  the  EU  should  continue  to  speak  out  on  its  human  rights
concerns, and to encourage the rule of law and political reforms in China. These are issues
which are sensitive for China, but also ones which are crucial to safeguard social stability in
China and the sustainability of the reform process.

Developing  a  robust,  enduring  and  mutually  beneficial  relationship  of  equals  which
covers all of these areas should be a major aim for both the EU and China in the coming
years. A very positive start has been made. The following action points should help to keep
relations  on  this  course  in  the  next  few  years.  Realising  them,  and  progressing  towards  the
broader goal, will require the full commitment from all relevant players on both sides. On
the EU side, it will be important to co-ordinate Member States’ policies towards China to the
maximum  extent  possible,  so  that  the  EU  speaks  with  a  single  voice  on  all  key  issues  of
China  policy.  China,  on  its  side,  will  need  to  ensure  that  all  branches  and  levels  of  its
administration are on board, and fully co-operate on the bilateral agenda.

3.  CHARTING A COURSE FOR EU ACTION IN 2003 AND BEYOND

3.1

The EU and China: shared responsibilities in promoting global governance

China  is  an  increasingly  important  global  player,  interested  in  a  stable  and  fair  global
environment which  will allow it  to  pursue its course of  economic  development  and  internal

7

reform. The EU expects China to contribute to global stability by gradually taking on more
responsibility, commensurate with its political and economic weight, both in the bilateral and
the multilateral context.

Given  its  particular  position  as  a  newly  emerging  power,  China  could  notably  play  an
important  role  in  the  common  effort  to  reconcile  the  interests  of  developing  and  developed
countries.  The  EU  also  looks  towards  China  to  use  its  considerable  influence  in  Asia  to
promote  peace  and  stability  in  the  region,  by  taking  a  lead  role  in  furthering  regional
integration and by helping to resolve pending regional conflicts.

The context

Chinese  foreign  policy  has  become  progressively  more  proactive  and  constructive,  with
China increasingly engaged on both global issues and in regional dialogue, as in the case of
the  Korean  Peninsula.  In  this  context,  China  has  expressed  clear  interest  in  strengthened
political ties with the EU, and expects the EU to have clear joint policy lines on global issues
of common concern.

EU and China share views on the importance of multilateral systems and rules for global
governance, which includes the further strengthening of the United Nations system, its role in
regional and  global  conflict resolution  and  in the  co-ordination  of  actions  addressing  global
concerns, from weapons control, through international terrorism, to climate change.

The  EU-China  political  dialogue  has  become  an  increasingly  important  component  of
overall relations, and annual Summits have provided a strategic vision for the fast developing
relationship.

The  2002  EU-China  Summit  confirmed  the  interest  of  both  sides  to  further  broaden  and
deepen  the  relationship  in  all  areas,  including  through  increased  co-ordination  and  co-
operation on global issues.

Implementation of action points in the 2001 Communication

In  general,  good  progress  has  been  achieved  in  the  implementation  of  the  concrete  actions
identified in the 2001 Communication.

Political dialogue mechanisms

EU-China  political  dialogue  has  developed  further  over  the  past  two  years.  A  new
framework for reinforced dialogue was agreed between the two sides through an exchange
of letters in June 2002.

In addition to high-level contacts, a number of lower-level dialogues have been established
in  the  recent  past,  accentuating  the  gradual  move  from  a  relationship  dominated  by  a  top-
down structure towards a relationship structure of multi-layered dialogues similar to the ones
established with other major partners.

The  newly-created  political  dialogue  at  the  level  of  Political  Directors  has  developed
successfully and  has proven a useful  platform to prepare for,  and  follow-up  on,  ministerial-
level Troikas and the Summits. Ministerial Troikas have been instrumental in ensuring high-
level dialogue between Summits and to prepare for the Summits.

8

Meetings  held  every  six  months  between  the  Chinese  Foreign  Minister  and  EU
Ambassadors  in  Beijing,  and  corresponding  meetings  between  the  Foreign  Minister  of  the
country  holding  the  EU  Presidency  and  the  Chinese  Ambassador  in  that  country,  have
enhanced communication flows, and been useful in addressing more day-to-day aspects of the
relationship.

The  mechanism  of  Troika  dialogue  expert  meetings  has  been  used  in  the  area  of  non-
proliferation and disarmament.

Topics of the political dialogue

Human rights concerns have been given priority focus and were systematically raised at the
different  levels  within  the  political  dialogue,  in  addition  to  the  dedicated  human  rights
dialogue with China (see section 3.2).

Co-ordination  was  strengthened  to  promote  the  reconciliation  and  security  on  the  Korean
Peninsula, on the Burma/Myanmar issue, and on other regional questions.

The  EU  has  also  regularly  reiterated  its  strong  interest  in,  and  insistence  on,  a  peaceful
resolution of the Taiwan issue through dialogue across the Taiwan Straits.

Developments  in  Hong  Kong  and  Macau  have  been  followed  closely,  with  annual  reports
issued  on  both  Special  Administrative  Regions,  and  particular  attention  given 
to
developments  in  Hong  Kong  regarding  the  proposed  national  security  legislation  under
Article  23  of  the  Basic  Law,  which  may  have  consequences  for  the  continuing  exercise  of
freedoms and rights in Hong Kong.

Co-operation  in  the  area  of  illegal  migration  and  trafficking  in  human  beings  has  been
stepped up. Regular High Level Consultations in this area have built mutual confidence, and
allowed for an increased exchange of information and on respective policies, legislation and
concerns in this field. It was agreed that co-operation between both parties should be further
enhanced. Expert visits have been exchanged between the EU and China, and seminars on the
issue  of  forged  documents  held.  Funds  have  been  reserved  by  the  EC  for  a  specific  co-
operation programme, which should back up the dialogue. A joint seminar in November 2002
allowed the identification of some areas of common interest for project components.

Illegal  migration  issues  featured  regularly  on  the  agenda  of  political  dialogue  meetings,
including  the  2002  EU-China  Summit.  Readmission  has  been  one  of  the  key  points  of
discussion since the launch of negotiations for an “Authorised Destination Status” agreement
in February 2003. In November 2002, the Council authorised the Commission to negotiate a
readmission agreement with China. Despite continued EU efforts, negotiations have not yet
been launched.

The political dialogue has also followed up on multilateral efforts to limit arms proliferation,
arms exports, and to promote disarmament.

Finally,  there  have  been  regular  contacts  on  global  environmental  issues,  including  on
climate change, at Ministerial level and in the margins of international conferences.

9

New action points

Raising the efficiency of the political dialogue

(cid:1)  Translate  the  agreement  on  reinforced  political  dialogue  fully  into  practice.  Better  use
should  be  made  of  the  existing  framework,  stressing  quality  over  quantity  of  the
dialogue, thus achieving more consistency on the substance.

(cid:1)  Enhance the effectiveness of Ministerial Troikas in steering the political dialogue, while
adjusting the mandates of these and other high-level EU-China fora to reflect the need for
an  effective  co-ordination  not  only  of  the  political  dialogue,  but  also  of  other  dialogue
strands within the EU-China relationship at large (see section 4).

(cid:1)  Hold more frequent ad hoc Troika political consultations at working level in Beijing to
enhance continuity of our political dialogue with China between formal meetings, while at
the same time increasing EU visibility.

(cid:1)  Maximise policy co-ordination with Member States on China, notably through regular
exchanges  in  the  framework  of  the  Political  and  Security  Committee.  Such  exchanges
could be opened to China by inviting suitable Chinese counterparts to meetings on an ad
hoc basis.

(cid:1)  Regularly include China as an item on the agenda of EU dialogue with third countries,
such as the US, Russia, Japan and South Korea, in order to increase the convergence of EU
and international policy vis-à-vis China.

EU priorities for the political dialogue

= Bilateral

(cid:1)  Stress human rights concerns as an essential component of the political dialogue.

(cid:1)  Encourage China and the Dalai Lama to further strengthen ongoing direct contacts with a
view  to  finding  a  mutually  acceptable  solution  to  the  question  of  Tibet  in  the  context  of
ensuring a genuine autonomy for this region.

(cid:1)  Render  High-level  Consultations  on  illegal  migration  more  concrete  and  result-oriented,
including in the field of exchange of concrete information, and the setting-up of joint co-
operation projects.

(cid:1)  Open  negotiations  on  readmission  of  illegal  migrants  and  conclude  a  readmission

agreement with China.

(cid:1)  Follow up on Chinese  request for closer co-operation on other Justice and  Home  Affairs
issues,  explore  scope  for  co-operation  on  organised  crime,  money  laundering  and  drug
trafficking and production, including of synthetic drugs and drug precursors.

(cid:1)  Closely  monitor  developments  in  the  Hong  Kong  and  Macau  Special  Administrative
Regions,  notably  as  concerns  the  maintenance  of  the  rule  of  law  and  safeguard  of
fundamental freedoms and autonomy, as enshrined in their Basic Laws.

10

(cid:1)  Stress  EU  insistence  on  a  resolution  of  the  Taiwan  issue  through  peaceful  dialogue,  and
underline  the  importance  of  growing  economic  ties  for  an  improvement  of  the  political
climate; underline EU interest in closer links with Taiwan in non-political fields, including
in multilateral contexts, in line with the EU’s ‘One-China’ policy.

= Regional

(cid:1)  Strengthen co-operation on issues of mutual concern in the region in particular as regards
to  assuring  peace  and  security  on  the  Korean  peninsula  and  on  the  Indian  sub-continent,
encouraging political reconciliation and reform in Burma/Myanmar and seeking resolution
of the South China Sea issue.

(cid:1)  Promote  a  continued  proactive  stance  by  China  in  the  ASEM  (Asia-Europe  Meeting)
process, in consultations on international and regional security and other challenges within
the ASEM political pillar, in building Asia-Europe understanding in the DDA negotiations
under  the  economic  pillar,  and  by  fostering  China’s  engagement  in  people-to-people
contacts within the Dialogue on Cultures and Civilisations.

(cid:1)  Enhance consultations with China on the ASEAN Regional Forum (ARF), to reinforce the
ARF’s  role  on  regional  security  issues,  and  promote  co-operation  on  defence  and  on
terrorism.

(cid:1)  Explore  the  possibility  to  establish  an  exchange  of  information  between  the  EU  and  the
Shanghai Co-operation Organisation (SCO), the permanent secretariat of which is to be
established in Beijing.

= Global

(cid:1)  Include global governance issues regularly in the political dialogue with China and, where
appropriate,  consult  with  China  in  the  early  stages  of  EU  policy  development  on  these
issues.

(cid:1)  Promote  the  development  of  a  co-ordinated  approach,  and  of  joint  EU-China  policy
initiatives, including, where possible, through joint declarations and demarches on issues
of common interest both in the bilateral and multilateral context.

(cid:1)  Enhance co-operation to promote multilateral systems and rules for global governance,
particularly the further strengthening of the United Nations system and its role in regional
and global conflict resolution and co-ordination in addressing global concerns.

(cid:1)  Address  global  security,  non  proliferation/disarmament  and  arms  control  issues;
reinforce  dialogue  on  non  proliferation  topics,  including  on  export  control  of  dual  use
goods; encourage China to support the re-launch of the UN Conference on Disarmament,
and to sign and ratify multilateral treaties and conventions such as the Comprehensive Test
Ban Treaty and the Ottawa Convention on landmines.

(cid:1)  Explore the possibilities for reinforced dialogue with China on combating terrorism, with
a  view  towards  closer  co-operation,  including  at  the  United  Nations,  while  stressing  the
need to safeguard the human rights of ethnic minorities in China.

11

(cid:1)  Promote  collaboration  on  global  environmental  challenges,  including  enhanced  co-
operation  on  the  Kyoto  protocol  and  climate  change,  and  on  follow-up  to  the  World
Summit on Sustainable Development.

(cid:1)  Launch the planned  call for proposals on joint research into SARS  under  the  Sixth  EU
Framework  Programme  for  Research  and  Technological  Development  in  which  China  is
expected to be an important participant.

3.2

Supporting China's transition to an open society based upon the rule of law and
the respect for human rights

Supporting  China’s  transition  to  an  open  society  based  upon  the  rule  of  law  remains  an
essential  element  of  EU  policy  towards  this  country.  This  is  particularly  true  in  a  period
where  China  is  engaged  in  substantial  reforms,  whose  implementation  requires  the
maintenance  of  societal  stability.  The  EU  believes  that  the  respect  for  human  rights,
democratic accountability and the rule of law, as well as a democratic participation of citizens
in decision-making processes, constitute the best guarantees for the long-term stability of a
society  and  for  the  sustainability  of  a  country’s  economic  development,  in  China  as
elsewhere.

The context

In the domestic field, there are signs of improvements in relation to the establishment of the
rule of law and the development of the legal system. The draft for a first ever civil code has
been  submitted  to  the  National  People’s  Congress.  Legal  training  of  judges  has  been
strengthened. The rule of law has improved in the economic field, mainly as a consequence of
China’s  accession  to  the  WTO,  but  there  has  been  no  large-scale  spill-over  effect  yet  and
“rule by law” generally still prevails. Tentative steps towards democratisation have continued,
with the experiment of elections at township level, but there is no indication for a substantial
change in the system of appointing leaders above village level in the near future.

Civil  society  is  an  area  where  significant  developments  have  taken  place  in  recent  years.
Whereas only few non-governmental organisations existed in China some years ago, a variety
of grassroots organisations across  the  country now aspires to a role  in  policy  making.  They
are taken more seriously by the government, but they still face important hurdles in realising
their full potential.

However,  a  significant  gap  still  exists  between  the  current  human  rights  situation  in
China  and  internationally  accepted  standards,  in  particular  with  respect  to  civil  and
political  rights.  As  noted  in  the  General  Affairs  Council  conclusions  of  18  March  2003,  a
number  of  serious  EU  concerns  remain.  China  has  still  not  ratified  the  UN  International
Covenant on Civil and Political Rights. The practice of re-education through labour persists.
The  death  penalty  continues  to  be  applied  extensively,  in  particular  in  the  context  of  the
“strike  hard”  campaign.  Freedom  of  expression,  religion  and  association  are  still  not
guaranteed,  in  particular  with  respect  to  pro-democracy,  labour  and  internet  activists,  and
ethnic  minorities,  notably  in  Tibet  and  Xinjiang,  are  still  deprived  of  their  religious  and
cultural rights.

Implementation of action points in the 2001 Communication

Four  sessions  of  the  EU-China  Human  Rights  dialogue  have  been  held  over  the  last  two
years.  They  have  been  complemented  by  four  EU-China  seminars  on  issues  such  as  the

12

death penalty, the prohibition and  prevention  of torture, the right to education, transparency
and regulation of the mass media, the establishment of national human rights institutions, and
of mechanisms for the implementation of economic, social and cultural rights.

The dialogue has allowed for detailed and frank exchanges of views on the different issues
of concern. It has allowed the EU to obtain information on human rights in China, has raised
awareness of Chinese decision-makers on international standards and EU best practices, and
has helped to build mutual trust and confidence.

The  dialogue  has  led  to  some  positive  developments.  China  has  stated  its  engagement  to
enhance  co-operation  with  UN  Human  Rights  mechanisms,  in  particular  with  the  UN  High
Commissioner  for  Human  Rights,  the  special  Rapporteurs  on  torture  and  on  education,  and
the Chairman of the working group on arbitrary detention, although these commitments have
yet  to  be  fully  realised.  The  dialogue  has  allowed  for  extensive  exchanges  of  views  on
individual  cases  of  human  rights  violations,  and  China’s  offer  to  provide  information  on
individual cases between  dialogue rounds is a  welcome  further  step.  Moreover,  EC  human
rights-related  assistance  programmes  have  been  implemented  in  a  largely  satisfactory
manner,  and  China  has  shown  readiness  to  envisage  further  projects,  including  on  sensitive
issues such as torture prevention in police and prison administration.

That  said,  a  number  of  issues  remain  where  the  discussions  have  not  yet  allowed  for
meaningful  progress.  China  has  yet  to  provide  a  clear  timetable  for  the  ratification  of  the
International  Covenant  on  Civil  and  Political  Rights.  Although  China  has  expressed  its
willingness  to  be  more  responsive  to  EU  concerns  regarding  the  use  of  the  death  penalty,
administrative  detention  and  torture,  no  substantial  progress  has  been  made  in  these  fields,
and  longstanding  EU  requests  to  provide  statistics  on  the  use  of  the  death  penalty  have  not
been answered. Substantial differences persist between the EU and China over the freedom of
expression, religion and association. The same applies to the preservation and the promotion
of  the  rights  of  minorities,  in  particular  in  Tibet  and  Xinjiang.  The  issue  of  North  Korean
refugees in China also remains an EU concern.

New action points

Dialogue  and  co-operation  should  continue  to  constitute  the  main  EU  approach  to
improving the human rights  situation in  China,  although  this  should  not  exclude  expressing
comments and observations in other appropriate fora. But the dialogue will remain a credible
option in the medium and long term only if effective progress is achieved on the ground. It
will be essential to enhance the continuity of the dialogue. Complementing the dialogue, the
EU  will  continue  and  intensify  co-operation  projects  related  to  human  rights  and  good
governance, including under the European Initiative for Democracy and Human Rights under
which China has become a focus country in 2003.

Moreover, at a time when China is engaged in major socio-economic reforms, support to the
rule of law should not only imply top-down initiatives, but also grassroots action involving
citizens, with a view to furthering ownership of the reforms. This is indeed a prerequisite if
the  reform  is  to  be  implemented  in  a  stable  and  satisfactory  manner.  Civil  society
organisations,  in  whatever  form,  will  therefore  be  increasingly  needed,  and  of  particular
importance  in  supporting  individuals  and  communities  disadvantaged  by  the  ongoing
changes. The strengthening of civil society in China thus should be an EU priority.

13

Attention should also be given to the rights of workers who are among the most vulnerable
groups in the context of the ongoing reforms. In this context, it is important to work toward
strengthened  co-operation  between  China  and  the  ILO,  aiming  at  adherence  to  the  norms,
conventions and recommendations of this organisation.

Human rights dialogue

(cid:1)  Upgrade  the  level  of  dialogue  to  vice-ministerial  level,  to  enhance  political  impact  and

visibility.

(cid:1)  Focus on issues where there has been very little progress up to now, so as to allow for

more meaningful discussion on key issues.

(cid:1)  Ensure better continuity through enhanced follow-up of issues and individual cases raised
in formal  dialogue meetings,  notably  by  holding  more  regular  working-level  meetings  in
Beijing  between  the  EU  Troika  and  the  Ministry  of  Foreign  Affairs  between  dialogue
sessions.

(cid:1)  Involve a wider variety of dialogue partners, and organise field visits outside Beijing.

(cid:1)  Maximise  synergies  with  existing  Member  States’  and  other  partners’  human  rights

dialogues with China.

(cid:1)  Give  as  much  visibility  and  transparency  as  possible  to  the  dialogue,  e.g.  by  briefing

press, civil society and European Parliament after each session.

(cid:1)  In order to allow  for a  real two-way dialogue on  human rights challenges  in  the  EU  and
China,  complement  the  dialogue  with  more  expert  exchanges,  involving  not  only
academics and NGOs, but also operational staff, such as police officials and prison staff.

Human rights/good governance-related co-operation programmes

(cid:1)  Focus  on  strengthening  the  understanding  of  law  and  legal  processes  by  citizens  and
officials,  together  with  training  programmes  for  professionals,  including  lawyers,  judges,
prison and police officers.

(cid:1)  Share EU expertise on the compliance of domestic legislation with international standards.

(cid:1)  Continue promoting grass-roots democracy through support to China’s experiments with

direct suffrage.

(cid:1)  Extend  co-operation  programmes  into  new  areas,  such  as  the  prevention  of  torture,
freedom  of  expression  and  independent  media,  the  promotion  of  minorities’  rights,  the
International Criminal Court, the death penalty, and labour rights.

(cid:1)  Take into consideration the promotion of human rights, including economic, social and
cultural rights and gender issues, as a cross-cutting theme throughout the EC-China Co-
operation Programme.

14

Support to civil society

(cid:1)  Promote  contacts  and  dialogue  between  European  and  Chinese  civil  society,  in  line
with the  recommendations resulting  from  the  dialogue  established  between  the  European
Economic and Social Committee and the China Economic and Social Council.

(cid:1)  Mitigate  the  negative  impact  of  socio-economic  reforms  by  supporting  civil  society
organisations whose aim is to promote the rights and welfare of the most vulnerable groups
in society.

(cid:1)  Provide  assistance  in  these  areas  through  major  co-operation  projects  aiming  in
particular  at building  the  capacity  of  the  emerging  civil  society,  establishing  networks
between  European  and  Chinese  civil  society  organisations,  and  encouraging  Chinese
NGOs to participate in international conferences open to civil society.

3.3

Promoting China’s economic opening at home and abroad

The  EU  regards  the  successful  and  sustainable  economic  development  of  China  as
important  and  beneficial  for  the  entire  world.  Its  aim  remains  to  contribute  as  much  as
possible  to  ensure  that  China  masters  successfully  its  transition  to  a  stable,  prosperous  and
open country. The EU thus is an ardent supporter of China’s  integration into the global
economy, and has fully backed China’s  bid for WTO  accession  from  the start. At the  same
time, it has sought to assist China in its internal reform process, and to help it in addressing
the  daunting  challenges  that  this  has  brought.  The  EU  offers  open  and  liberal  markets  for
Chinese exports, the transfer of European capital, technology and know-how that come with
reinforced  commercial  ties,  but  also  European  experience  and  best  practice  in  relevant
economic, environmental and social sectors.

In turn, the EU looks towards China to act as a constructive and responsible player in the
world  economy,  playing  a  role  commensurate  to  its  size  and  importance.  The  preservation
and development of a liberal global trading system is in China’s own long-term interest. Like
all other major players, China should set an example by abstaining from protectionist reflexes,
and  help  prevent  them  elsewhere.  Having  itself  benefited  significantly  from  globalisation,
China  should  reciprocate  by  progressively  opening  its  own  economy,  in  line  with  its  WTO
accession commitments and beyond. China, as the EU, should do its utmost to help make the
new round of WTO negotiations under the Doha Development Agenda (DDA) a success.

The context

China’s  process  of  integration  into  the  world  economy,  launched  in  1978,  culminated  in
China’s  accession  to  the  World  Trade  Organisation  (WTO)  on  11  December  2001,
arguably  one  of  the  most  momentous  events  in  recent  history,  whose  importance  far
transcends the realm of international trade. It not only buttresses China’s position as a global
trading power, but also cements the process of economic and social reform in China.

Progressive  opening  towards  the  world  economy  has  made  China  one  of  the  foremost
beneficiaries of globalisation. In 2002, it became the world’s fifth largest trader, with USD
620.8 bn worth of exports and imports, and with its foreign trade growing at 21.8%, a growth
rate  unrivalled  by  any  major  trading  nation.  China  also  overtook  the  US  as  the  largest
recipient of foreign direct investment (FDI) in the world, with new FDI inflows of USD 52.7
bn, up 12.5%.

15

China’s  economic  achievements  have  made  it  the  locomotive  for  economic  growth  in  its
region. Building on this, and also seeking to assuage fears at times linked to its ascendance,
China  is  promoting  ambitious  initiatives  for  regional  economic  integration,  notably  the
ASEAN + 1 scheme, which aims at the creation of a free trade area between the 10 ASEAN
countries and China by 2010.

China  has  made  considerable  efforts  to  live  up  to  its  new  role  in  the  global  economic
system. To comply with its WTO accession commitments, it has cut tariffs across the board,
and  engaged  in  a  thorough  overhaul  of  laws  and  regulations.  It  has  also  launched  a
restructuring  of  government  agencies  responsible  for  economic  issues.  Nonetheless,  a
number of substantial concerns remain, in particular the lack of transparency  in economic
governance, overly  restrictive  and  burdensome  regulations  in  some  sectors,  the  introduction
of  new  non-tariff  barriers,  and  the  persistence  of  a  protectionist  culture  favouring  local
industry, which could have the effect of limiting the very liberalisation which WTO entry was
to  bring  about.  More  precisely,  one  year  and  a  half  after  China's  WTO  accession,  the  EU
concerns  in  terms  of  WTO  implementation  include  notably  the  problems  encountered
regarding  market  access  (allocation  of  quotas  and  tariff-rate  quotas),  services  (financial
services, telecommunication, construction), the enforcement of intellectual property rights and
the  respect  of  international  standards  (both  industrial  and  in  the  sanitary  and  phytosanitary
field).

Since  its  WTO  accession,  China  has  become  an  important  player  in  the  global  trading
system. It is playing an increasingly pro-active role in defending its interests in the ongoing
DDA  negotiations.  Given  China's  stake  in  a  dynamic  and  liberal  trading  system  and  its
political objective  of promoting  a multipolar world  governed by  multilateral rules, it has  an
interest in a successful and timely conclusion of the Doha Round, resulting in further market
opening,  accommodation  of  developing  countries’  interests,  and  improved  WTO  rules.  To
make  as  much  headway  as  possible  in  these  negotiations,  the  EU  closely  co-operates  with
key players such as China to reach further convergence of views, seeking  China’s support
particularly  on  rules-related  issues,  such  as  investment,  competition,  trade  facilitation,  and
transparency in government procurement.

As  the  process  of  internal  economic  and  social  reform  in  China  enters  its  most  difficult
phase, the enormous challenges for China in the years to come are becoming more apparent.
Reform  and  opening  have  been  accompanied  by  a  significant  rise  in  unemployment  and
underemployment.  Disparities  in  regional  economic  development  in  income  levels,  and  the
rural-urban  divide  are  reaching  worrying  levels.  In  spite  of  the  considerable  reduction  in
poverty  associated  with  economic  growth  in  recent  years,  China  has  still  large  numbers  of
poor people. In 1999 it was estimated that some 213 million Chinese, representing 17% of the
population  and  18%  of  the  world’s  poor,  were  living  on  less  than  $1  per  day.  Serious
weaknesses  have  yet  to  be  tackled  in  the  corporate  and  financial  systems,  as  well  as  in  the
system  of  social  security  provision.  Furthermore,  the  fiscal  system  is  weighed  down  in  the
short-term  by  the  need  to  maintain  economic  stimulus  and  in  the  long  term  by  the  need  to
improve social welfare.

Economic and trade relations between the EU and China have developed in step with the
latter’s  emergence  on  the  global  economic  scene.  China  in  2002  overtook  Japan  to  become
the EU’s second-largest trading partner outside Europe, with a trade volume of over € 115
bn. EU markets are open to China, as witnessed by the continuing increase in the EU’s trade
deficit with China, which topped € 47 bn in 2002 and is by far the largest with any partner.

16

The EU is also a major investor in China, with the stock of EU FDI at USD 34 bn at the end
of 2002.5

The  positive  overall  development  of  EU-China  economic  and  trade  relations  puts  into
perspective the problems which have  arisen in these areas.  Nonetheless,  the  reinforcement
of  bilateral  consultation  mechanisms  is  necessary  to  ensure  that  bilateral  problems,  and
concerns related to China’s compliance with its WTO commitments, can be resolved rapidly
and  do  not  constrain  the  relationship.  Enhanced  regulatory    dialogue  will  be  important  to
overcome non-tariff barriers and facilitate bilateral trade. Full  and  timely  implementation of
China’s  WTO  obligations  and  the  removal  of  remaining  market  access  obstacles  will  be
crucial  to  ensure  continued  and  balanced  growth  of  two-way  trade,  and  are  key  factors  in
attracting major new flows of European FDI in China.

Implementation of action points in the 2001 Communication

Good  progress  has  been  made  in  implementing  the  concrete  actions  identified  in  the  2001
Communication. An EU network has been created to track China’s WTO implementation.
There  have  also  been  regular  and  intensive  consultations  with  the  Chinese  authorities  on
relevant issues.  The  EU  Chamber  of  Commerce  in  China  has  become  increasingly  active
and further increased its scope of activities,  and  has  become  a  key  interlocutor  both  for  the
EU and for the Chinese authorities. These instruments have allowed the EU to make progress
on some important existing concerns.

In addition to regular dialogue on WTO and other trade issues, the Commission and Chinese
authorities have launched a joint study process on areas which are on the agenda of the DDA
negotiations,  allowing  for  the  identification  of  areas  of  common  interest  and  of  shared
viewpoints.

Both  sides  have  reinforced  sectoral  dialogue  on  questions  of  policy  and  regulation,
focussing on sectors which are related to WTO, or affected by China’s transition process. A
dialogue on the regulation of industrial products, including standardisation and conformity
assessment issues, was launched in October 2001. The existing Telecommunications Working
Group  in  September  2001  was  transformed  into  a  broader  Information  Society  Working
Group whose remit now includes policy and the regulatory framework for the entire IS sector.
A  very  successful  EU-China  Co-operation  Forum  on  the  Information  Society  was  held  in
Beijing in April 2002. An environmental  policy dialogue was initiated  in September 2001.
The scope of the existing Energy Working Group was extended to include policy issues. EU-
China  research  co-operation  under  the  1999  S&T  agreement  has  become  increasingly
successful,  not  least  following  the  creation  of  the  joint  EU-China  S&T  Cooperation
Promotion  Office  in  Beijing  in  mid-2001;  research  projects  involving  China  launched  since
2000 have total budgets of over € 94 million. In February 2003, China started negotiations to
join  the  international  ITER  collaboration  on  the  next  major  step  for  the  development  of
fusion energy. Finally, first contacts have taken place on a possible new dialogue in the field
of human resources development, including education, an area which is key to the success
and sustainability of the reform process.

Progress  has  also  been  made  towards  new  bilateral  agreements  in  important  fields.  A
maritime  transport  agreement,  the  EU’s  first  such  agreement  with  any  third  country,  was
signed in December 2002, and has already been ratified by China. Good advances have been

5

Source: Chinese government (MOFCOM/MOFTEC).

17

                                                
made in negotiating an agreement on “Authorised Destination Status”, which will facilitate
the visit of Chinese tourist groups to the EU. Negotiations for an agreement on co-operation
in  the  field  of  satellite  navigation,  in  the  context  of  the  European  GALILEO  programme,
have started in May 2003, and a joint Sino-European satellite navigation co-operation centre
has  been  opened  in  Beijing  in  February  2003.  Exploratory  discussions  on  an  EU-China
agreement on customs co-operation  and mutual administrative assistance in customs matters
have recently intensified following  high-level discussions in June 2003.  Beyond customs co-
operation per se, an objective of mutual concern is to combat fraud and counterfeited goods.
It is anticipated that the agreement will be concluded by early 2004. The Council in June 2003
adopted the negotiating directives for an agreement on research and related peaceful use of
nuclear energy; formal negotiations will be launched very soon.

The  EU  has  supported  China’s  implementation  of  its  WTO  commitments,  as  well  as  its
participation  in  the  DDA  negotiations  through  trade-related  co-operation  projects.  In
addition  to  ongoing  projects  focusing  on  capacity-building  in  China's  government  and
administration, a new € 15 million project will shortly be launched, the largest programme of
this kind so far. The EC-China Co-operation Programme is also being used to complement the
various  sectoral  dialogues,  and  to  tackle  challenges  related  to  the  process  of  economic  and
social reform.

New action points

(cid:1)  Streamline  and  optimise  the  structure  of  dialogue  in  the  wider  economic  area,  taking
account  of  the  reorganisation  of  the  Chinese  administration,  with  the  aim  of  ensuring
effective co-ordination of activities by relevant authorities on both sides in all the sectors
referred to in this section.

WTO, trade and investment

(cid:1)  Reinforce  bilateral dialogue  and co-ordination related  to  the  new  round  of  multilateral
negotiations  under  the  WTO  Doha  Development  Agenda,  extending  its  coverage  to  all
DDA issues, with the aim of facilitating China’s participation in a forward looking WTO
agenda,  of  building  alliances  in  areas  of  mutual  concern,  and  of  jointly  building  bridges
between developed and developing countries.

(cid:1)  Reinforce monitoring of the implementation of China’s WTO commitments, inter alia by:

- making the best use of available resources in the Commission and  Member States
by enhancing networking and information-sharing between missions in Beijing, but also
between EU administrations in capitals;

- enhanced  co-ordination  and  information  exchange  with  European  industry  and  third

countries;

-

-

focusing not only on adaptation of Chinese laws and regulations to WTO rules, but also
on  their  full  and  uniform  implementation  and  enforcement  by  central,  regional  and
local authorities;

feeding  into,  and  following  up  on,  the  EU’s  contributions  to  the  annual  WTO  China
Transitional  Review  Mechanism  (TRM)  exercise  which  provide  a  clear  list  of  EU
priorities as regards Chinese WTO implementation;

18

- assisting  China 
conferences, 
programmes.

in 

its  WTO 

training  and  studies 

implementation  efforts 

through  visits,  seminars,
the  framework  of  relevant  co-operation

in 

(cid:1)  Strengthen  dialogue  with  the  Chinese  administration  on  WTO  implementation  and
bilateral  trade  and  investment  issues  at  all  levels,  to  provide  an  effective  system  for
early warning and real-time management of disputes.

(cid:1)  Monitor  regional  integration  initiatives,  such  as  ASEAN+1,  as  well  as  initiatives  for
bilateral free trade areas between China and third countries, safeguarding EU interests,
ensuring that any new arrangements are fully compatible with WTO rules and frameworks,
and that relevant efforts do not interfere with the DDA negotiations.

(cid:1)  Launch  a  dedicated  dialogue  on  intellectual  property  rights  issues  with  relevant
Ministries  and  IPR  agencies,  given  the  continued  pervasiveness  of  IPR  infractions  in
China.

(cid:1)  Support the growth of the European Chamber of Commerce in China (EUCCC), the
expansion of its scope of activities, as well as a stronger presence in the regions; promote
the speedy integration of companies from new EU Member States into the EUCCC.

(cid:1)  Support  possible  initiatives  by  EU  industry,  notably  the  EUCCC,  but  also  EU-based
organisations, such as the EU-China Business  Association  (EUCBA),  to  facilitate mutual
understanding  and  develop  common  business  practices,  as  well  as  to  establish  a  regular
dialogue on trade and investment issues with Chinese government and industry, feeding
into bilateral government-to-government dialogue.

(cid:1)  Reinforce trade-related co-operation programmes:

-

launch planned major projects in the area of WTO support and information society;

- continue other, ad hoc actions such as WTO seminars with Commission participation;

-

review the  role and weight of, and methods  of delivery for,  trade-related assistance in
the National Indicative Programmes (NIPs) for 2002-2004 and 2005/2006, including in
areas like trade and environment.

(cid:1)  Make  better  use  of  trade-related  cooperation  programmes  to  support  EU-China
dialogue  in  areas  such  as  trade  and  investment,  making  best  use  of  possibilities  existing
under relevant co-operation projects (e.g. round tables with business involvement foreseen
in the ongoing Financial Services Project).

(cid:1)  Launch  negotiations  on  an  agreement  on  co-operation  and  mutual  assistance  in  customs

matters by the end of 2003, with a view to conclusion in 2004.

(cid:1)  Analyse  China’s  formal  request  for  full  ‘Market  Economy  Status’  for  the  entire  Chinese
economy  under  the  EC’s  antidumping  instrument,  taking  account  of  China’s  progress
towards  EU  market  economy  criteria  as  documented  in  the  request;  continue  to  consider
objectively the requests of individual Chinese companies for ‘market economy’ treatment
in anti-dumping investigations.

19

(cid:1)  Make full use of the benefits that EU enlargement will bring for EU-China economic ties
to  deepen  the  relationship  further,  and  allay  groundless  Chinese  fears  about  a  negative
impact  on  trade  flows;  take  account  of  the  implications  of  enlargement  by  associating
new EU Member States and their industries to the actions listed in this section.

(cid:1)  Examine  China’s  request  for  special  trade  preferences  under  the  special  incentive
arrangements  for  environmental  protection  of  the  EC’s  Generalised  System  of
Preferences (GSP).

Sectoral issues

(cid:1)  Fully  implement  the  successful  dialogue  on  industrial  products  by  closely  involving
industry  and  other  interested  parties,  not  least  to  deal  effectively  with  potential  technical
barriers to trade on both sides.

(cid:1)  Strengthen  the  recently  extended  dialogue  on  the  Information  Society,  to  cover  both

information society and communications regulatory policy.

(cid:1)  Continue the efforts to resolve the current disputes on food safety issues. Building on these
efforts, reinforce dialogue on sanitary and phytosanitary (SPS) issues,  with  the mutual
aim of ensuring  that trade takes place in the framework  of  standards which  are based on
science  and  agreed  international  rules.  Implement  SPS-related  actions  foreseen  under
planned trade-related cooperation programmes, and explore options for further support in
this area. Pursue the initiative to establish a dialogue with China on competition policy.

(cid:1)  Conclude  ongoing  negotiations  for  an  agreement  on  visa  and  related  issues  concerning
visits of tourist groups from China (agreement on “Authorised Destination Status”) by
the end of 2003, thus facilitating EU-bound tourism by Chinese citizens.

(cid:1)  Strengthen existing policy dialogues on environment and energy, and complement them
by implementing planned co-operation  projects  on  environmental  capacity-building  and
sustainable development. Through the Commission’s participation in the China Council for
International  Co-operation  on  Environment  and  Development,  help  identify  priorities  for
future co-operation in this area.

(cid:1)  Launch  formal  negotiations  for  a  nuclear  research  co-operation  agreement  as  soon  as

possible in 2003, with a view to a rapid conclusion of the agreement.

(cid:1)  Further  expand  co-operation  under  the  1999  EC-China  Science  and  Technology
Agreement, making best use of the new possibilities provided by the EC Sixth Framework
Programme, including in areas such as biotechnology or the “Digital Olympics” initiative
for Beijing  2008. Hold the second high-level “China-Europe  S&T  and  Innovation  Policy
Forum” in Beijing in the second half of 2004.

(cid:1)  Support  China’s  interest  to  join  the  ITER  fusion  research  project,  and  continue
negotiations for an agreement on the possible joint implementation of ITER, aiming at a
conclusion by the end of 2003.

(cid:1)  Continue  negotiations  for  an  agreement  on  EU-China  co-operation  under  the  EU’s
GALILEO programme for global satellite navigation, aiming at a conclusion by the end
of  2003.  The  objective  is  to  bring  China  as  a  full  partner  to  the  programme,  including
investment through the Galileo Joint Undertaking.

20

Economic and Social Reform

(cid:1)  Continue supporting China’s reform process across the board through dialogue and co-
operation,  including  by  making  best  possible  use  of  experience  from  the  comparable
transition processes of EU accession candidates.

(cid:1)  Pursue  the  initiative  to  launch  a  policy  dialogue  in  the  field  of  education  and  human

resources development, with the full involvement of the Ministry of Education.

(cid:1)  Establish exchanges of experience between relevant authorities on both sides responsible
for  regional  policy,  with  a  view  to  contributing  to  policies  for  reducing  regional  and
urban/rural divides in China.

(cid:1)  Launch the planned co-operation project supporting social security reform, and develop

new programmes in the area of human resources development.

(cid:1)  Establish  a  new  dialogue  on  industrial  policy,  to  contribute  to  the  improvement  of  the
competitiveness  of  businesses  on  both  sides,  and  to  enhance  mutual  understanding  of
regulatory frameworks on both sides.

(cid:1)  Promote exchanges in the area of macro-economic policy, e.g. on the Euro, exchange rate

policies, China’s economic reform process, and other issues of mutual interest.

(cid:1)  Make efforts to involve civil society more closely in existing and new exchanges, e.g. in

the field of environmental protection.

3.4

The  EC-China  Co-operation  Programme  –  a  mutually  beneficial  partnership
underpinning EU objectives

The context, and implementation of action points in the 2001 Communication

The China Country Strategy Paper (CSP) covering the period 2002–2006, and the National
Indicative Programme  (NIP)  for  2002–2004 were  approved by the  Commission  in  February
2002, with indicative funding of up to € 250 million for the period of the CSP. They represent
a significant move towards an approach which is predicated on support for the EU’s overall
objectives in the framework of its China policy, albeit, in a mutually beneficial way.

In line with this policy, the CSP  addresses the three  following  specific  objectives,  broadly
designed to assist China in its reform process, while capitalising on the particular added value
that the EC can provide when compared with other donors:

– 

– 

– 

Support  for  the  social  and  economic  reform  process  (WTO  implementation,
information society, social security reform, human resources development)

Support for environmental protection and sustainable development (water resources,
biodiversity protection), and

Support for good governance and the rule of law (illegal migration, support to civil
society).

21

In addition to ongoing co-operation activities under the national programme, which amount to
approximately  €  260  million  in  terms  of  multi-annual  financial  commitments,  it  should  be
noted  that  China  is  a  major  participant  in,  and  beneficiary  of,  a  number  of  regional  EC-
financed  Asian  programmes.  These  include  the  EU-Asia  Pro  Eco  Programme  on  the
improvement of environmental performance in economic sectors; the Asia-Invest Programme
promoting  business  partnerships;  the  Asia  Information  Technology  and  Communication
Programme  which  co-finances  mutually  beneficial  partnerships  between  Europe  and  Asia;
and  the  Asia-Link  Programme  which  promotes  networking  between  higher  education
institutions.

Under  these  Asia-wide  programmes,  China  is  currently  participating  in  between  35%  and
50% of all proposals approved for  financing,  and is  involved in activities for  which  the  EC
contribution amounts to some € 21 million.

Considerable progress has been made in establishing the required environment for enhanced
EU-China  co-operation,  in  particular  through  the  completion  of  the  devolution  of
preparation  and  management  responsibilities  for  bilateral  projects  from  Commission
Headquarters  to  the  Delegation  in  Beijing,  with  the  corresponding  reinforcement  of  the
Delegation’s  human  resources,  and  through  regular  co-ordination  with  Member  States  and
other  donors.  Furthermore,  the  focussing  of  the  co-operation  programme  on  a  limited
number of larger interventions in key sectors will in the longer term enhance programme
effects and impact.

Some  delays  and  difficulties  in  the  implementation  of  the  2002-2004  NIP  have  however
been encountered. These are in part related to the complexity and sensitivity of the issues to
be  addressed  in  the  Chinese  context  –  an  example  is  the  planned  programme  on  illegal
migration – and in part to the fact that the CSP/NIP programming  approach to co-operation
has  not  yet  been  fully  internalised  at  all  levels  on  the  Chinese  side,  where  improved  inter-
ministerial co-ordination and role definition is required.

This latter point is increasingly proving to be a constraint for programme implementation. The
EC’s principal Government interlocutor on co-operation matters is the Ministry of Commerce
which has been the most appropriate focal point for the co-ordination of programme planning
and  implementation.  However,  with  the  current  shift  in  orientation  of  the  EC-China  co-
operation  programme  away  from 
towards  sectoral
interventions  which  are  increasingly  aligned  with  EU  policies,  a  greater  degree  of
involvement of line Ministries is required. If the Ministry of Commerce is to continue in its
co-ordinating  role  for  the  overall  programme,  more  responsibilities  should  in  general  be
devolved to line Ministries for the preparation and implementation of specific interventions.

traditional  development  projects 

While progress on NIP support for WTO implementation, the environment, and civil society
remain broadly on track, the delays encountered in other areas will result in a concentration of
activities toward the end of the NIP’s duration. While the now-completed devolution exercise
should result in more rapid commitments and implementation, this nevertheless constitutes an
important challenge.

These elements will be taken into account under the Mid-Term Review of the CSP and NIP
which is under way. While the CSP and the co-operation priorities stemming from it remain
fully valid and responsive both to Community policies and to China’s policies under its new
leadership,  an  important  review  of  the  NIP  is  required  in  order  make  the  necessary
adjustments and to ensure that revised and attainable targets are defined.

22

New action points

(cid:1)  Complete  the  Mid-Term  Review  of  the  CSP  and  the  2002-2004  NIP  during  the  second

half of 2003.

(cid:1)  Prepare a new NIP for the period 2005-2006 by the first quarter of 2004, building on the
experience  gained  in  the  implementation  of  the  2002-2004  NIP,  while  at  the  same  time
remaining focussed on the objectives specified in the overall framework of the 2002-2006
CSP. This will take account, inter alia, of Trade-Related Technical Assistance.

(cid:1)  Ensure  appropriate  consultation  with  the  Chinese  authorities  in  preparing  the  new

NIP, in order to enhance ownership and facilitate implementation.

(cid:1)  Reconfirm  with  the  Chinese  authorities  the  multi-annual  –  as  opposed  to  annual  –

programming approach under the CSP as the basis for EC co-operation.

(cid:1)  Promote  improved  co-ordination  of  project  and  programme  preparation  and

implementation through the greater allocation of responsibilities to line ministries.

(cid:1)  Ensure a co-ordinated approach between the implementation of the NIP and the various
related  horizontal  assistance  programmes  from  which  China  benefits,  notably  the
European Initiative for Democracy and Human Rights (EIDHR), and NGO budget lines.

(cid:1)  In view of the importance of the EC-China co-operation programme as a vehicle of support
for the EU’s China policy, strengthen dialogue on co-operation matters, notably in the
wider context of the EU-China Joint Committee.

3.5

Raising the EU's profile in China

The  development  of  EU-China  relations  requires  better  understanding  between  partners.
Growth of relations, as well as changes on both sides, such as China’s entry to WTO or the
EU  enlargement  process,  also  require  a  review  and  adjustment  of  the  EU’s  communication
strategy. The increasing  access of  individual  Chinese  citizens  to  sources  of  information,
through the development of information technologies, telecommunications and travel abroad,
represents opportunities for enhanced EU visibility.

China’s geopolitical vision of a multipolar world, and the Chinese perception of the EU as a
partner of growing importance, also provide a favourable context for increased EU visibility.
However,  more  needs  to  be  done  to  raise  EU  visibility  in  China.  The  EC  Delegation  in
Beijing, Member States as well as others, such as the European Chamber of Commerce have
already made great efforts to raise the EU’s profile through daily contacts, the dissemination
of information and publications, and the organisation of public events.

To ensure the long-term sustainability of the EU-China relationship and the political dialogue,
it is crucial that the EU becomes more visible in China, both to the general public and to its
leadership. In this respect, emphasis should be put on a few key messages, for example:

– 

The EU, as a global player on the international stage, shares China’s concerns for a
more balanced international order based on effective multilateralism, and wants to
engage China as a responsible power in the management of global issues.

23

– 

– 

– 

The  EU  stands  for  a  set  of  common  values,  with  democracy,  human  rights  and
peaceful resolution of conflicts through multilateral mechanisms at the core of it. Its
unique  raison  d’être  and  institutions  differentiate  the  EU  from  classical  regional
organisations.

As  a  model  of  successful  regional  integration  and  of  governance  under  the  rule  of
law, the EU supports ongoing reforms in China and is ready to help China address
current challenges of its economic and social transition.

The  EU  is  a  major  global  trading  power  and  market.  It  is  willing  to  strengthen
exchanges with China and to help China further integrate in the global economy.

Along with coherent messages, internal EU policy cohesion is vital to enhance EU visibility
in China. Communication strategies and the EC-China Co-operation Programme should thus
be  closely  linked  to  the  EU’s  broader  political  objectives,  in  order  to  ensure  overall  policy
coherence.  It  is  equally  important  to  ensure  co-ordination  of  policies  with  Member  States,
including in the field of communication and co-operation.

To  foster  mutual  understanding,  efforts  should  be  undertaken  to  promote  people-to-people
contacts, through increased tourist, educational and cultural exchanges.

The context, and implementation of action points in 2001 communication

Activities  regarding  information  on  the  EU  of  the  EC  Delegation  in  Beijing  have  been
intensified.  Targeted  communication  actions  such  as  an  extensive  Euro  campaign  have
attracted  wide  coverage  in  China.  Financial  and  staff  resources  are  being  reinforced,  but
remain limited. The web site of the Delegation has become fully operational in English and
Chinese.  Collective  and  individual  visits  to  Brussels  of  Chinese  journalists  have  continued.
Most EU-China co-operation programmes also now include publicity activities.

People-to-people contacts, educational and cultural exchanges were also intensified. The EU
Visitors Programme continues to be a valuable means to bring Chinese decision and opinion
makers to Brussels to acquire first hand knowledge of Europe. The EC Delegation in Beijing
strengthened  links  with  academia  through  the  organisation  of  round  tables  around  visits  by
EU  personalities,  and  the  launching  of  the  European  Studies  Centres  Programme.  In  the
cultural field, the EC Delegation and Member States have co-ordinated their participation in
events such as Shanghai International Film Festival.

New action points

(cid:1)  Conduct a survey on public perceptions of the EU in China to identify information needs

and gaps and help establish a targeted approach.

(cid:1)  Improve  knowledge  and  awareness  of  the  EU  in  China  through  the  provision  of
comprehensive and up-to date information on EU policies, notably via Internet and audio-
visual media, and with a special focus on enlargement and institutional developments
within  the  EU,  e.g.  through  an  enlargement  road  show.  Extend  information  activities
beyond Beijing to China’s major cities.

24

(cid:1)  Systematically  issue  press  releases  and/or  hold  press  conferences  in  Beijing  on  the
occasion  of  major  meetings  such  as  Summits,  Joint  Committees  and  sessions  of  the
human  rights  dialogue.  Try  to  find  common  ground  with  the  Chinese  side  to  issue  joint
statements, especially after EU-China Summits.

(cid:1)  Consider organising annual round tables alternatively in China and in the EU gathering

Chinese and European journalists with EU personalities.

(cid:1)  Raise  the  level  of  co-ordination  with  Member  States  on  information  policy,  to  ensure
that  key  EU  messages  are,  whenever  feasible,  included  in  public  parts  of  high  level
bilateral visits to China.

(cid:1)  Raise  awareness  in  China  of  EU  co-operation  with  China,  e.g.  through  systematic
inclusion  of  publicity  activities  in  the  scope  of  co-operation  projects,  field  visits  by
journalists  to  projects,  and  increased  project  participation  in  business  and  academic  fairs
and exhibitions, including at regional level.

(cid:1)  Further reinforce people-to-people exchanges, by making use of co-operation activities to
foster  links  between  European  and  Chinese  NGOs  and  social  bodies,  strengthening
contacts  with  universities  which  provide  European  Studies  courses,  and  developing
cultural, educational and research  initiatives  in  the  framework  of  existing  or  planned  EU
programmes such as Erasmus World and the Marie Curie fellowships, while encouraging
students, researchers, and Chinese universities to participate in such programmes.

4.  IMPROVING THE MECHANISMS OF THE RELATIONSHIP

The expansion and strengthening of EU-China dialogue across the board has shown the need
to streamline and further develop the current institutional structure of the relationship, in
particular  as  regards  the  interaction  between  meetings  at  different  levels  and  in  the  various
areas, and emphasising quality over quantity of dialogue. Proposals have been made in the
preceding sections for enhancing the effectiveness of dialogue in the political, economic and
other  fields.  Experience  proves  that  there  is  also  a  need  for  an  effective  high-level  co-
ordination  of  the  entire  breadth  of  EU-China  relations,  over  and  above  improvements
within  the  different  strands  of  dialogue,  and  in  keeping  with  the  EU’s  overall  aim  of  a
comprehensive  partnership  with  China  in  all  areas.  This  general  objective  also  militates  in
favour of increasing the profile and visibility of high-level meetings.

To this end, the following actions are proposed:

(cid:1)  Summits  and  meetings  at  ministerial  level  should  focus  on  a  limited  set  of  strategic
priorities.  This  will  increase  the  strategic  importance  of  EU-China  Summits  and
Ministerials, allow for more free-flowing dialogue on selected topics, increase chances for
concrete results, and in turn heighten their political visibility.

(cid:1)  The mandates of different high-level EU-China fora should be adjusted and clarified, to

allow a better burden-sharing and division of responsibilities between them:

- Summits  should  cover  the  whole  breadth  of  the  relationship.  However,  their  agendas
should be focussed to inject political momentum into the relationship and project a joint
vision of world affairs, in the political and other fields.

25

- Foreign  Ministers  Troikas  should  cover  political  and  human  rights  issues,  but  also,

where appropriate, selected trade and sectoral issues.

- The  steering  role  of  the  EC-China  Joint  Committee  should  be  reinforced  so  as  to
cover  the  wider  economic  area,  i.e.  not  only  trade  and  investment  issues,  but  also  the
fast  expanding  sectoral  dialogue  and  the  EC-China  Co-operation  Programme,  thus
maximising synergies between the three areas in question. To this end, the participation
of relevant line ministries in the Joint Committee should be enhanced.

- Regional  Directors  Troikas  should  focus  on  EU  and  Asian  economic  and  political

integration, as well as on regional crises.

- Political Directors Troikas should cover political and other issues of global concern.

(cid:1)  To allow Summits to provide direction and stimulus to overall relations effectively, they
should, wherever possible, be held on  a stand-alone basis, rather than back-to-back  with
other events, in order to ensure adequate time appropriation and to increase visibility.

(cid:1)  For the same reason, and to provide a visible reflection of the increasing importance of the
relationship, it could be considered to upgrade the level of Summits to presidential level.

(cid:1)  Chinese  President  Hu  Jintao  should  be  invited  to  visit  Brussels  in  the  near  future,  and
reciprocal  visits  of  senior  EU  leaders,  including  Commission  President  Prodi,  to  Beijing
arranged,  to  give  further  expression  to  the  growing  political  weight  of  the  EU-China
relationship.

26

Annex 1

EU-China Dialogue

Political Dialogue

Summit
(annual)

Troika 
Ministerials 
(1-2 p.a.)

Meetings between GAERC 
President and Chinese 
Ambassador in Presidency Capital 
(1x/presidency)

Meetings between Chinese Foreign 
Minister and EU Heads of Mission 
in Beijing (1x/presidency)

Polical DirectorsTroikas 
(1x/presidency)

Regional Directors 
Troikas (1x/presidency)

High-level 
consultations on 
illegal migration

Human Rights 
Dialogue
 (1x/presidency)

Regular expert level meetings on

Asian 
affairs

non-
proliferation

conventional 
arms exports

Economic and sectoral dialogue and 
agreements

Joint Committee
Ministerial
SOM

Economic and Trade Working Group

Environment: High-
level dialogue and 
Environment 
Working Group

Energy Working 
Group

Information 
Society Working 
Group

Possible future 
dialogue on 
human resources 
development

Possible future 
dialogue on 
competition policy

Possible future 
dialogue on 
sanitary and 
phytosanitary 
standards

Dialogue on 
industrial policy 
and regulation 
(regulatory 
dialogue est'd; 
policy dialogue yet 
to be set up)

Possible future 
dialogue on 
intellectual 
propoerty rights

Science and 
Technology 
Steering 
Committee (under 
S&T agreement)

Maritime transport 
agreement

Future customs 
cooperation 
agreement 
(negotiations to be 
launched soon)

Future satellite 
navigation 
cooperation 
agreement 
(negotiations 
ongoing)

Future ADS 
agreement 
(negotiations 
ongoing)

Future nuclear 
research co-
operation 
agreement 
(negotiations to be 
launched soon)

established in the framework of / with reference to 1985 Trade and Economic 
Cooperation Agreement

dialogues under existing or planned sectoral agreements

27

ANNEX 2

50

40

30

20

10

0

-10

-20

)

%

,
r
a
e
y
-
n
o
-
r
a
e
y
(

e
t
a
r
h
t
w
o
r
G

50

40

30

20

10

0

-10

-20

)

%

,
r
a
e
y
-
n
o
-
r
a
e
y
(

e
t
a
r
h
t
w
o
r

G

35

30

25

20

15

10

5

0

-5

-10

-15

)

%

,
r
a
e
y
-
n
o
-
r
a
e
y
(

e
t
a
r
h
t
w
o
r

G

)
n
b
o
r
u
E

(

e
m
u
o
v

l

e
d
a
r
T

500000

450000

400000

350000

300000

250000

200000

150000

100000

50000

0

China

US

Japan

Growth (China)

Growth (US)

Growth (Japan)

)
n
b
o
r
u
E

(

e
m
u
o
v

l

e
d
a
r
T

250000

200000

150000

100000

50000

0

China

US

Japan

Growth (China)

Growth (US)

Growth (Japan)

)
n
b
o
r
u
E

(

e
m
u
o
v

l

e
d
a
r
T

300000

250000

200000

150000

100000

50000

0

China

US

Japan

Growth (China)

Growth (US)

Growth (Japan)

EU trade with the world and China (€ million)
(exluding intra-EU trade)
Source: EUROSTAT (COMEXT)

Total trade

1998

59.386

313.564

97.609

10,4

12,9

2,3

1999

69.006

343.604

107.284

16,2

9,6

9,9

2001

106.003

435.559

121.218

10,7

0,9

-8,2

2000

95.773

431.493

132.068

38,8

25,6

23,1

EU imports

2002

115.270

412.860

109.966

8,7

-5,2

-9,3

2003 (I-IV)

41.554

125.192

36.533

18,0

1998

41.974

152.019

66.042

12,4

11,2

11,3

1999

49.655

160.588

71.911

18,3

5,6

8,9

2001

75.915

195.655

76.298

8,0

-1,7

-12,4

2000

70.275

199.024

87.133

41,5

23,9

21,2

EU exports

2002

81.289

174.162

67.807

7,1

-11,0

-11,1

2003 (I-IV)

29.143

52.378

23.120

16,1

1998

17.411

161.545

31.567

5,9

14,6

-12,5

1999

19.351

183.016

35.374

11,1

13,3

12,1

2000

25.498

232.470

44.936

31,8

27,0

27,0

2001

30.087

239.904

44.920

18,0

3,2

0,0

2002

33.981

238.698

42.159

12,9

-0,5

-6,1

2003 (I-IV)

12.411

72.814

13.413

23,0

28

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
)
n
b
D
S
U

l

(
e
m
u
o
v
e
d
a
r
T

120

100

80

60

40

20

0

-20

EU

US

Japan

Growth (EU)

Growth (US)

Growth (Japan)

)
n
b
D
S
U

(

e
m
u
o
v

l

e
d
a
r
T

60

50

40

30

20

10

0

-10

EU

US

Japan

Growth (EU)

Growth (US)

Growth (Japan)

)
n
b
D
S
U

(

e
m
u
o
v

l

e
d
a
r
T

80

70

60

50

40

30

20

10

0

-10

-20

EU

US

Japan

Growth (EU)

Growth (US)

Growth (Japan)

1998

48,9

54,8

57,9

13,6

11,9

-4,8

1998

20,8

16,9

28,3

8,1

3,6

-2,5

1998

28,1

37,9

29,7

18,1

16,0

-6,8

China's trade with major partners (USD bn)
Source: Chinese Government (MOFCOM / MOFTEC)

Total trade

45

40

35

30

25

20

15

10

5

0

)

%

,
r
a
e
y
-
n
o
-
r
a
e
y
(
e
t
a
r
h
t
w
o
r
G

40

35

30

25

20

15

10

5

0

)

%

,
r
a
e
y
-
n
o
-
r
a
e
y
(

e
t
a
r
h
t
w
o
r
G

50

45

40

35

30

25

20

15

10

5

0

)

%

,
r
a
e
y
-
n
o
-
r
a
e
y
(

e
t
a
r
h
t
w
o
r
G

1999

55,7

61,4

66,2

13,9

12,0

14,2

2000

69,0

74,5

83,2

24,0

21,2

25,7

2001

76,6

80,5

87,8

11,0

8,1

5,5

2002

86,8

97,2

101,9

13,2

20,8

16,2

2003 (Jan.-April)

35,6

36,3

40,3

39,4

36,3

33,7

China's imports

2002

38,5

27,2

53,5

7,9

3,9

25,0

2003 (Jan.-April)

15,6

11,1

22,3

35,5

36,9

48,6

2002

48,2

70,0

48,4

17,9

28,9

7,8

2003 (Jan.-April)

19,9

25,2

18,0

44,6

34,9

23,7

1999

25,5

19,5

33,8

22,7

15,4

19,4

1999

30,2

41,9

32,4

7,4

10,5

9,3

2001

35,7

26,2

42,8

15,8

17,2

3,1

2001

40,9

54,3

45,0

7,1

4,2

7,9

2000

30,8

22,4

41,5

21,2

14,8

22,9

China's exports

2000

38,2

52,1

41,7

26,4

24,2

28,5

29

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign Direct Investment (FDI) in China

Source: Chinese Government (MOFCOM / MOFTEC)

New FDI inflows (USD bn)

60

50

40

30

20

10

0

l
a
t
o
T

1999

4,5

4,4

3,0

2,6

2,6

15,8

40,4

2000

4,5

4,4

2,9

2,3

2,2

15,5

40,7

2001

4,2

4,4

4,3

3,0

2,1

16,7

46,9

Share in new FDI inflows

2002

3,7

5,4

4,2

4,0

2,3

17,9

52,7

s
r
e
n
t
r
a
p
n
i
a
M

20

15

10

5

0

EU

US

Japan

Taiwan

Singapore

Hong Kong*

Total

1998

4,0

3,9

3,2

3,0

3,3

18,5

45,6

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%

EU

US

Japan

Taiwan

Singapore

1998

8,7%

8,6%

6,9%

6,7%

7,2%

1999

2000

11,1%

10,9%

7,4%

6,5%

6,5%

11,0%

10,8%

7,2%

5,6%

5,3%

2001

8,9%

9,5%

9,3%

6,4%

4,6%

2002

7,0%

10,3%

7,9%

7,5%

4,4%

2003 (Jan.-
March)

7,6%

8,4%

8,4%

6,9%

4,6%

Hong Kong*

40,6%

39,2%

38,1%

35,7%

33,9%

34,4%

Aggregate FDI (stocks, end of 2002)

(USD bn)

(% share)

78,3

33,1

21,5

33,9

36,3

39,9

204,9

Hong Kong*

USA

Japan

EU

Singapore

Taiwan

Other

17,5%

7,4%

4,8%

7,6%

8,1%

8,9%

45,7%

*) Chinese data on HK FDI are thought to be hugely exaggerated, as tax privileges offered to attract FDI prompt Chinese investors to export funds to 
Hong Kong and to repatriate them in the form of FDI. Moreover, large amounts of Taiwanese FDI pour into China through Hong Kong, skirting 
Taiwanese restrictions; Chinese figures capture only part of these (official figure for aggregate utilised Taiwanese FDI is 29 bn, but analysts 
estimates range from 70-100 bn).

30

 
EU-CHINA CO-OPERATION PROJECTS

ANNEX 3

This list includes projects financed under the following budget titles and budget lines:
B7-3
B7-7
B7-6000
B7-6212

Co-operation with Asian Developing Countries
European Initiative for Democracy and Human Rights (EIDHR)
NGO co-financing
Health, Population, Fight against HIV/AIDS

PROJECTS AND PROGRAMMES UNDER IMPLEMENTATION

Sector

General

Human Resource 
Development

Rule of Law and Good 
Governance

Economic and Social 
Reform

Environment

Rural and Agricultural 

NGO Co-Financing and 
Health/Population

Total:

Project

EU-China Small Project Facility 2001/2005
China-Europe International Business School (Phase II)
EU-China Junior Managers Training Programme
China Europe Public Administration Project (CEPA)
EU-China Prog. for the Development of Vocational Training 
Basic Education Project in Gansu Province
STD/HIV/AIDS Training Programme 
Chinese Interpreters Training Programme 2001-2004
European Studies Centres Programme (ESCP)
EU-China Legal and Judicial Co-operation Programme
EU-China Village Governance Training Programme
EU-China Intellectual Property Rights Co-operation Prog.
China Human Rights Project Facility
EU-China Network on Human Rights Covenants
Co-op. in Economic Social and Cultural Rights in Yunnan 
EU Support to China's Accession to the WTO
EU-China Financial Services Co-operation Project
EU-China Enterprise Reform Project
EU-China Civil Aviation Co-operation Project
Support for China's Integration into the World Trading System
EU-China Liaoning Integrated Environmental Programme
Environmental Management Co-operation Project (EMCP)
Vehicle Emmissions Control Project
Natural Forest Management Project
Energy and Environment Programme
Municipal Solid Waste Management Reform
Pa-Nam Integrated Rural Development (Tibet)
Improving Access to STD Services in Urban Areas in China
Maternal and Child Health Care Project, Mid-West China
Child Welfare in Communities
Support to Health Policy in Disfavoured Regions of Wester 
China
Rural Poverty Alleviation and CommunityCapacity Building
Yunnan Integrated Primary Health Care
Povert Alleviation for Communities in Western China
Sershul County Health Initiative, Sichuan Province
Leprosy Rehabilitation Programme

EC Grant   
(€)

8.000.000
10.950.000
11.640.000
5.700.000
15.100.000
15.000.000
400.000
390.000
10.330.000
13.200.000
10.670.000
5.600.000
840.000
1.730.000
830.000
3.600.000
8.500.000
8.500.000
12.570.000
15.000.000
37.000.000
13.000.000
840.000
16.500.000
20.000.000
460.000
7.600.000
1.070.000
880.000
1.000.000

800.000
500.000
710.000
750.000
110.000
500.000

Subtotal

8.000.000

69.510.000

32.870.000

48.170.000

87.800.000
7.600.000

6.320.000
260.270.000

31

REGIONAL PROGRAMMES IN WHICH CHINESE INSTITUTIONS ARE PARTICIPATING(1)

Category

Project

Regional Programmes

Total:

Asia Pro Eco (2003 Call for Proposals, 1st Deadline)
Asia-Link (2002 Call for proposals)
Asia-Invest (1997-2002)
Asia Urbs (2002 Call for Proposals)
Asia IT & C (2002 Call for Proposals)

EC Grant   
(€)

1.890.000
4.930.000
9.130.000
850.000
4.480.000
21.280.000

(1) Reference year 2003.  China also participates in the ASEM Trust Fund II Regional Programme 
(total funding €20 million) and benfits from EC support to the Asia-Europe Foundation (total funding
€3.5 million)

PROJECTS AND PROGRAMMES UNDER PREPARATION

Category

Project

Social Security Reform
Information Society
Human Resources Development
Environment Programmes
Information Technology Project
Support to Civil Society
Fight against Illegal Migration

Projects under preparation

Total

EC Grant   
(€)

Total 
indicative 
funding €135
million

135.000.000

32