Promoting 'green' and 'social' values with China : assessing EU trade-related cooperation on sustainable development.
Date: 2022-06-15
Institutions: European University Institute
Subjects: China, EU institution, common commercial policy, environmental policy, multilateral relations, policymaking, sustainable development, trade agreement (EU), trade relations, value of trade

ROBERT
SCHUMAN 
CENTRE

Promoting 'Green' 
and 'Social' Values 
with China 

Assessing EU trade-related cooperation  
on sustainable development

Weinian Hu and Jacques Pelkmans

© European University Institute, 2022
Editorial matter and selection © Weinian Hu and Jacques Pelkmanse, 2022

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PROMOTING 'GREEN' 
AND 'SOCIAL' VALUES 
WITH CHINA

Assessing EU trade-related cooperation 
on sustainable development

Weinian Hu and Jacques Pelkmans

This  project  received  funding  from  the  European  Union’s  Horizon  2020 
research  and  innovation  programme  under  grant  agreement  number 
770680  (RESPECT).  The  content  of  this  document  represents  only  the 
views of the authors and is their sole responsibility. The European Com-
mission does not accept any responsibility for use that may be made of the 
information it contains.

Table of Contents

Preface  

i

1. Promoting ‘Green’ And ‘Social’ Values With China  1

1.1 Our research: coverage, research questions and  
overall inference 

1.2 EU-China sustainable development cooperation:  
methods and intensity  

1.3 What prospects for EU-China cooperation in  
sustainable development? 

2. The EU-China Dialogue Structure 

2.1 The structure of the EU-China  
dialogue architecture   

2.2 Other EU institutions’ and Member States’  
dialogues with China   

2.3 Functions   

2.4 Exploring new areas of mutual interests to  
achieve a win-win situation for both 

2.5 Environment Policy Dialogue  

2.6 A platform for capacity-building 

2.7 US-China policy consultation  
(vis-à-vis the EU-China dialogue architecture)   

2.8 Conclusion 

3. EU Values, International Conventions and China  

3.1 Identifying ‘EU values’ from EU FTAs and  
multilateral obligations 

3.2 Social values: blending bilateral and  
multilateral commitments 

3.3 Green values: blending bilateral and  
multilateral commitments 

2

6

8

11

13

29

31

47

49

55

61

65

68

71

73

79

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.4 The green and social fall-out from the  
Chinese growth machine 

3.5 Three transformations enabling high and  
sustained economic growth 

3.6 The green costs of China’s super growth 

3.7 The social costs of China’s super growth 

4. EU/China Sustainable Development Cooperation:  
Towards Convergence?  

4.1 Measuring ‘green’ convergence   

4.2 The social dimension of China’s transformation  
to a market economy   

4.3 Research question 2: EU/China policy  
convergence as of 2020 

4.4 China’s Social Protection in 2020 

4.5 25 years of EU/China cooperation in the  
green pillar of sustainable development  

4.6 Answering the third research question for the  
green and social pillars 

5. Prospects For Eu-China Cooperation On  
Sustainable Development 

5.1  EU-China sustainable development  
cooperation – a little recognised success story 

5.2  Bilateral ‘green’ and ‘social’ cooperation:  
more of the same?  

5.3  Conflicting signals about EU-China  
sustainable development cooperation in future  

References 

83

86

93

100

103

106

131

155

194

212

246

257

257

260

265

269

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
List of Figures

Figure 1: EU-China Dialogue Architecture 

Figure 2: China’s consistently high economic growth:  
1973-2018 

Figure 3: Environmental profile of Chinese industry 

Figure 4: China’s green growth indicators relative t 
o OECD in 2015 

Figure 5: China and the OECD: Environmental  
trends and economic growth 

Figure 6: Carbon intensity in the world: 2018 

Figure 7: World coal consumption 2018   

Figure 8: Distribution in China of surface water  
by water quality, in July 2019 

Figure 9: PM2.5 levels in China and the OECD,  
comparing 2000 and 2017 

Figure 10: Poverty eradication in China (%),  
based on Yuan 2300 p.y. (2010 pr.) 

Figure 11: Trend of Human Development  
Indices in China: 1995-2018 

Figure 12: Trend in HDI components in China:  
health, education and income 1995-2018  

Figure 13: China’s health (life expectancy at birth)  
index: 1995-2018 

Figure 14: China’s ratio of urban over rural  
p.c. incomes: 1978 - 2017 

Figure 15: Level of provincial HDIs in China:  
2017, 31 provinces 

Figure 16: Fatality rate of China’s coal mines:  
deaths per million tons (2000-2010) 

15

85

109

110

112

116

117

122

129

200

203

205

205

208

209

238

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
List of Boxes 

Box 1: Employment & Social Policies Dialogue 

Box 2: Sustainable urbanisation partnership 

Box 3: Human Rights Dialogue   

Box 4: High-level Economic and Trade  
Dialogue (HLETD) 

Box 5: Competition Policy Dialogue 

Box 6: US-China cooperation on protection of  
geographical indications   

Box 7: Labour and social specifications in EU FTAs 

20

27

32

34

37

63

76

Box 8: Chinese U-turn in soil pollution, prevention 
 and control 

125

Box 9: Human Development in China in the early 1990s  141

Box 10: China’s ETS, an early assessment  

Box 11: Sustainable development and ‘green’  
commitments in the draft CAI 

Box 12: China and the EU: joint dominance of  
worldwide CDM 

Box 13: Problems of social protection for  
(outbound) rural migrant workers 

Box 14: The EU/China Partnership on Climate  
Change, 2005 

Box 15: Where China stands in environment and  
climate, the EPI rankings 2020 

160

180

192

197

228

249

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
List of Tables

Table 1: Adhering to MEAs: convergence between  
the EU and China 

Table 2: Recent air pollution trends in China:  
2015 – 2019 (% change)  

Table 3: China’s convergence with the EU  
“standard” on sustainable development 

Table 4: Contributions from the private sector  
to social protection in China 

Table 5: HDI trends of the BRICS compared:  
1995 - 2018 

Table 6: China’s multilateral convergence:  
Ratification of GSP+ & Other Conventions 

Table 7: EU-China cooperation on  
energy/environment/climate: 2003 – 2019 

Table  8: Summary of EU/China Roadmap on  
energy cooperation 2016-2020 

80

127

166

195

204

215

225

230

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
i

Preface

The present eBook is a product of the RESPECT project [ www.
respect.eui.eu ]. The authors are indebted to many colleagues from 
universities in Europe, China and the US, for insightful discussion 
and valuable suggestions. In particular, we wish to thank Bernard 
Hoekman  for  encouragement,  suggestions  and  his  insistence  to 
bring out this eBook. 

The theme and its in-depth treatment is neither a run-of-the-
mill  analysis  of  EU  Trade  Policy,  nor  of  EU-China  cooperative 
relations. Trade policy specialists do not deal with bilateral coop-
eration, with some occasional sectoral exceptions. The debates in 
the EU circuits are almost entirely focussed on trade negotiations 
and mutually agreed ‘hard’ obligations. We show that there is more 
and that, in the case of EU-China, it matters for sustainable devel-
opment whilst supporting an important plank of EU trade policy. 

Weinian Hu & Jacques Pelkmans

x

Weinian  Hu  is  a  Research  Fellow  in  the  Foreign  Policy  unit  at 
CEPS. Her research interests include EU-China trade relations and 
multilateral EU-Asia relations, with a focus on international trade 
law, patent law and intellectual property rights protection. She has 
served as consultant and team leader for the European Union for 
coordination  of  the  Asia-Europe  Meeting  (ASEM),  the  multilat-
eral  political  dialogue  process  between  Asian  and  the  European 
regions.

Jacques Pelkmans is an Associate Senior Fellow at the Centre for 
European Policy Studies (CEPS). He has held professorial appoint-
ments at the European University Institute, the European Institute 
of Public Administration, Maastricht University, Goethe Univer-
sity  Frankfurt  and  the  College  of  Europe  in  Bruges.  A  frequent 
advisor to Asian and European governments, the European Parlia-
ment, the European Commission and international organizations, 
he  has  published  extensively  on  EU  economic  integration,  EU 
trade and investment policy, the economics and political economy 
of EU regulation and technical standards, and ASEAN economic 
integration.

Preface1

1. PROMOTING ‘GREEN’ AND 
‘SOCIAL’ VALUES WITH CHINA

The EU has long been concerned about sustainable development 
in  China.  This  pre-occupation  refers  to  two  NTPOs  (non-trade 
policy objectives, often denoted as ‘values’): the ‘green’ pillar con-
sisting  of  environmental  policies  and  those  pursuing  the  miti-
gation of climate change, and the ‘social’ pillar of internationally 
recognised  labour  standards  in  eight  ILO  core  Conventions  and 
the accomplishment and sound implementation of adequate social 
protection for its citizens, in particular workers. Our research in 
the RESPECT project1 has focused on how EU-China cooperation 
with respect to these NTPOs has been built up over a period of 
some 25 years, and how effective it has turned out to be, without 
having  a  bilateral  FTA  –  hence,  no  ‘sustainable  development 
chapter’ in place. Nor does or did China benefit from GSP+ and 
hence  –  when  benefitting  from  GSP+  -  should  have  ratified  27 
international Conventions on human rights, sustainable develop-
ment and governance, and cooperated in the prescribed compli-
ance regime. 

The EU and China have cooperated with respect to sustainable 
development on a voluntary basis. The book attempts to systemati-
cally set out and explain the great activism in bilateral cooperation 
in  a  range  of  policy  domains  and  specialisations. This  range  has 
widened considerably over time. The numerous bilateral activities 
and commitments are, more often than not, underpinned by mul-

1 

 See http://respect.eui.eu 

2

tilateral  commitments,  whether  Agreements,  Treaties,  Conven-
tions or global diplomatic Declarations. 

1.1 Our research: coverage, research questions and 
overall inference

Our work covers a long time span, some 25 years since the mid-
1990s. Initially, the cooperation (and trade policy where relevant) 
with  China  was  mainly  development-oriented,  but  this  began  to 
change once the EU and China concluded the Strategic and Com-
prehensive  Partnership  in  2003.  Ever  since,  China  and  the  EU 
usually worked via Dialogues, at ministerial level as well as with 
annual  Summits,  in  which  joint  programming  was  announced. 
They spawned several series of projects (some, very large), applied 
programmes, working groups, exchanges, conferences and action 
plans with significant – often joint - funding for a period of two 
decades, and in energy even longer. This long-run working rela-
tionship avoided a legalistic approach with enforceable standards 
and/or targets set in FTAs or otherwise. Nevertheless, the EU and 
China  have  worked  fairly  consistently  on  sustained  progress  in 
both pillars, and frequently in operational, technical and practical 
terms rather than mere declaratory statements. However, this does 
not mean that the two partners did not enter commitments. Thus, 
in the green pillar both partners adhered, with ratification, to no 
less than 12 MEAs and related Protocols and Amendments. This 
is far more than the specific MEAs referred to in EU FTAs, even 
though China and the EU have never concluded a FTA together. 
In the social pillar the situation is more complicated and also less 
satisfactory. The leading multilateral set of commitments are ILO 
Conventions,  and  in  particular  the  eight  core  Conventions.  But 
China has not ratified four of these eight. Moreover, there are no 
international legal commitments for social protection, except for 
some aspects (in other ILO conventions), although this field has 
been effectively broadened via more encompassing ILO Declara-
tions, for example (to which some FTAs refer). 

Weinian Hu and Jacques Pelkmans3

There is another critical difference between the green and the 
social pillar: whereas private and/or public activities relevant for 
the  green  pillar  often  generate  major  negative  cross-border  or 
global externalities (mostly, via global warming but selectively also 
with air and water pollution; and positively with forestation if large 
enough), this is basically not the case for the social pillar, unless 
one is willing to argue that poverty risks and neglect of OSH (occu-
pational safety & health) distort the level-playing field in trade and 
investment  by  avoiding  significant  labour  costs  when  exporting. 
However,  if  one  would  support  the  level-playing  field  argument, 
this  may  also  apply  to  the  green  pillar  when  observing  a  strong 
avoidance of the cost of ‘clean’ production. The level-playing field 
argument – insofar as sustainable development is concerned - has 
not played a significant role in EU-China trade relations when it 
would have been best applicable, that is, when China was still a rel-
atively poor developing country. However, China is now an upper 
middle-income country and the argument is much less plausible 
insofar as sustainable development is concerned2, because – as we 
show – today’s China has significantly increased (costly) social pro-
tection and invested in stricter green laws as well as their (more) 
credible enforcement. 

We understand ‘coherence’ of external policies with respect to 
sustainable development as the coherence of EU trade and invest-
ment policies vis-à-vis China3 with the pursuit, if possible jointly 
with  China,  of  sustainable  development  in  China.  It  is  possible, 
especially recently – but only in the green pillar – that the EU can 
actually  improve  or  be  stimulated  by  China  in  the  area  of  green 
technologies such as renewables, e-vehicles and some of its compo-
nents. For most aspects, however, ‘coherence’ should be read as the 
pursuit of EU values – such as sustainable development – via EU 
trade  and  investment  policies  and  the  accompanying  EU-China 
cooperation. In the case of EU-China, the combination of EU trade 

2  There is a series of reasons outside the realm of sustainable development, where the lev-
el playing field does play a role, best summed up as systemic distortions in China. See 
European Commission (2017), Pelkmans (2018) and BusinessEurope (2020), among 
others. 

3 

Such coherence is required under Art. 21, TFEU (Lisbon treaty). 

Promoting 'Green' and 'Social' Values with China4

policy and very elaborate and active cooperation is truly unique. 
The present eBook attempts to demonstrate this uniqueness and to 
provide ample evidence to that effect. This uniqueness is reflected 
in the sheer quantity of EU-China Dialogues (some 68!, with 50 
or so on economic and trade-related issues, including sustainable 
development) but also in the consistency and continuity over time 
since the Strategic and Comprehensive Partnership began. Many 
of  these  Dialogues  or  activities  create  bilateral  working  relation-
ships and this  is  often – although not  always, for example when 
issues are sensitive - generating a degree of trust and recognition. 
In turn, this can often lead to better and more tangible results. And 
such results may inspire further cooperation.

The  typical  EU  cooperative  approach  to  sustainable  devel-
opment  in  external  policies  has  never  been  practiced  with  other 
trading partners anywhere near to the same extent as with China. 
More activities and greater efforts do not necessarily produce better 
results, of course. In Hu & Pelkmans (2020) we show that, selec-
tively, the great efforts of pursuing a multiple set of goals via many 
EU-China Dialogues have paid off. Our detailed research on the 
EU cooperative approach in promoting sustainable development 
with and mainly in China has culminated in two lengthy papers 
focusing respectively on the green pillar (Pelkmans, 2021) and the 
social pillar (Hu & Pelkmans, 2021). Chapter 4 below constitutes 
an integrated presentation of both papers, with selected updating. 
In some respects these papers have a common foundation. To wit, 
in  order  to  establish  more  accurately  what  exactly  the  EU  pref-
erences in values under the heading of ‘sustainable development’ 
are,  we  rely  on  chapter  16  of  the  Economic  Partnership  Agree-
ment  (EPA)  with  Japan,  an  ambitious  recent  FTA  –  and  itemise 
both for ‘green’ and for ‘social’ what provisions can be found. This 
high  standard  of  sustainable  development  is  used  for  inspecting 
EU-China cooperation in this area, conscious of the fact that the 
EU and China do not have an FTA together and that China is not 
yet, although close to, a developed country. 

Weinian Hu and Jacques Pelkmans5

The research has been conducted on the basis of three research 
questions  for  each  one  of  the  two  pillars.  In  the  green  pillar,  we 
query  whether  and  to  what  extent  respectively  the  indicators  in 
and subsequently the policies of China reveal a process of conver-
gence with the EU. This is followed by a third research question, 
also central to the RESPECT project more generally, whether EU 
trade policy and cooperation vis a vis China with respect to sus-
tainable  development  systematically  pursued  the  ‘green’  NTPOs 
since the late 1990s and whether this pursuit has been effective in 
supporting a process of convergence. 

In the social pillar, we query first whether China has addressed, 
when transforming to a market economy, the respect for interna-
tional labour standards and began building up a system of social 
protection based on individual entitlements (which never existed 
before  in  China).  The  second  research  question  is  whether  one 
can  observe  a  process  of  convergence  in  policies,  laws  and  enti-
tlements  with  respect  to  labour  standards  and  social  protection 
between China and the EU over the period 2000 – 2020. Subse-
quently,  we  answer  the  third  question,  whether  EU  trade  policy 
and cooperation on sustainable development vis-à-vis China has 
systematically pursued the NPTOs of labour standards and social 
protection since around 2000 and whether this pursuit has been 
effective in supporting a process of convergence. This type of work 
inevitably requires painstaking and detailed analysis which cannot 
be summarized in a few lines. Nevertheless, the overall inference 
is clear and possibly surprising as a policy message: the EU-China 
cooperative  approach  has  been  quite  successful,  with  of  course 
some hiccups and limitations. Put differently, this bilateral cooper-
ative approach on sustainable development is not necessarily infe-
rior to a set of bilateral legal commitments in an FTA, possibly at 
times or in some respects even more effective than the FTA-based 
approach. This would matter in every bilateral relation but surely 
is remarkable in case of a very big trading partner like China, not 
regarded by many as cherishing similar values as the EU. 

Promoting 'Green' and 'Social' Values with China6

1.2 EU-China sustainable development cooperation: 
methods and intensity

Three connected building blocks lay at the basis of two-plus decades 
of quite successful cooperation in sustainable development and in 
some other policy domains. First, the Strategic and Comprehen-
sive Partnership [SCP] between China and the EU concluded in 
2003 - a deepening of the Comprehensive Partnership of 1998 - is 
and has remained critical. The initial expectations of this SCP were 
high as expressed in a series of speeches by PM Wen Jiabao in 2004 
in Europe.4 Although a degree of realism crept in in later years and 
frictions occasionally developed, the SCP is still regarded as a kind 
of ‘special’ relationship by both the EU and China. The Partnership 
is usually invoked to justify or strengthen cooperative activities or 
to  provide  a  well-accepted  diplomatic  basis  for  proposals  for  or 
extensions of ongoing work. 

Second, the Partnership was so highly valued that it was crowned 
by annual EU-China Summits starting in 1998. The summits were 
quickly considered as the zenith of a huge pyramid of High-Level 
Dialogues, in turn overlooking or guiding a broad range of more 
technical  committees  at  higher  or  lower  levels,  with  sub-groups 
and ad-hoc sub-committees conducting the fine details of meas-
ures or proposals. In chapter 2 this ‘architecture’ of the EU-China 
Dialogues  is  explained  in  some  detail.  In  that  chapter,  the  huge 
cluster of EU-China activities by Chinese and EU officials is por-
trayed by a rich flowchart, which should help to realise the scale 
and  diversity  of  the  Dialogue  architecture  in  recent  years.  The 
profound investment by the two partners in joint but nonetheless 
informal institutions, based on commitment without treaties, has 
certainly paid off, even when occasional frictions ‘at the top’ led to 
a cancellation of an annual Summit. 

Third, Dialogues were systematically promoted and employed 
for a very large number of permanent policy domains, but also for 
new or ad-hoc policy issues. In other words, the pyramid of Dia-

4 

 See Jiabao (2004)

Weinian Hu and Jacques Pelkmans7

logues overarched by the regular Summit expanded continuously 
and remained open for new initiatives for two decades. Dialogues 
can mean different things. They can refer merely to bilateral meet-
ings of the relevant officials, sometimes with business or scholars. 
On  the  EU  side,  EU  officials  were  routine  participants  but  their 
colleagues from EU Member States also joined dependent on the 
issues (e.g. in the ‘social’ pillar, more often as social competences 
are predominantly national). Frequently, Dialogues generate other 
initiatives such as smaller, big or even vast projects over a few or 
many years, and (often) with joint funding, i.e. common owner-
ship. The cooperation can extend to Chinese ministries – in some 
cases, projects are conducted inside the ministries. A range of other 
options can be used, from regular conferences to targeted technical 
assistance  to  research  on  the  ground  to  experimental  measures 
testing  out  EU-inspired  measures.  Our  work  on  EU-China  Dia-
logues starts with its EU-China ‘architecture’. In Pelkmans & Hu 
(2020a ; 2020b) an attempt is made to verify whether EU-China 
Trade-related Dialogues can advance bilateral trade relations, and 
the  conclusion  is  that  –  within  clear  limits  –  they  can  and  have 
done so. Moreover, in the cooperation both in the ‘green’ and in 
the ‘social’ pillar we have studied a range of projects, action plans 
and other initiatives called for or supported by Dialogues. 

These methods and their sheer intensity and diversity, as well 
as the political weight of the Summit have altogether generated an 
amazing dynamic which has also yielded results in terms of steady 
progress  in  sustainable  development.  Without  entering  into  the 
details of this cooperation here, results can be found in both pil-
lars but it is probably fair to conclude that the harvest in and the 
‘productivity’ of the ‘green’ pillar has been greater than those in the 
‘social’ pillar. The reader is offered a rich menu of facts and expla-
nations so that (s)he can judge for him/herself. 

Promoting 'Green' and 'Social' Values with China8

1.3 What prospects for EU-China cooperation in 
sustainable development?

We end with a brief reflection on the prospects of EU-China ‘green’ 
and ‘social’ cooperation. In particular, we query whether the past 
pattern of EU-China cooperation is still a good guide to anticipate 
and comprehend the near future. 

EU-China  cooperation  in  sustainable  development,  both 
‘green’ and ‘social’, has assumed a very wide scope and grown in 
intensity for 2 decades or more. It was solely based on functional 
considerations for both partners, underpinned by a Comprehen-
sive  and  Strategic  Partnership.  The  EU  and  China  were  ‘equal’ 
partners with a joint organisation and common funding. On the 
whole, this cooperation has been useful, often targeted to specific 
agreed objectives and leading to or supporting concrete progress 
in a broad range of policies in China and/or jointly multilaterally. 

However,  the  China  of  2004  (just  after  having  concluded  the 
Strategic and Comprehensive Partnership with the EU) has trans-
formed into a much more assertive partner in the early 2020s and 
would  seem  more  inclined  to  signal  power-political  approaches. 
China’s refusal to respect human rights in Tibet and Xinjiang, its 
squeezing  of  democracy  in  Hong  Kong  and  its  rejection  of  crit-
icism  besides  considering  it  as  a  strictly  domestic  matter  where 
interference  is  not  accepted,  renders  it  more  difficult  for  the  EU 
to retain functional cooperation under the Strategic Partnership, 
as before. 

After  two  decades  or  more  of  intense  cooperation,  the  ques-
tion arises whether China and the EU can be expected to continue 
with ‘more of the same’. We suspect that this is doubtful. There are 
good  reasons  not  to  expect  a  simple  extrapolation  of  the  steady 
and largely successful functional cooperation in these two ‘values’. 

In a U-turn in 2021 led by the European Parliament, the rat-
ification  of  the  draft  Comprehensive  Agreement  on  Investment 
(CAI) was suspended for reasons of alleged human rights violation 

Weinian Hu and Jacques Pelkmans9

in Xinjiang, which has disrupted the relatively undisturbed climate 
of cooperation. This U-turn is a break with the past. What had long 
remained disconnected (EU trade policy and foreign policy advo-
cating ‘values’) has now been re-coupled. In the process also coop-
eration in sustainable development is likely to suffer a setback. 

Therefore,  one  might  expect  ‘some  of  the  same’  but  probably 
not ‘more of the same’. Nonetheless, on both sides there is a clear 
willingness to retain as much as possible the functional approach. 
And one ought to realise that bilateral activities ‘under the radar’ 
can more easily continue even in a frostier climate. Both in ‘green’ 
and ‘social’ cooperation, many bilateral activities are ongoing. The 
suggestion that the frictions, referred to above, have killed all bilat-
eral cooperation would be entirely false and without any basis. But 
there is no denying that such frictions risk to hurt the trust, the 
informal machinery as well as the predictability stimulating new 
initiatives. 

Apart from lowering expectations to ‘some of the same’, there 
are a number of lingering queries which do matter for this brief 
assessment.  The  most  important  one  is  about  the  following:  so 
far, in the ‘green’ and ‘social’ cooperation between China and the 
EU, the link with EU trade policy was loose. Much of the cooper-
ation was a ‘stand-alone exercise’, barely or not affected by ongoing 
negotiations  about  ‘trade  irritants’  or  other  aspects  of  market 
access  or  trade  defence  issues.  The  link  was  more  seen  as  indi-
rect  and  long-run.  As  noted,  that  began  to  change  since  around 
2015/6 when newly set-up cooperation was tasked to help resolve 
trade policy questions (from fisheries to the newly initiated High 
Level  Environmental  and  Climate  Dialogue). This  trend  is  likely 
to continue. Of course the nature of such sustainable development 
cooperation is more an extension of trade policy and touches upon 
vested interests. It will be much harder to be successful. 

There are also some other queries the answers to which need 
to  be  considered.  We  specify  four  important  ones.  First,  how  to 
address in earnest China’s fossil addiction, which is much bigger 
than coal (which is already so disproportional), f.i. large oil and gas 

Promoting 'Green' and 'Social' Values with China10

imports? Second, can China and the EU cooperate to bend [dirty] 
‘rare earth’ mining and processing into a much more clean & green 
direction?  Third,  how  could  China  and  the  EU  (possibly  with 
others) cooperate in order to ensure in the longer run that China’s 
massive imports from parts of Africa and from Brazil [turning rain 
forest into soybean fields for export to China] become far more sup-
portive of ‘green’ objectives. Fourth, quite apart from trade defence 
issues of products from heavy industries exported by China to the 
EU and other countries, there is an issue for bilateral or plurilateral 
cooperation in that China exports what the EU (and some others) 
have chosen no longer to produce or much less. Arguing that Chi-
na’s overall industrial performance is more polluting – though cor-
rect – might be seen as partly due to policy choices made by the 
EU  (and  Japan,  etc.).  All  these  queries  are  intimately  connected 
to  carbon  footprints  and  the  considerations  behind  the  CBAM 
(even  when  not  actually  introduced).  China  rejecting  a  CBAM-
type measure does not solve these underlying problems. Much of 
embedded carbon is directly a function of trade, not just bilaterally 
but also with third countries. If the CBAM would not be feasible, 
trade-related  cooperation  in  these  areas  between  China  and  the 
EU  may  well  be  appropriate  to  address  these  aspects  in  earnest. 
But it seems unlikely that such vital cooperation will again remain 
‘under  the  radar’.  On  the  contrary,  it  will  be  difficult  and  move 
slowly. 

Weinian Hu and Jacques Pelkmans11

2. THE EU-CHINA DIALOGUE  
STRUCTURE

The  EU  and  China  maintain  their  bilateral  relationship  through 
an architecture of dialogues which have been evolving, especially 
after the EU-China Trade and Co-operation Agreement was con-
cluded in 1985. The relationship between the EU and China was 
upgraded to become a “comprehensive and strategic partnership” 
in  2003.  Such  an  at  first  very  generally  formulated  ‘partnership’ 
is substantiated by more than 65 dialogues which steer the part-
nership in political, economic and sectoral, and people-to-people 
relations.  This  survey  will  depict  this  partnership,  by  discussing 
the depth and breadth of the bilateral dialogue architecture with 
a  focus  on  its  premise,  structure,  functions  and  a  range  of  case 
studies to illustrate or illuminate how it works. The many deliver-
ables that have been generated by the various dialogues, over the 
past two decades, will be highlighted throughout the survey.5 How 
EU’s trade and non-trade policy objectives are promoted vis-à-vis 
China China is described, too.

The  EU  possesses  formidable  rule-making  power  in  external 
trade, which is premised on its vast single market. Thanks to that, 
the  EU  has  acquired  much  ‘soft  power’  in  non-trade  issues,  in 
enforcing standards for labour rights, consumer and human rights 
protection,  and  sustainable  development  on  its  trade  partners 

5  This survey is undertaken within the framework of the EC-funded H2020 project: Re-
alising Europe’s soft power in external cooperation and trade (RESPECT), which anal-
yses how to best forge coherence between EU’s trade and non-trade policies in order to 
improve the effectiveness of EU external policies, with an emphasis on trade policy.

12

within  the  framework  of  applicable  international  commitments. 
These non-trade policy objectives, coined as EU’s values, are incor-
porated in the EU’s comprehensive trade agreements, such as free 
trade  areas,  as  trade-related  sustainable  development  provisions, 
in  the  light  of  the  obligations  of  Article  21  of  the  Lisbon  Treaty 
since December 2009. The provision obliges the EU to be guided 
by its principles, such as democracy, the rule of law, human rights, 
when developing relations and build partnership with third coun-
tries, etc. And it is reinforced as a component of EU’s external trade 
policy, thanks to the strategy Trade for All6, published in 2015. In 
other words, the EU’s trade partners should agree with the EU, and 
deliver their shared values when conducting deep and comprehen-
sive  trade  relations,  thereby  the  EU’s  value-based  trade  strategy 
will  materialise.  In  reality,  trade  agreements  have  since  become 
a conduit to export EU’s trade and non-trade policies and stand-
ards from the single market to third countries. Reflecting on the 
EU-China trade agreements concluded so far, the EU’s non-trade 
policy objectives are not included in the Agreement on Coopera-
tion on, and Protection of, Geographical Indications, but they are 
in the provisional agreement (January 2021) of the Comprehensive 
Agreement on Investment (CAI), including China’s commitments 
on labour and environment protection. One explanation for that is 
that the CAI is a comprehensive agreement, while the former not. 

This  survey  starts  with  a  reminder  of  the  legal  premise  upon 
which the bilateral EU-China dialogue architecture has been built. 
While describing the structure of the dialogue, the historic evolu-
tion of each pillar will be highlighted, too. After that, the functions 
of the dialogues will be illustrated, with case studies. Before con-
cluding,  a  handful  of  bilateral  dialogues  conducted  between  the 
US and China will be featured in order to compare them with the 
EU-China dialogues for effectiveness.  

6  Available at: Trade for All - Towards a more responsible trade and investment policy 

(europa.eu).

Weinian Hu and Jacques Pelkmans13

2.1 The structure of the EU-China dialogue architecture

The comprehensive strategic partnership is described in detail by 
the  Elements  for  A  New  EU  Strategy  on  China,  adopted  by  the 
European Commission and the European External Action Service 
(EEAS) in 2016, and is in line with the Junker Commission’s polit-
ical guidelines, the Commission’s “Trade for All” strategy (2015) 
and the Resolution on EU-China Relations adopted by the Euro-
pean  Parliament  in  December  2015.7  This  partnership  is  rolled 
out by a bilateral dialogue architecture under the three pillars of 
political  cooperation,  economic  and  sectoral  dialogues  and  peo-
ple-to-people exchange. As will be illustrated below, evolving with 
times and circumstances, the objectives of these dialogues remain 
relevant for the current bilateral relations.8 

Initially, the bilateral dialogues were set up based on the neces-
sities,  following  China’s  ‘opening  up’  some  30-40  years  ago.  This 
was especially the case with regard to some of the economic and 
sectoral dialogues, such as the Dialogue on Technology Coopera-
tion. After that, because of China’s WTO membership bid, more 
dialogues were established under this pillar in order to assist China 
in  transforming  its  economic  development  model  from  central-
ly-planned to market-oriented. The themes of the dialogues estab-
lished then therefore reflect China’s reform directions in prepara-
tion of its WTO accession, as well as the ‘by-products’ of it, and 
Industrial products & WTO / TBT Consultation is one of them. 
Many dialogues on non-trade issues were established, too, such as 
employment  protection  and  environment  protection,  which  was 
to help China develop a wholly new societal welfare structure after 
the  country  dismantled  the  old  one  installed  intricately  around 
state-owned  enterprises  (SOEs)  and  attached  to  localities.  The 

7  Available at: Texts adopted - EU-China Relations - Wednesday, 16 December 2015 (eu-

ropa.eu).

8  According  to  the  EEAS,  the  EU-China  Dialogue  Architecture  is  the  only  published 
source summarising the bilateral dialogues presently available. Dated November 2015, 
it is still valid today although a number of new dialogues have been added since 2015, 
such as the legal dialogue inaugurated in 2016, the state aid control dialogue 2017, and 
the circular economy dialogue 2018.

The EU-Dialogue Structure14

old  social  welfare  system  was  dismantled  when  China  started  to 
reform its SOEs through closing-down, or merger and acquisition. 
The EU extended generous assistance of capacity-building to help 
China establish fund-based new social security system.  

A  few  trade  and  non-trade  dialogues  were  first  inaugurated 
as  bilateral  cooperation  projects  following  the  conclusion  of  the 
EU-China Trade and Co-operation Agreement in 1985. The Indus-
trial products & WTO / TBT Consultation was an example of such 
cooperation project. The annual Joint Trade Committee was set up 
around the same time in the mid-1980s at ministerial level to take 
stock  of  policy  developments  in  bilateral  trade  and  investment, 
to  review  trade  irritants  arising  between  the  two  sides,  and  to 
help removing market access barriers in the relevant sectors. The 
annual Committee meeting also provides China and the EU with 
the opportunities to exchange views on important multilateral and 
plurilateral trade initiatives and on-going trade negotiations. 

Over the years, as the bilateral relationship has deepened eco-
nomically and politically, the scope for cooperation between the 
EU and China has become much broader, so has the number of 
dialogues taking shape under the pillars of political, economic and 
sectoral  and  people-to-people  dialogues.  The  formalities  of  the 
dialogues became more diverse, too, including summit, ministe-
rial, working group meetings, experts’ seminars, and projects des-
ignated to implement policy objectives for concrete deliverables. 

Weinian Hu and Jacques PelkmansFigure 1: EU-China Dialogue Architecture

15

The EU-Dialogue Structure16

Pillar I – Political dialogue

The  mechanism  of  bilateral  political  contact  was  inaugurated  in 
1994, and upgraded to summit level in 1998. Gradually, because 
of  necessity  and  demands,  dialogues  on  specific  subject  matters 
were arranged and the pillar of political dialogue has grown. For 
example, the EU-China Cyber Task force was set up in 2013 amidst 
the  EU’s  increasing  concerns  over  China’s  rampant  cyber  espio-
nage and when both sides saw the needs for exchanging views on 
research,  business  and  global  standardisation  in  relation  to  the 
rapid 5G development. Also, following the Lisbon Treaty, the EU 
created the European External Action Service (EEAS) to undertake 
the Union’s Common Foreign and Security Policy led by a High 
Representative, in 2010 the High-Level Dialogue on Strategic and 
Foreign  Policy  was  established  between  the  High  Representative 
of the Union and the Chinese counterpart of the Foreign Minister. 
This dialogue takes place usually just ahead of the annual summit, 
in the form of exchanging views and both sides will summarise the 
major progress the partnership has achieved through the dialogue 
architecture. The purpose of this exercise is to set the scene for the 
summit and to substantiate the summit joint statement, to inject 
political  impetus  to  the  partnership,  including  mapping  major 
cooperation programmes for the next year. 

An example is the Strategic Dialogue that took place on 9 June 
2020. The EU and China reviewed progress  of  the bilateral rela-
tionship made in the past year, including the progress made in the 
negotiations  of  Agenda  2025  and  the  need  to  move  forward  the 
remaining  areas.  Concrete  disagreements  between  the  two  sides 
were also tabled and discussed.9 The high-level dialogue was con-
cluded by both sides’ expressing shared determination to push for 
the  conclusion  of  a  Comprehensive  Agreement  on  Investment, 
the  materialisation  of  China’s  commitments  pledged  in  2019, 
including eliminating market access barriers, improving the level 

9 

For  details,  see  EU-China  Strategic  Dialogue:  Remarks  by  High  Representative/
Vice-President Josep Borrell at the press conference - European External Action Ser-
vice (europa.eu).

Weinian Hu and Jacques Pelkmans17

playing  field  and  reciprocity.10  In  terms  of  international  affairs, 
both sides reaffirmed their commitment to cooperate on a number 
of  areas,  such  as  climate  change,  non-proliferation,  including  to 
fully implement the JCPOA (Joint Comprehensive Plan of Action 
– the Iran nuclear deal), inter-Korean relations and support to rec-
onciliation, as well as dialogue between DPRK and the USA, and 
bilateral cooperation in Afghanistan, Middle East incl. Syria and 
Africa.

It is well-known that China attaches greater importance to the 
“One China” Policy in international affairs, including in its rela-
tions towards the EU, as China reiterates this principle in nearly 
every  bilateral  political  document.  This  stance  in  effect  records 
one motivation upon which the entire EU-China relationship was 
established. After China regained its permanent seat at the Secu-
rity  Council  at  the  United  Nations  in  1971,  the  European  Eco-
nomic Community, as the EU was known at that time, recognised 
the People’s Republic of China as the only legitimate government 
of China, paving the way for the establishment of the bilateral dip-
lomatic relations in 1975. 

The  subject  themes  covered  under  the  Pillar  of  Political  Dia-
logue range from regional affairs, international affairs, security and 
defence,  cyber  security  as  well  as  human  rights.  The  breadth  of 
the bilateral political dialogues illustrates the many areas that both 
sides’ share their common interests and recognise the mutual ben-
efits they could garner via cooperation. Their shared positions are 
sometimes  elevated  to  global  level,11  yielding  joint  leadership  on 
several specific global issues, including implementing the nuclear 
agreement  with  Iran  and  denuclearisation  in  the  Korean  Penin-
sula. 

Nonetheless, the political dialogue embodies a mixed picture of 
cooperation and challenges interwoven in the bilateral EU-China 
relationship  overall.  The  institutionalised  dialogue  mechanism 

10 

 See Grieger (2021) 

11  Note that already in the draft European Security Strategy Paper in 2003, China has been 
recognised as one of the key partners for the EU’s strategic security relationship.

The EU-Dialogue Structure18

helps to sustain bilateral communication which is vital, especially 
in times of frictions. As to the policies for which each side upholds 
its own distinctive perspectives, the EU and China conduct their 
affairs  in  a  manner  of  ‘agree  to  disagree’,  therefore  their  policy 
divergence has been containable. This is evident, for example, as 
far  as  African  development  is  concerned,  as  the  EU  prides  itself 
on fostering good governance and sustainable development, while 
China  practises  the  “five  principles”,  including  “non-interfer-
ence”.12 Similarly, the EU and China acknowledge their conceptual 
differences in human rights protection, which are political rights 
to the EU and economic rights to China; nonetheless, the Human 
Rights Dialogue continues over the last decades with a “construc-
tive, frank, forward-looking” approach.  

The  geographical  regions  covered  by  the  political  dialogue 
pillar includes, practically, the whole globe. Additionally, there are 
dialogues on security and defence, covering the subjects of cyber 
security,  and  non-proliferation  &  disarmament.  Some  political 
dialogues  concern  very  specific  subjects,  such  as  Human  Rights 
Dialogue,  and  the  EU  Special  Representative  &  Special  Envoy 
Meetings.  Besides,  there  is  the  mechanism  for  regular  contact 
between the EU High Representative/Vice President and China’s 
foreign affairs minister as well as the minister of defence.  

Pillar II – Economic & Sectoral Dialogue

The number of economic & sectoral dialogues conducted between 
the EU and China has reached around 55 to date. The subjects cov-
ered are all-encompassing, ranging from trade to non-trade issues, 
as diverse as research and innovation, water management, public 
procurement regulation and animal health. Most dialogues com-
bine  policy  dialogue  meetings,  expert  seminars  and  implemen-
tation  projects  so  that  shared  policy  objectives  can  be  pursued. 
Given  the  unusual  number  of  economic  and  sectoral  dialogues, 
the  depth  and  the  breadth  of  the  EU-China  economic  coopera-

12 

 See the Joint Declaration of the EU-China Summit, Helsinki, 2006.

Weinian Hu and Jacques Pelkmans19

tion  was  probably  foreseen  because  of  China’s  huge  market  size, 
its complex WTO accession process, as well as trade opportunities 
and the frictions entailed. 

History

From the outset, initiating a pillar of economic dialogues reflected 
EU’s  aim  of  market  access,  through  China’s  integration  in  the 
world trade order. By applying the same market-driven trade rules, 
the EU envisaged that market openness would prevail and barriers 
would be lifted. Supporting China’s WTO membership bid was a 
strategic approach engaged by the EU to achieve this objective.13 
Along the process, the fundamental WTO market principles, from 
national treatment, intellectual property rights (IPR) protection, to 
good governance models, such as transparency and independent 
judicial review, were expected to be enacted in China. Dialogues, 
mainly for capacity-building in the beginning, were thus consid-
ered one after another as a means to achieve this purpose. Many 
ad hoc cooperation programmes were later developed into mech-
anism in order to assist China to further implement outstanding 
WTO commitments,14 while serving as cooperation platform for 
seeking trade opportunities and addressing irritants. Examples in 
this  regard  include  market  access  for  industrial  and  agricultural 
goods,  services,  market  economy  status,  maritime  transport,  air 
transport,  nuclear  trade  and  safety,  customs,  science  and  tech-
nology  and  liberalisation  of  China‘s  financial  sector.  Around  the 
same time, as mentioned before, a few dialogues focusing on non-
trade  objectives,  such  as  those  on  environment  and  on  regional 
policy, were initiated. To this end, the EU’s objective was to pro-
mote a sustainable development concept, new to China at the time, 

13 

 See European Commission (1998)

14  For example, as seen in the Communication: Building a Comprehensive Partnership 
with China [footnote 10], the Commission identified as early as 1998 that without se-
curing China‘s membership of the WTO GPA as part of the country‘s WTO accession 
package  would  reduce  the  overall  value  of  the  country‘s  market  access  package. The 
Commission‘s  both  objectives  failed  to  materialise.  The  Dialogue  of  Public  Procure-
ment was established in 2007, a year before China submitted its initial offer to negotiate 
its GPA accession. 

The EU-Dialogue Structure20

while helping China integrate environmental protection measures 
into  its  overall  development  strategy,  and  to  foster  transfer  of 
know-how  and  technology  in  the  energy  sector  in  China.  As  to 
social cohesion, the EU assisted China to explore different policy 
options,  drawn  from  the  EU’s  experiences  and  expertise  so  that 
China would be able to mitigate the social impact as a result of the 
overwhelming SOEs restructuring exercise, including the disman-
tling of the old SOE-based social welfare system. At the time, as a 
consequence  of  the  restructuring,  a  massive  number  of  Chinese 
SOEs workers were laid off, and left with no or insufficient social 
protection since the new social security system was yet to be built 
up (Box 1). 

Box 1: Employment & Social Policies Dialogue

The Employment & Social Policies Dialogue was established in 
2005  between  the  Chinese  Ministry  of  Human  Resources  and 
Social Security, the Chinese Academy of Social Sciences and the 
DG Employment, Social Affairs and Inclusion of the European 
Commission. 

The policy areas covered by the Dialogue range from employ-
ment, social security, demographic ageing to social dialogue and 
labour relations. The Dialogue was inaugurated in the wake of 
China’s  SOEs  re-structuring  exercise,  which  was  conducted  in 
order to subject them to market principles operating as a busi-
ness  entity,  instead  of  as  a  government  outlet.  In  the  process, 
millions  of  workers  were  laid  off,  but  the  majority  of  themw 
were then left without sufficient social security protection as the 
new  system  was  not  in  complete  operation,  after  the  old  one, 
attached to the SOE life-tenured employment, was demolished. 
As a result, overnight many laid-off SOE employees experienced 
a roller-coaster change from free to fee-paying medical coverage, 
and lost the community that they relied on from cradle to grave. 
Those who fell ill were compelled to pay medical bills from their 
one-off  unemployment  compensation,  often  already  meagre 
especially in view of bleak re-employment prospects.   

Weinian Hu and Jacques Pelkmans21

The EU member states’ models and experiences were offered 
as a reference, when China was building a new social security 
system, along with new employment relations based on labour 
contracts. 

From  the  outset,  after  the  EEC  took  over  from  the  member 
states  the  competence  for  all  trade  relations  with  state-trading 
countries, the trade relationship that the EEC and China embarked 
on was designed to be open and broad as illustrated by the 1985 
Trade  and  Economic  Cooperation  Agreement.  This  relationship 
was intended to not exclude any subjects of economic cooperation 
as long as it fell within the Community’s competence (Article 10). 
Back then, sectors for cooperation were industry, mining, agricul-
ture,  science  and  technology,  energy,  business  management  and 
biotechnology, etc. As to the forms of bilateral cooperation, they 
included  exchange  of  economic  information,  people-to-people 
contacts between businessmen and trade officials, seminars, tech-
nical  assistance  programmes  and  trade/investment  promotion.15 
As  mentioned  before,  the  Joint  Committee  was  also  established 
then as a platform for trade and business exchange activities con-
ducted  at  expert  level  and  for  supervising  the  overall  bilateral 
cooperation. 

More bilateral cooperation programmes were launched in the 
run up to China’s WTO accession, and gradually they developed 
to become dialogues for long-term cooperation around the time 
when the EU-China annual summit mechanism was inaugurated 
in 1998. 

15  After the Community took over from the member states the trade responsibility for 
all  trade  relations  with  state-trading  countries  in  1974,  the  EEC-China  Trade  and 
Economic  Cooperation  Agreement  was  subsequently  concluded  in  1978.  It  was  a 
non-preferential agreement with equal benefits and obligations for both parties, and 
provided  them  the  possibility  to  accord  each  other  most-favoured-nation  treatment 
and to develop mutual trade. A component of economic cooperation was added to the 
1978 Cooperation Agreement and therefore a new trade agreement was signed in 1985 
when both sides felt the need to strengthen and broaden their cooperation. The 1985 
Agreement was therefore an open agreement encompassing many subjects for trade 
and called for different and flexible forms of cooperation activities as we see today from 
the dialogues. See Press Release Joint Committee EEC/China, MEMO-86-26, found in 
Snyder, ed. (2009) 

The EU-Dialogue Structure22

Since  then,  as  the  EU-China  trade  volumes  were  rising  con-
tinuously and because China had become a leading economy pre-
senting many more business opportunities, the scope of bilateral 
trade  dialogues  expanded  further  to  what  it  is  today.  Another 
motivation for such expansion was that bilateral trade relations had 
grown beyond goods and services, and moved also into investment 
and other regulatory areas as well as competition policy, therefore 
the dialogue themes have become ever more diverse compared to 
two decades ago. 

Structure

The  annual  High-level  Economic  &  Trade  Dialogue  (HLETD) 
is  the  chapeau  of  the  Second  Pillar  of  the  EU-China  Dialogue 
Architecture.  Every  year,  the  HLETD  takes  stock  of  the  deliver-
ables achieved by all the economic and sectoral dialogues ahead 
of  a  Summit.  When  the  HLETD  was  inaugurated  in  2007  at  the 
vice-president level, the aim was also to address the outstanding 
market opening pledges of its WTO Accession Agreement yet to 
be materialised by China. In practical terms, the HLETD has the 
mandate to identify ways to reduce bilateral trade imbalances and 
to increase trade in a balanced way. 

The  agenda  of  the  HLETD  varies  little  from  year  to  year.  It 
covers issues related to the multilateral global trading system, stra-
tegic  bilateral  trade  and  trade-related  areas,  investment,  innova-
tion, effective market access, IPR protection and high technology, 
environment protection and energy. For example, the agenda of the 
8th HLETD (July 2020) focused on the joint response to Covid-19 
and global economic governance issues, bilateral trade and invest-
ment concerns, and cooperation in the area of financial services 
and taxation. Both sides exchanged views on the CAI negotiations, 
and agreed to work towards the continued relevance of the WTO. 
Also, referring to the 2019 EU-China Summit Joint Statement, the 
EU  urged  China  to  engage  in  future  negotiations  on  industrial 
subsidies. The EU called upon China as well to start exploratory 

Weinian Hu and Jacques Pelkmans23

talks for an agreement with the EU covering administrative coop-
eration to fight VAT fraud.   

Overall,  the  economic  and  sectoral  dialogues  are  conducted 
under  two  groups  which  are  trade  and  non-trade  issues.  Addi-
tionally,  the  Connectivity  Platform  was  established  in  2015  with 
a singular focus on China’s Belt and Road Initiative (BRI), which 
was launched a year earlier. In relation to the BRI projects imple-
mented in the EU single market, the Connectivity Platform aims 
to  promote  transparency  and  a  level  playing  field  based  on  the 
EU  market  rules  and  international  norms  with  respect  to  public 
procurement,  competition,  environmental  protection  and  tech-
nical standards, etc. The Platform in the meantime identifies syn-
ergies  between  China’s  infrastructure  blueprint  and  the  Junker 
Investment  Plan,  as  well  as  funding  sources  in  transport  and  in 
other kinds of infrastructure. In this regard, in 2017 the European 
Investment Fund (EIF) and China’s Silk Road Fund (SRF) signed a 
Memorandum of Understanding with the aim of jointly investing 
in  private  equity  and  venture  capital  funds  that  would,  in  turn, 
invest in SMEs located primarily in the EU. The total amount of 
the investment fund is expected to reach €500 million, of which 
the EIF and the SRF would each invest €250 million. The joint fund 
was a joint deliverable following China’s pledge announced at the 
HLETD 2015 to contribute to the Investment Plan for Europe, the 
so-called “Juncker Plan”, and to enhance cooperation with the EU 
on investment issues generally.16

In  respect  of  the  relationship  between  trade  and  non-trade 
related  dialogues,  it  is  generally  assumed  that  the  dialogues  on 
non-trade issues would ultimately contribute to achieve EU’s trade 
objectives. This assumption has been made more apparent by the 
EU’s  2015  trade  strategy  Trade  for  All,  when  the  EU  pledged  to 
reinforce value-based objectives as a component of its trade policy, 
and to use trade agreements and trade preference programmes as 
levers  to  promote  among  its  trading  partners  around  the  world 

16  See the Press Release published after the EU-China Summit took place in Brussels in 

2017.

The EU-Dialogue Structure24

values like sustainable development, human rights, environmental 
protection,  in  accordance  with  Article  21(2)(a)  of  the  Lisbon 
Treaty. In practice, provisions concerning environment protection, 
human  rights  protection  and  core  labour  standards  must  be  an 
integral part of a free trade agreement with third countries; while 
the EU aims to ensure that the applicable international standards 
are implemented as a condition for concluding a free trade agree-
ment.  

Trade issues

In  the  course  of  its  WTO  accession  negotiations,  China  was 
obliged to redraft almost all its trade policies and legislation so that 
its economic model would be compatible with the market-driven 
WTO  disciplines.  The  extent  of  this  exercise  may  be  gauged  by 
the variety of bilateral sectoral dialogues established in the 1990s 
encompassing  all  the  WTO  trade  areas,  not  only  on  goods  and 
services  but  also  on  regulatory  issues,  such  as  agriculture,  trade 
defence instruments, food safety and sanitary/phytosanitary, and 
industrial products & TBT, and IPR.  

Once bilateral trade volumes soared and trade relations deep-
ened,  the  original  scope  of  economic  dialogues  was  extended  to 
other  sectoral  areas,  such  as  competition  policy,  peaceful  use  of 
nuclear  energy,  aviation  regulations.  For  example,  since  interna-
tional cooperation is essential in fighting against the formation of 
international cartels and China can play a significant role because 
the country has become a must-visited jurisdiction in recent dec-
ades when examining cases of global merger and acquisition, the 
Competition Policy Dialogue was established. For China, it wanted 
to harmonise its vast domestic markets among the different levels 
of  administration,  and  the  EU  wished  to  align  China’s  competi-
tion policy with the EU’s model. The bilateral R&D cooperation in 
peaceful use of nuclear energy brings about the EU’s interests, too, 
as the research programme enabled researchers from both sides’ 
mutual access to research facilities. Hence, EU nuclear researchers 

Weinian Hu and Jacques Pelkmans25

could access China’s state-of-the-art nuclear facilities as in Europe 
many are either closing down or phasing out. 

Non-trade issues

The difference in EU-China dialogues on non-trade issues between 
the past and the present is found in the purpose of conducting such 
dialogues.  In  the  past,  the  purpose  was  to  share  with  China  the 
EU’s  expertise  and  experience,  as  a  means  for  capacity-building, 
including reflecting on the “European model” of regional integra-
tion and good governance under the rule of law.17 However, now-
adays  the  purpose  of  conducting  dialogues  on  non-trade  issues 
seems to be raising China’s ambition of sustainable development 
to match EU’s level of standards in order to prevent China from 
enjoying  (low)  price  advantages  against  EU  goods,  often  due  to 
compromised environmental and labour protection standards. In 
this sense, achieving a level-playing field is equally an assurance to 
tell EU citizens that Chinese goods and services are procured from 
workers employed under safe and fair conditions.  

There  is  a  presumption  that,  since  China  pursues  economic 
development “at all costs” and at the expense of the ‘values’ that 
the EU champions, conducting dialogues with China on non-trade 
issues might only yield limited progress. Nonetheless, one reason 
that EU-China cooperation on non-trade issues could continue for 
nearly two decades is exactly because the Chinese government has 
become ardent in promoting environment and labour protection, 
in order to nurture a ‘harmonious’ society for stability, quality of 
life, job satisfaction, good governance, and a ‘beautiful China’ as 
President Xi Jinping vowed to build at the Conference of the Par-
ties to the Convention on Biological Diversity (COP15) in October 
2021, etc. This motivation may explain why the Chinese govern-
ment has been engaging in discussions with the EU on non-trade 
issues, until China committed to implement its pledges on envi-
ronment and labour protection as incorporated in the CAI provi-

17 

 See European Commission (2003)

The EU-Dialogue Structure26

sional agreement.18 Similarly, in September 2020, President Xi reit-
erated that China would aim to hit peak emissions before 2030 and 
for carbon neutrality by 2060. This is seen as a significant pledge 
China has undertaken to fight against climate change.19 

Other bilateral dialogues on non-trade issues include dialogues 
on  regional  policy,  and  occupational  safety  &  health.  The  latter 
focuses on improving working conditions, reducing work-related 
accidents  and  illness,  contributing  to  decent  work  for  all  while 
adhering to agreed international standards. 

The  EU’s  commitment  in  the  overall  bilateral  economic  dia-
logues  was  considerable,  also  in  financial  terms.  In  2000,  the 
amount that the EU allocated for conducting bilateral EU-China 
cooperation projects already totalled around €60 million per year. 
Many business opportunities have emerged from such dialogues, 
too, and contributed to economic growth and job creations in the 
EU, which is an objective that the economic and sectoral dialogues 
are envisaged to achieve. On top of that, along the process, since 
China  indeed  has  adopted  a  few  of  EU’s  policies  and  regulatory 
models, such as the Emission Trading System (ETS), the EU’s nor-
mative power on trade is being reinforced on the world’s stage. 

The number of bilateral economic dialogues is expected to grow 
further, including through ‘organic growth’ and for tackling trade 
irritants. For the former, the Dialogues on Sustainable Urbanisa-
tion Partnership (Box 2) is a case in point. 

18 

 For detailed analysis on China’s commitments, see Hu (2021-b)

19  Doubts nonetheless remain as to how China might manage this coal transition, also 
given the need to fuel a post-covid economic recovery which demands energy. As a 
result, it is perhaps of no surprise that the 14th Five-Year Plan did not announce any 
measures for coal consumption cap, unlike the previous Five-Year Plan. For example, 
as part of its 13th Five-Year Plan, China sought to cap coal consumption at the national 
level at 4.1 billion tonnes by 2020, or to less than 58 per cent of total energy consump-
tion. It is also reported that after lifting a previous construction ban on new coal plants 
in 2018, China has rolled back policies restricting new coal plant permitting in each of 
the last three years. By mid-2020 China had permitted more new coal plant capacity 
than in 2018 and 2019 combined. This is going against the global shift away from coal: 
https://climateactiontracker.org/countries/china/. See also ch. 3.

Weinian Hu and Jacques Pelkmans27

Box 2: Sustainable urbanisation partnership

The  Dialogue  on  Sustainable  Urbanisation  Partnership  was 
launched  between  China’s  NDRC  (National  Development  and 
Reform Commission) and the EC DG Energy, in 2012. 

The motivation for launching the Dialogue was for the EU to 
help China optimise the layout and new formation of urbanisa-
tion. Due to the quick speed and large scale of urbanisation that 
has  taken  place  in  China,  exceeding  50%  of  level  of  urbanisa-
tion in recent years, the Dialogue is expected to assist China in 
attaining sustainable development goals in expanded cities while 
at the same time, for example, promoting rural-to-urban migra-
tion. This objective of the Dialogue is crafted on the premise that 
the EU and its member states have rich experience in urbanisa-
tion, for which their know-how would be invaluable to Chinese 
policy-makers, either to accelerate an optimal urbanisation pro-
cess, or to offer possible policy alternatives via concrete consul-
tation. 

At  the  same  time,  European  and  Chinese  cities  nowadays 
may  well  face  similar  challenges  for  urbanisation  in  terms  of, 
for example, energy efficiency, energy and natural resource con-
servation  and  reduction  of  greenhouse  gas  emissions.  These 
common challenges call for common solutions, too. Within this 
context, specific projects, such as on promoting energy efficiency 
buildings, research on energy technologies and finding ways to 
integrate renewable energy into urban areas, were undertaken in 
order to tackle these challenges. 

Some  programmes  launched  under  the  Urbanisation  Dia-
logue were conducted in conjunction with other related dialogue 
programmes, such as the Mayors’ Forum, and the EC-Link pro-
ject. The latter was set up in order to help China make its cities 
more  energy  and  resource  efficient,  to  launch  the  EU-China 
Emissions  Trading  Scheme,  and  the  Satellite  Cities  and  Met-
ropolitan  Governance  Project.  This  approach  is  designed  to 
tap  into  each  programme’s  strengths  for  a  holistic  approach  to 
improve China’s overall urbanisation experience. 

The EU-Dialogue Structure28

Another important component of urbanisation cooperation 
is  twinning  where  twinning  partnerships  are  forged  between 
cities in EU member states and China in order to work together 
on specific areas of urbanisation concerning, for example, energy 
(e.g. low-carbon), investment and trade, exploration and inno-
vation. Forums, study trips, training activities, etc. are organised 
among policy makers and stakeholders, such as businesses, for 
generating understanding of urbanisation on the ground.

Pillar III – People-to-People Dialogue

Most  dialogues  conducted  under  the  pillar  of  People-to-People 
Exchange were first launched as cooperation projects, for mainly 
two purposes. First, at civil society level, it was for the EU to assist 
China in the country’s overall social reform to promote the rule of 
law,  strengthen  the  civil  society,  modernise  the  overall  legal  and 
administrative  framework  of  the  country  by  showcasing  the  EU 
model. Second, it was to raise the profile of the EU for greater vis-
ibility and to exert its soft power in China. 

The  High-Level  People-to-People  Dialogue  was  inaugurated 
in 2012 after having grouped together all those bilateral dialogues 
initially conducted at civil society level, such as higher education, 
vocational training, culture, sports, gender equality and multilin-
gualism. Some of the dialogues under this pillar of dialogues were 
established one or two decades earlier, including cooperation on 
higher education which has been flourishing since. For example, 
following  the  successful  conclusion  of  the  EU-China  Legal  and 
Judicial  Cooperation  Programme  (2000-2005),  the  China-EU 
School of Law at the China University of Political Science and Law 
was established by EU-China joint funding. Regarded as a symbol 
of China’s commitment to cooperating with the EU on legal affairs, 
the  mission  of  the  Law  School  is  to  improve  the  mutual  under-
standing towards each other’s legal systems, and to educate a great 
number  of  legal  professionals  who  should  acquaint  themselves 

Weinian Hu and Jacques Pelkmans29

with the knowledge of both jurisdictions, with practical legal skills. 
Within this context, the cohorts of Chinese law students have sub-
sequently  been  brought  a  better  understanding  of,  and  a  greater 
affinity with, EU laws, policies and legal practices for the Chinese 
judiciary and government institutions. As to the cooperation pro-
gramme  on  business  education,  the  China-Europe  International 
Business School,20 which was co-funded by the EU and China in 
1994 in Shanghai, has swiftly gained a global reputation with rising 
student numbers, with campuses now established in Beijing, Shen-
zhen, Accra in Ghana, and Zurich in Switzerland. 

Moreover, in 2005 the EU opened the “China window” of the 
Erasmus  Mundus  programme  to  Chinese  students  and  scholars. 
Subsequently,  China  emulated  the  same  model  whereby  since 
2007, 100 scholarships are offered every year to EU students21 in 
a  bid  to  provide  EU  students  more  educational  opportunities  in 
China. 

2.2 Other EU institutions’ and Member States’ 
dialogues with China 

The interlocutors of all the above-mentioned dialogues are usually 
the EEAS and the various Directorate-General (DG)s of the Euro-
pean Commission from the EU side, and their Chinese counter-
parts from the ministries and agencies of the State Council. Think 
tanks  and  industry  associations  may  be  lead  interlocuters  of  the 
bilateral dialogues, too. The Chinese Academy of Social Sciences, 
a network organisation but also a think tank, is the lead interloc-
utor of the Employment & Social Policies Dialogue, together with 
the  Chinese  Ministry  of  Human  Resources  and  Social  Security. 
Relevant  industry  associations  sometimes  are  dialogue  partners 
as  well.  For  example,  the  shipping  industries  from  both  the  EU 
member states and China are institutionalised interlocuters of the 

20  More information on CEIBS, see The Best Business School in China | China Europe 

International Business School (ceibs.edu). 

21  For more information on the Study in China programme, see Study in China (china-

mission.be).

The EU-Dialogue Structure30

Dialogue on Maritime Transport Agreement Implementation, and 
the Chinese Ministry of Transport and EC DG Move are the inter-
locutors at policy level. 

Other  EU  institutions  conduct  bilateral  dialogues  with  their 
respective  Chinese  counterparts  as  well.  Every  year,  the  Euro-
pean Economic and Social Committee co-organises a Roundtable 
with  its  Chinese  counterpart,  the  China  Economic  and  Social 
Committee,  in  order  to  exchange  views  on  usually  controversial 
topics of concern to both sides. Equally, in order to deepen mutual 
understanding,  the  Delegation  for  Relations  with  China  at  the 
European  Parliament  organises  annual  dialogues  with  the  Chi-
nese National People’s Congress on different subjects that are cov-
ered by the EU-China Dialogue Architecture. Moreover, the Euro 
Troika (Eurogroup Chair, ECB, and Commissioner for Economic 
& Monetary Affairs) conducts an Economic and Financial Affairs 
Dialogue on financial markets with China’s Ministry of Finance, 
National Development and Reform Committee (NDRC) and Peo-
ple’s Bank of China.

EU  member  states  conduct  many  dialogues  and  cooperation 
projects  with  China.  For  example,  in  the  past  the  UK  and  Ger-
many  conducted  their  respective  judicial  dialogue  with  China’s 
Ministry of Justice to train Chinese judges, to broaden their expo-
sure to other jurisdictions, including the handling of legal cases. 
There are also many joint Master of Law curriculum programmes 
launched between law schools in EU member states and China. As 
a result, these days more and more Chinese lawyers and govern-
ment officials are familiar with EU laws, the civil law legal system 
and international law. Such cooperation in legal training has been 
long-standing. In fact, as early as 1983 China and Germany already 
concluded  an  inter-governmental  agreement  on  the  Project  of 
Promotion of the Patent System of the People’s Republic of China, 
thanks to which many Chinese patent examiners were trained in 
Germany  and  a  patent  documentation  database  was  installed  so 
that patent applications could be examined in China. The whole 
process of judicial exchange, whether at the EU or member states 

Weinian Hu and Jacques Pelkmans31

level, is particularly important to help instil the quality of transpar-
ency, fairness and impartiality when adjudicating in the Chinese 
judicial system and public administration. Notably, establishing an 
impartial judiciary is equally a commitment that China pledged at 
its WTO accession. 

Education is a popular, often long-standing, cooperation area 
between  the  EU  member  states  and  China.  For  example,  on  13 
April  1995,  China’s  Sichuan  Province  and  the  Brussels-Capital 
Region  signed  the  Brussels-Sichuan  Agreement  of  Cooperation, 
covering the cooperation areas of vocational training, student and 
cultural exchange programmes. 

2.3 Functions

In the beginning, the EU-China bilateral cooperation programmes 
were  usually  of  a  capacity-building  nature. They  later  evolved  to 
become platforms for undertaking other functions, such as policy 
coordination,  and  forging  more  business  opportunities.  As  a 
by-product of the dialogues, the EU seeks regulatory convergence 
where possible so that its rule-making capacity may be enhanced 
on  the  world  stage.  On  the  other  hand,  China  has  gained  much 
know-how  from  the  EU’s  experiences  in  many  regulatory  areas. 
The whole process has facilitated China’s quicker integration into 
the  WTO  trading  system  bringing  about  a  more  market-driven 
economic development model. In the meantime, the funding pat-
tern of the dialogues has transformed from a donor-recipient rela-
tionship between the EU and China to a co-funding pattern as far 
as cooperation projects are concerned.

In the past the EU and China assumed a mentor-student rela-
tionship between them, too, but these days it is more of a partner-
ship as reflected by some dialogue agendas, such as the agendas of 
the Human Rights Dialogue (Box 3) taken place in recent years.

The EU-Dialogue Structure32

Box 3: Human Rights Dialogue

Initially, the Human Rights Dialogue was engaged as an instru-
ment for the EU to promote its values of human rights protec-
tion  in  China;  while  China’s  human  rights  record  (or  rather 
violations)  was  scrutinised  by  the  EU  on  a  yearly  basis  during 
such meetings. At recent meetings, the agendas are re-orientated 
towards  a  “two-way”  dialogue  for  deepening  not  only  mutual 
understanding  of  the  differences  in  each  other’s  society  and 
political systems, but also for highlighting specific issues in the 
debate with each other. 

To  date,  though  China’s  record  on  human  rights  is  still 
regarded  as  poor  by  quite  a  few,22  over  the  decades  China  has 
been improving human rights protection gradually and installed 
a  number  of  fundamental  legal  instruments  in  order  to  better 
safeguard citizen’s human rights, including legal aid.23 

In parallel, the EU and its member states in recent years face 
persisting social challenges, such as irregular migration. This has 
granted  China  the  opportunity  to  identify  EU’s  weaknesses  in 
human rights protection, and raise them to the EU in the Human 
Rights Dialogue meetings. As a result, the Human Rights Dia-
logue in recent years has replaced its China-focused agenda-set-
ting  by  a  two-way  approach,  because  human  rights  protection 
challenges raised in China and in the EU are both discussed at 
the  meetings.  Though  the  EU  has  maintained  the  possibilities 
of listing some alleged individual human rights violations (e.g. 
death  penalty,  minority’s  rights)  on  the  agenda,  China  equally 
uses the Dialogue to bring to the EU’s attention on alleged human 
rights violations in the EU, such as migrants’ rights.

For example, during the EU-China Human Rights Dialogue 
in 2018, issues concerning business and human rights, disability 
rights and the status quo of women’s rights were topics identi-
fied for China to make improvement. At the same meeting, the 
migration  issues  and  protection  of  fundamental  rights,  and  in 
particular protection of the rights of migrants and asylum seekers 
were raised by China to the EU.

22 

 See Lederer (2020)

23 

 See Kuhn (2020)

Weinian Hu and Jacques Pelkmans33

Tackling the practical challenges in bilateral trade

A large number of dialogues under the Pillar of Economic and Sec-
toral  Dialogue  were  established  for  tackling  practical  challenges, 
such as the Dialogue on Consumer Products for consumer goods 
safety.  The  RAPEX-China  online  system,  launched  by  the  Dia-
logue, serves for regular and rapid data transmission, where infor-
mation  on  Chinese  consumer  (non-food)  products  identified  as 
’serious risk goods’ and consequently banned or withdrawn from 
the EU markets is transmitted to Chinese authorities. Since 2008, 
the same dialogue instrument became a component of the EU-US-
China trilateral cooperation on consumer product safety issues for 
coordinated response. 

Sustaining a partnership, especially in time of frictions 

Since the bilateral dialogues are not ad hoc but institutionalised, 
meaning that the EU and China are bound by the respective dia-
logue trajectories at political and/or working levels, with some of 
them  also  including  contractual  obligations  for  project  delivera-
bles, both sides are condemned to stay connected to carry on their 
work to make progress, however large their differences may be and 
whatever frictions may exist. In this respect, the High-level Eco-
nomic  and  Trade  Dialogue  (HLETD)  is  a  case  in  point  (Box  4). 
Because of the ever-growing trade imbalances, and particularly for 
the lack of a level playing field and of reciprocity, in 2008 HLETD 
was  established  hoping  to  redress  these  issues,  and  to  identify 
practical ways to improve bilateral trade. In principle, HLETD had 
the aim to implement the outstanding commitments about what 
China pledged to reform with regard to substantial market access 
for goods and services, based on the Joint Statement issued at the 
first EU-China Summit, in London, 1998. 

The EU-Dialogue Structure34

Box 4: High-level Economic and Trade Dialogue (HLETD)

The annual agenda-setting of the HLETD corresponded with the 
trade frictions experiencing between the EU and China in recent 
years concerning disciplines, such as state aid, especially indus-
trial subsidies.

For example, under the theme of “harnessing globalisation”, 
the  agenda  of  the  7th  HLETD  in  2018  covered  the  subjects  of 
WTO reform, including a new working group in order to tackle 
key  reform  areas,  for  example  on  industrial  subsidies.  During 
the  meeting,  the  EU  also  urged  China  to  submit  an  ambitious 
and comprehensive offer for its WTO Government Procurement 
Agreement  accession  as  the  previous  offers  were  not  accepted 
by  GPA  partners.  On  trade  and  investment  issues,  both  sides 
exchanged views on obstacles to market access. The issues related 
to digital economy, cooperation on climate change, environment 
protection  and  the  Connectivity  Platform  were  also  discussed. 
Other agenda items included China’s steel and aluminium over-
capacity and the high technology sectors covered by the Made 
in  China 2025 Strategy, market access barriers to EU beef and 
poultry  exports,  the  circular  economy,  the  ETS,  the  Oceans’ 
Partnership  (e.g.  fisheries),  and  the  market  access  barriers  fol-
lowing China’s cybersecurity regulations, etc.

Trade  frictions  aside,  in  the  meantime  HLETD  pushes  to 
advance  bilateral  economic  and  trade  relations.  The  bilateral 
WTO Working Group tackles WTO reforms in relation to the 
Appellate  Body  and  other  disciplines,  such  as  industrial  subsi-
dies and transparency. For the former, after the Appellate Body 
ceased  to  function  in  December  2019,  the  EU,  China  and  17 
other WTO members in March 2020 established a contingency 
multi-party  interim  appeal  arbitration  arrangement,  as  a  sepa-
rate appeal system to settle trade disputes.

Weinian Hu and Jacques Pelkmans35

For  the  latter,  however,  little  progress  seems  to  have  been 
made, except that the Dialogue on State Aid was established. It 
serves  as  a  mechanism  for  the  EU  and  China  to  conduct  con-
sultation, cooperation, and for transparency and legal certainty 
purposes,  in  the  field  of  state  aid  control  and  Fair  Competi-
tion Review. According to its MOU, this new dialogue aims to 
enhance practical cooperation on transparency of China’s state 
aid control regime and establishing a Fair Competition Review 
System in China, so as to foster fair competition in the market, 
the so-called a level-playing field, for businesses of all countries. 

Aligning objectives where possible, elevate bilateral 
cooperation at global level

When the EU and China are able to forge shared positions on a 
given subject, their cooperation would be facilitated at global level. 
This is often the case with regard to their cooperation on foreign 
policy and security issues. For example, as acknowledged by Fed-
erica  Mogherini,  the  former  High  Representative  of  the  EU  for 
Foreign  Affairs  and  Security  Policy,  at  her  meeting  with  China’s 
Premier Li Keqiang on 24 October 2019, EU-China cooperation 
was a major factor in first securing the Iran nuclear agreement and 
later in ensuring its full and effective implementation. 

The EU-Dialogue Structure36

Enhancing the EU’s rule-making power in trade24

With  the  sheer  size  of  its  single  market,  counting  450  million 
consumers and 22.5 million small and medium-sized enterprises 
(SMEs), the EU boasts a normative power in global trade. When 
China  embarked  on  market-opening  in  order  to  qualify  for  its 
WTO membership, abundant opportunities were presented to the 
EU to shape China’s various trade policies and to align them with 
the  EU’s,  where  possible.  The  success  of  the  whole  undertaking 
would  yield  enhanced  rule-making  power  for  the  EU  at  global 
level.  In  reverse,  EU’s  trade  policy  approaches  and  experiences 
(including market integration) could serve as examples for China 
to reflect upon and learn from. Indeed, many economic and sec-
toral dialogues, for example the Competition Policy Dialogue (Box 
5) and the IPR Dialogue, have served both sides. 

24  Seeking possibilities for greater influence and for enhanced market access ultimately 
is a strategy engaged by global market powers, the EU is not the only one. Recall, on 
15 November 1999, Ambassador Barshefsky, then USTR, at the Press Conference on 
the U.S.-China Agreement said that on the question of financial securities, the Trea-
sury Department in particular would have a forum in which to consult with China on 
the development of its securities market, which was underdeveloped. The Ambassador 
further said that while China typically turned to Hong Kong regulators for advice, the 
Treasury Department “...was very anxious to be able to participate in this kind of formu-
lation of regulations and the development of capital markets generally in China, including 
with respect to market access in future...” Note that the Agreement, which paved the way 
for the U.S.’ support to China’s WTO membership bid, established a capital markets di-
alogue to cover the totality of banking issues as well as securities and regulatory issues.

Weinian Hu and Jacques Pelkmans37

Box 5: Competition Policy Dialogue

Competition policy is a crucial and complex issue for China both 
internally,  in  relation  to  its  domestic  markets  among  different 
administrative  levels,  and  externally  for  international  mergers 
and acquisitions reviews. 

Domestically, as a by-product of China’s judicial devolution, 
China’s internal markets at different administrative levels were 
often  subject  to  diverse  regulations.  Therefore,  when  transi-
tioning from a central-planned to a market-oriented economy, 
to achieve China’s ‘internal markets’ integration the regulatory 
barriers erected between central and local, and among provin-
cial  and  municipality,  governments  had  to  be  removed,  mini-
mised or harmonised. Only after such integration, the (internal) 
market would be ready for fair competition on an equal footing. 
Besides,  as  a  legacy  of  a  central-planned  economy,  SOEs  were 
bestowed  with  many  privileges  in  terms  of  favourable  policies 
and convenient access to public funds. In this context, achieving 
fair  competition  means  eliminating  SOEs’  privilege  and  sub-
jecting them to the same market rules as applicable to all enter-
prises regardless of their ownership, whether SOEs, private, or 
foreign-invested. Only then, a level-playing field for competition 
would materialise. 

Internationally, with its quick rise to become a huge market 
for foreign investments, China is increasingly a “must visit” juris-
diction  for  global  mergers.  But  at  the  same  time  its  Anti-Mo-
nopoly  Law  (AML),  since  in  2008,  appears  relatively  young  in 
comparison with other competition jurisdictions in the world, 
such as the EU’s, and requires improvements in implementation, 
in particular.   

The EU-Dialogue Structure38

The EU and China in 2004 agreed to set up a permanent con-
sultation  mechanism  on  competition  policy.  At  the  time,  Chi-
na’s  competition  regime,  including  AML  2008,  administrative 
regulations  and  implementing  rules,  already  started  to  follow 
the “European model” as China’s AML equally regulates against 
anti-competitive  agreements,  abuse  of  dominant  position 
and concentration, echoing Articles 101 and 102 of the Treaty 
on  the  Functioning  of  the  EU  and  the  EC  Merger  Regulation. 
Depending on the investigated markets, since an international 
transaction  outside  China  could  be  subject  to  AML’s  scrutiny, 
coordinating  with  Chinese  authorities  on  competition  policy 
has become essential in order for both the EU and China to fight 
against international cartels. 

Three different kinds of activities are introduced to comple-
ment the EU-China Dialogue on Competition Policy, in order 
to harness uniform implementation and coherent and predict-
able enforcement. The three kinds of activities are, a “Compe-
tition  Week”  to  enhance  public  awareness  about  competition 
policy, a “Competition Summer School” to conduct an intensive 
week-long study programme to train Chinese officials, a “Visi-
tors’ Programme” which is a field trip to visit different compe-
tition authorities in the EU. At policy level, during the annual 
meeting of the Dialogue, officials from both sides will exchange 
views on good practices and discuss all areas of competition law, 
including state aid control.25  

Established  in  2004,  the  bilateral  cooperation  in  civil  avia-
tion has yielded the same result for the EU in extending its single 
market principles to China. China has one of the fastest growing 
aviation sectors in the world; it is expected to be the largest growing 

25  With the dialogue as a platform, the EU shares with China its experience in enforcing 
state aid control. It can also be used to learn more about the implementation of the 
Fair Competition Review in China, which is designated to prevent public policies from 
distorting and restricting competition while maintaining fair market competition and 
promoting a unified market. The dialogue is seen as the Commission’s broad strategy 
to address the distortion that national subsidies policies engender on the promotion of 
a global level playing field where companies can compete on the merits. The dialogue 
is supported by cooperation with working groups at technical level. The dialogue takes 
place at least once a year, alternating between Brussels and Beijing.

Weinian Hu and Jacques Pelkmans39

domestic aviation market for the next 20 years, too. With a steadily 
increasing number of customers in the country, new airlines and 
low-cost subsidiaries of existing full services carriers will enter the 
market, many opportunities are therefore presented for the Euro-
pean aviation industry in China. This includes not only EU-manu-
factured aircraft and components, but also more flight frequencies 
between Europe and China. 

The EU’s aviation industry supports 5.1 million jobs and gen-
erates 2.4% of its GDP. Aviation is also one of the main drivers for 
R&D,  and  for  creating  employment  in  Europe.  Exports  account 
for  roughly  60%  of  its  revenue.  Aviation  trade  between  the  EU 
and China has already generated more than EUR 10 billion. The 
EU-China Aviation Relations Dialogue aims to strengthen the eco-
nomic partnership between the EU and China in the civil aviation 
domain in relation to industry, technology and safety. 

From the perspective of EU’s rule-making power, replacing the 
traditional  flight  route  set-up  based  on  nationality  restrictions, 
the  single  market  principle  of  destination  has  eventually  been 
recognised  by  the  Chinese  aviation  authority  in  the  Horizontal 
Agreement signed in May 2019. This recognition extends the EU’s 
internal aviation market to a third country. 

As  to  safety,  the  objective  of  ‘mutual  acceptance’  has  been 
achieved as a result of the bilateral aviation dialogue. By signing 
the Bilateral Aviation Safety Agreement (BASA), the EU and China 
have established the mechanism of reciprocal acceptance of 1) cer-
tificates  (airworthiness,  environmental  testing)  and  2)  findings 
of  compliance  issues  by  respective  competent  authorities.  Such 
findings include design and production, maintenance, personnel 
licensing  and  training,  operation  of  aircraft,  air  traffic  services 
and management, etc. As to the ‘mutual acceptance’ arrangement, 
it will apply to a range of products, such as civil aircraft, aircraft 
engines, propellers, sub-assemblies, appliances, and parts. In prac-
tical terms, it means automatic acceptance without any technical 
investigation or validation exercise, so that a certificate issued by 
the certificating authority is recognised by the validating authority 

The EU-Dialogue Structure40

as  equivalent  to  its  own  certificate  issued  in  accordance  with  its 
legislation and procedures. 

The  Aviation  Dialogue  is  conducted  through  1)  exchange  of 
information  between  regulatory  authorities;  2)  specific  techno-
logical cooperation activities, including training, and secondment 
of  short-term  experts,  in  order  to  implement  policy  objectives. 
Aviation  cooperation  was  emphasised  by  the  EU  as  “a  matter  of 
priority” in bilateral relations with China since 2004, for three rea-
sons. Firstly, China’s ever-growing civil aviation market, as men-
tioned  above,  promises  substantial  commercial  opportunities,  as 
mentioned above. Secondly, for the EU’s principle of destination 
to be recognised by China, so that all EU airlines will be able to 
fly to China from any EU member states with a bilateral air ser-
vices agreement with China if unused traffic rights are available. 
Without the agreement, only airlines owned and controlled by a 
given member state of its nationals could fly between that member 
state and China. Thirdly, on ‘mutual acceptance’, the EU perhaps 
did not want to lag behind the US since the U.S. and China signed 
the  Agreement  for  Promotion  of  Aviation  Safety  in  2005  cov-
ering,  among  others,  mutual  acceptance  of  technical  standards, 
including  (a)  airworthiness  approvals  and  environmental  testing 
and. approval of civil aeronautical products, and (b) qualification 
evaluations of flight simulators. 

BASA also aims to facilitate mutual acceptance of the approvals 
and monitoring of maintenance facilities and alteration or mod-
ification  facilities,  crew  members,  aviation  training  establish-
ments, and flight operations. Indeed, BASA brings the EU on an 
equal footing with the US, among others, with respect to aircraft 
and related products trade. In the meantime, BASA removes the 
unnecessary  duplication  of  evaluation  and  certification  activities 
for  aeronautical  products  by  the  civil  aviation  authorities  and 
therefore reduce costs for the aviation sector. BASA also promotes 
cooperation  between  the  EU  and  China  towards  a  high  level  of 
civil aviation and environment compatibility. Both the Horizontal 
Agreement and the Bilateral Aviation Safety Agreement came into 
effect in September 2020.

Weinian Hu and Jacques Pelkmans41

Thanks to the bilateral dialogue mechanism, not only on trade 
issues,  but  also  on  certain  non-trade  issues,  chiefly  on  environ-
mental  protection,  the  EU’s  rule-making  capacity  is  seen  to  be 
working  towards  China,  for  which  China  has  stepped  up  from 
“soft”,  e.g.  exchanging  views  and  sharing  experiences,  to  “hard” 
commitments  with  legally-binding  deliverables,  as  testified  by 
the CAI. Based on the provisional text of the Agreement (January 
2021),  China  has  committed  to  implement  the  Paris  Agreement 
on  Climate  Change  and  to  ratify  the  two  ILO  core  Conventions 
on Forced Labour. With these legally binding obligations on non-
trade issues, China departs from its previous approach undertaken 
in a similar context which was only about “best efforts” referring to 
by the negotiations, and the eventual suspension, of the EU-China 
Partnership  and  Cooperation  Agreement  (PCA)  between  2007 
and 2011. 

In 2007, the EU and China launched their PCA negotiations, 
with a scope encompassing political cooperation, e.g. democracy, 
human rights, governance, and trade and investment liberalisation, 
mainly  in  the  form  of  trade  and  investment  facilitation.  China’s 
aversion against “hard” commitments to political deliverables was 
quoted as one reason for suspending the negotiations although one 
half of the 22 chapters had been finalised or were close to finalisa-
tion.26 However, at the end of 2020 China has changed its position 
against  non-trade  issues  during  trade  negotiations  and  accepted 
hard  commitments  to  implement  the  Paris  Agreement  on  Cli-
mate Change and to ratify the ILO Conventions on Forced Labour 
which are both with legally-binding effects. More significantly, as 
far as the CAI is concerned, China has subjected its sovereign right 
of ratification to a consultation mechanism with the EU – as the 
ILO Constitution is clear that ratification is a sovereign matter that 
a member shall decide. This is a triumph for the EU over its rule-
making power, as well as its value-based trade policy. No wonder 
China’s hard commitments, grouped under the chapter of sustain-
able development of the CAI, were hailed as the “last piece that fell 

26  For the motivation for launching the PCA negotiations and a brief explanation of the 

suspension of the negotiations, see Pelkmans, Hu, Francois et al. (2018), ch. 1

The EU-Dialogue Structure42

into place” before the CAI was provisionally concluded.27 

With  regard  to  environmental  protection,  China’s  commit-
ments under the CAI are two-fold. Firstly, China has committed 
to implementing the UNFCCC (United Nations Framework Con-
vention on Climate Change) and the Paris Agreement on Climate 
Change. This means to have CO2 emissions peak before 2030 and 
achieve  carbon  neutrality  before  2060.  On  December  12,  2020, 
President  Xi  Jinping  announced  some  further  commitments  for 
2030 at the Climate Ambition Summit: China will lower its CO2 
emissions per unit of gross domestic product (GDP) by over 65% 
from the 2005 level, increase the share of non-fossil fuels in pri-
mary energy consumption to around 25%, increase the forest stock 
volume  by  6  billion  m3  from  the  2005  level,  and  bring  its  total 
installed capacity of wind and solar power to over 1.2 billion kW.28 
Secondly, China has committed to a five-year action plan, known 
as Nationally Determined Contributions (NDC) under the Paris 
Agreement, to implement the aforementioned goals. Working on 
a five-year cycle since November 2016 when the Paris Agreement 
came into force was a commitment pledged at the conclusion of 
the Paris Agreement. 

As  to  the  labour  protection  commitment  under  the  CAI, 
although – as far as the provisions are concerned – ratifying the 
two ILO Conventions on Forced Labour (Nos 29 and 105) will be 
on China’s “own initiative” with “continued and sustained efforts”29 
which appear rather a “best endeavour” kind of soft commitment, 
but the pledge is nevertheless legally binding, as confirmed by the 
Panel  Report  on  the  EU-Korea  labour  dispute,  where  the  Panel 
decided that the wording “… respect, promote and realize…”, used 
by Article  13.4.3  of  the EU-Korea Free  Trade  Agreement (FTA), 
and also by Article 4 of Sub-section 3 of the EU-China CAI (Agree-

27  Available at tradetalkspodcast.com 148, the EU’s new trade policy, with Sabine Weyand 

of DG Trade.

28  China’s Achievements, New Goals and New Measures for Nationally Determined Con-

tributions.

29 

 See Article 4 of Sub-section 3 on Investment and Labour of the EU-China Comprehen-
sive  Agreement  on  Investment  (https://trade.ec.europa.eu/doclib/docs/2021/january/
tradoc_159346.pdf).

Weinian Hu and Jacques Pelkmans43

ment  text  as  of  22  January  2021),  is  legally  binding.30  Moreover, 
the provision that constitutes the “best endeavour”, where parties 
“will make continued and sustained efforts towards ratifying”, seen 
in  the  same  Article  in  both  trade  agreements,  is  equally  legally 
binding as established by the same Panel Report.31

Furthering the EU’s strategic interests

The  bilateral  dialogues  provide  the  EU  with  a  ready  instrument 
to advance its strategic interests vis-à-vis China, which is a global 
player in many dialogue areas under the Dialogue Architecture.

The foreign policy dimension 

The  EU-China  bilateral  political  dialogues  consolidate  many  of 
their shared positions in foreign policy in the geographical areas 
concerned,  from  Asia,  Africa,  Latin  America,  Middle  East  to 
North Africa. For example, at the 7th EU-China Summit in 2004, 
the  Joint  Declaration  on  Non-proliferation  and  Arms  Control 
was  concluded  while  both  sides  recognised  each  other  as  major 
strategic partners on arm control. This enhanced cooperation has 
been conducive in order to advance the multilateral non-prolifera-
tion process. The position shared by the EU and China on the Joint 
Comprehensive Plan of Action (JCPOA) is another case in point, 
as mentioned above. 

The economic and trade front

Many dialogues conducted under the Pillar of Economic and Sec-
toral  provide  the  EU  with  opportunities  to  explore  new  terrains 
to advance its trade interests. For example, as one of the earliest 

30  See  Report  of  the  Panel  of  Experts,  Panel  of  Experts  Proceeding  Constituted  under 
Article 13.15 of the EU-Korea Free Trade Agreement, 20 January 2021, pp 28-40.

31  See  Report  of  the  Panel  of  Experts,  Panel  of  Experts  Proceeding  Constituted  under 
Article 13.15 of the EU-Korea Free Trade Agreement, 20 January 2021, pp 70-7. For an 
analysis on the challenges that China faces in order to ratify the ILO Conventions on 
Forced Labour, see Hu (2021-b)

The EU-Dialogue Structure44

bilateral cooperation projects, the Energy Dialogue was first estab-
lished in 1994 in the forms of annual working group meetings and 
the bi-annual Conference on EU-China Energy Co-operation. 

When  the  EU-China  Energy  Dialogue  was  first  inaugurated, 
the  specific  agenda  included  energy  policy  and  development 
strategy, the evolution of energy markets, and security of supply 
and sustainable development. Over time, and because China has 
since become simultaneously the world’s largest renewable energy 
producer as well as the largest producer of hydroelectricity, solar 
power and wind power, and yet the world’s largest greenhouse gas 
emitter,  bilateral  energy  cooperation  has  been  elevated  to  a  very 
strategic  issue  for  both  sides,  especially  concerning  supply  and 
innovation. 

In  September  2020,  President  Xi’s  pronouncement  on  “emis-
sion  peak  by  2030  and  carbon  neutrality  by  2060”  has  injected 
new  impetus  to  China’s  ambition  of  environmental  protection. 
Nonetheless, achieving carbon neutrality suggests that China will 
become  the  world’s  biggest  market  for  low-carbon  technologies, 
and  this  potential  has  been  indeed  acknowledged  for  it  presents 
concrete trade opportunities. After all, China has been the world’s 
biggest investor in renewable energy since 2016.  

However,  aside  from  all  the  encouraging  developments,  one 
should not underestimate the considerable impediments of a coal 
transition towards clean energy that China must overcome before 
achieving  its  goals.  It  is  noticed  that,  in  the  14th  Five-Year  Plan 
delivered  at  the  ‘two  sessions’  (Beijing,  4-11  March  2021),32  Pre-
mier Li Keqiang refrained from setting a cap on carbon intensity 
for  the  next  five  years  (2021-2025)  and  from  introducing  a  ban 
on building new coal-fired plants, which would have been a major 
step  for  promoting  carbon  reduction.  As  the  world’s  largest  coal 
producer  accounting  for  half  of  global  production,  China  con-
tinues to depend heavily on coal domestically. 

32 

 The ‘two sessions’ refer to the annual meeting of the Chinese People’s Political Consul-
tative Conference (CPPCC) and the National People’s Congress (NPC). The meeting is 
a window on the central government’s priorities and plans for the coming year (https://
www.scmp.com/news/china/politics/article/3123587/two-sessions-2021-five-things-
you-need-know-about-chinas). 

Weinian Hu and Jacques Pelkmans45

Presently,  fossil  fuels  –  mostly  coal  –  account  for  about  90% 
of China’s energy production and consumption. The government 
has been working to lower its reliance on coal, to cut down over-
capacity, while expanding its renewable capacity and to gradually 
switch from coal to gas as well as to renewable energy sources.33 To 
peak CO2 emissions by 2030 is therefore to manage a coal transi-
tion.34 Using the Covid-19 recovery package as a conduit, China 
announced  that  it would invest  around  CNY 17.5 trillion (€2.26 
trillion)  in  ‘new  infrastructure’  (e.g.  5G  networks,  charging  sta-
tions  for  new  energy  vehicles).  However,  it  is  also  reported  that 
the country will likely ease the pressure35 on coal mines’ closure 
to meet the rising demand of energy for economic recovery post-
Covid.

Nuclear energy is another area where cooperation has gener-
ated tangible results, and benefits the EU since it could learn from 
China  for  its  know-how.  The  R  &  D  in  Peaceful  Use  of  Nuclear 
Energy Steering Committee (RD-PUNE) was established in 2008, 
after the agreement on R&D co-operation on the peaceful use of 
nuclear energy between the Euratom and the Government of China 
was signed at the EU-China Summit, in The Hague, in 2004. The 
Agreement launched research cooperation, including researchers’ 
access to nuclear energy research facilities on both sides. This pro-
vision is particular important to EU researchers as they can access 
China’s  state-of-the-art  nuclear  facilities  while  those  in  Europe 
were closing down or being phased out. 

The  same  spirit  of  cooperation  on  nuclear  energy  extends  to 
international fora, too. For example on nuclear fusion, the EU could 
promote its strategic interest in “advancing fusion science and pre-
paring the way for the fusion power plants of tomorrow”.36 The EU 

33  For example, China’s State Development and Investment Corporation pledged in 2019 
to  no  longer  invest  in  new  thermal  power  plants,  Bloomberg,  (March  2019),  China 
state  funds  join  shift  from  coal  power  investments  (www.bloomberg.com/news/arti-
cles/2019-03-20/top-china-fund-sdic-joins-global-shift-away-from-coal-investment).

34  See also Teng (2018)

35  Bloomberg, China Likely to Ease Coal Mine Closures to Meet Rising Needs, 15 June 

2020.

36  Available at: https://www.iter.org/proj/inafewlines.

The EU-Dialogue Structure46

and China are both parties of the inter-governmental multilateral 
agreement on fission-related research, and partners of the ITER,37 
the world’s largest nuclear fusion project in which 35 nations coop-
erate on fusion research and participate in the R&D activities on a 
Sodium Fast Reactor and Very-High Temperature Reactor, within 
the Generation IV international Forum. When the ITER negoti-
ation  reached  a  deadlock  in  2004  among  the  six  parties  (China, 
Japan, Korea, the EU, Russia and the US) as to the location of the 
10-billion-Euro science project, China (and Russia) supported the 
EU’s  choice  of  the  South  of  France  (as  opposed  to  a  location  in 
Japan, supported by the US and Korea). At the time, China even 
indicated that if negotiations were to fail it would be ready to join 
the EU to go ahead with the latter’s choice of location.38 The ITER 
Agreement was officially signed in Paris in November 2006, while 
India also joined as a party. France was eventually chosen as the 
location of the project.

The people-to-people front

The  various  dialogues  undertaken  at  the  people-to-people  front 
help to deepen trust and mutual understanding between the peo-
ples in the EU and China. Cooperation in this regard include many 
areas, such as education, youth, gender equality, sports and mul-
tilingualism. The whole exercise is designed to enhance EU’s visi-
bility, and soft power. 

Though  the  dialogue  themes  of  people-to-people  exchange 
may  appear  light-hearted,  they  are  of  much  importance  when 
promoting  EU’s  interests  towards  China.  This  is  testified  by,  for 
example, the 2016 Joint Communication on Elements for a New 

37 

 In southern France, 35 nations, including China, collaborate to build the world’s largest 
tokamak, a magnetic fusion device that has been designed to prove the feasibility of fu-
sion as a large-scale and carbon-free source of energy based on the same principle that 
powers our Sun and stars. ITER will be the first fusion device to produce net energy, 
and to maintain fusion for long periods of time. ITER will also be the first fusion device 
to  test  the  integrated  technologies,  materials,  and  physics  regimes  necessary  for  the 
commercial production of fusion-based electricity.

38 

 See the Joint Statement of the 7th EU-China Summit, The Hague, 8 December 2004, at 
para.19.

Weinian Hu and Jacques Pelkmans47

EU Strategy on China which identified the Erasmus+ programme 
as an instrument to strategically promote the EU’s interests con-
cerning China.  

Indeed, higher education has become increasingly a focal point 
for EU-China cooperation. China has already been the top bene-
ficiary of the EU-funded “Erasmus+” programme and, since 2015 
more than 4,000 Chinese students and staff benefitted from the pro-
gramme in which 70 Chinese universities participated. Moreover, 
in 2017 both parties further agreed to boost researchers’ mobility 
through the EC-funded Marie Skłodowska-Curie Actions, which 
is a programme promoting interdisciplinary research and interna-
tional  collaborations,  and  supporting  scientists  across  the  globe. 
China  has  benefitted  considerably  from  the  various  EU-funded 
academic  exchange  programmes  whereby  some  of  China’s  most 
brilliant minds of the future generation are also exposed to Europe’s 
culture, values, science and technology, reflecting EU’s soft power. 
Perhaps as an emulation of the EU’s practice and the logic behind 
it,  China  launched  an  “EU-style”  five-year  Chinese  Government 
Scholarship Program (EU Window) from 2007 onwards to provide 
100 scholarships per year to young EU students to study in China. 
This programme continues to date.

2.4 Exploring new areas of mutual interests to achieve 
a win-win situation for both

The examples above, such as on competition policy, already high-
light the fact that dialogues can facilitate to achieve a win-win situ-
ation for both the EU and China. As the biggest consumer market 
in  the  world,  China  presents  many  opportunities  for  EU  busi-
nesses. This was indeed one reason that, since the very beginning, 
the scope of EU-China cooperation set no limits as witnessed by 
the  1985  bilateral  Agreement  on  Trade  and  Economic  Coopera-
tion  which  also  covers  their  cooperation  in  third  countries.  For 
this purpose, the number of dialogues between the EU and China 
has been ever growing to date, since new cooperation areas con-

The EU-Dialogue Structure48

tinue to emerge.39 This phenomenon is applicable to dialogues on 
non-trade issues, too.  

On the other hand, although the dialogues on non-trade issues, 
such  as  environment  protection,  have  delivered  many  tangible 
results,  these  Dialogue  results  were  only  realised  in  relation  to 
“non-complicated”  subject  matters  without  the  need  for  struc-
tural change. If a structural change is required, China may still be 
persuaded  to  change  its  stances,  but  that  would  require  a  much 
longer time to materialise. In this regard, China’s stance on forced 
labour is a case in point, since legislative changes in prison law and 
criminal  law  will  be  involved,  although  China  already  abolished 
forced labour camps in 2013.40 Dialogues of other non-trade issues 
include  Regional  Policy  and  occupational  safety  &  health.  The 
latter focuses on improving working conditions, reducing work-re-
lated accidents and illness, in order to contribute to the objective of 
decent work for all and adhere to the agreed ILO standards. 

Some  sectoral  dialogues  were  established  in  order  to  identify 
synergies  between  the  EU  and  China  for  mutual  benefits.  The 
Climate  Change  Partnership,  the  Dialogue  on  Aviation  Regula-
tion  and  the  High-Level  Dialogue  on  Innovation  are  three  such 
examples. The EU-China Climate Change Partnership includes an 
action plan of cooperation on clean coal, energy efficiency, renew-
able energies. Working towards a more ambitious Paris Agreement 
within  the  remit  of  the  UN  Climate  Convention  is  an  objective 
of  the  Partnership,  too.  Under  the  High-Level  Innovation  Dia-
logue, both sides set up a co-funding mechanism 2018-2020 and 
the Flagship initiatives, such as food, agriculture, biotechnologies, 
environment  protection,  sustainable  urbanisation,  surface  trans-

39  In this regard, EU’s financial commitment has been considerable. For example, in 2004 
the Hague Summit endorsed four financing agreements for EUR 61 million for four 
new  cooperation  projects  under  the  programme  of  supporting  economic  and  social 
reform in China. The four projects were: the EU-China Information Society Project, 
the EU-China Managers Exchange and Training Programme, the EU-China Social Se-
curity Reform Project, and the Erasmus Mundus China Window project. The Informa-
tion Society Project as well as the Social Security Reform project have both organically 
grown and established further concrete dialogues, while the Erasmus Mundus China 
Window project has become fully-fledged in recent years as mentioned above. 

40  For details, see Hu (2021-b)

Weinian Hu and Jacques Pelkmans49

port, safer and greener aviation, are topics identified for coopera-
tion under the framework of the EU-financed H2020 programme. 
The  obverse  also  applies:  the  EU  joins  China’s  drive  for  innova-
tion  and  taps  into  China’s  increasing  innovation  capacity  for  a 
win-win position for both sides. In recent years, China has been 
making inroads in innovation. In 2019, China’s R&D expenditure 
reached 2.17 trillion CNY (0.27 trillion EUR), equivalent of 2.19% 
of GDP, after the US.41 It is the world’s second-largest producer of 
high-quality  academic  research  and,  seven  of  the  world’s  top  25 
academic  institutions,  ranked  by  research  output  in  the  natural 
sciences, are found in China. 

2.5 Environment Policy Dialogue 

The EU and China started to collaborate on environment protec-
tion  in  1999,  when  the  Environment  Policy  Dialogue  was  inau-
gurated. The EU was committed to support China’s wide-ranging 
social and economic reforms in the run up to the country’s WTO 
accession. Other projects established in the same period included 
education  and  training,  science  and  technology,  energy,  agricul-
ture,  civil  aviation,  telecommunications,  legal  co-operation  and 
public administration training, and human rights. 

In 2003, the Environment Policy Dialogue was upgraded to the 
ministerial  level,  with  the  overall  objective  of  implementing  the 
2030  UN  Agenda  for  Sustainable  Development  in  China.  Since 
then,  the  topics  covered  under  the  Dialogue  have  experienced 
organic growth. Because of the Chinese society’s increased aware-
ness of environment protection, the scope of bilateral dialogue has 
been  extended  to  cover  more  cooperation  areas  over  the  years. 
And, when the importance of some policy areas, such as sustain-
able  development,  renewable  energy,  and  water  source  manage-
ment,  grew  in  their  own  right,  specific  dialogues  were  launched 
accordingly.  Additionally,  after  the  government  has  adjusted  its 
policy  focus  from  “development  at  all  costs”  towards  environ-
ment-oriented,  practical  cooperation  projects  started  to  take  off, 

41 

 Available at: UKRI China – UKRI.

The EU-Dialogue Structure50

too,  in  order  to  rollout  environment  protection  policies,  such  as 
the ETS. 

The topics of environment protection have since increased to 
include sustainable production and consumption, pollution con-
trol and management, natural resource management, river basin 
management,  biodiversity  conservation,  international  environ-
ment  governance,  emergency  response  to  environmental  acci-
dents, chemicals management, and disposal and management of 
dangerous wastes, etc. Both the EU and China also pledged their 
support  to  promote  clean  technology  transfer,  and  to  encourage 
the adoption of stricter environmental standards in mutual invest-
ment.42 In 2012, the projects on water pollution reduction, waste 
policy  and  reduction  of  heavy  metal  pollution  were  launched. 
Later, since the subjects of water, food and nutrition security gar-
nered substantive interest from both sides under the umbrella of 
environmental and agricultural cooperation, the EU-China Water 
Platform was established in order to tackle the issue of integrated 
water resources management in China. 

More recently, green finance and circular economy were added 
to the agenda of bilateral cooperation on environment protection. 
On green finance, a shared objective is to harness private capital 
flows  towards  a  more  environmentally  sustainable  economy.  As 
to circular economy cooperation, following the MoU on Circular 
Economy Cooperation signed in July 2018, both sides started to 
share  with  each  other’s  best  practices,  to  align  key  mechanisms, 
and  to  set  up  product  standards  and  policies  potentially,  which 
may enable an effective circular economy, for example in the area 
of plastics.

Exchange  of  information  concerning  methodologies,  policy 
tools,  technology  transfer  and  implementation  as  well  as  staff 
exchanges,  etc.  are  the  means  engaged  by  the  EU  and  China  in 
order to roll out a comprehensive and dynamic environment pro-
tection  partnership.  At  policy  level,  a  significant  output  of  the 
bilateral Environment Policy Dialogue is China’s adoption of the 

42 

 See EU-China Joint Summit Declaration, Beijing, 2007.

Weinian Hu and Jacques Pelkmans51

EU’s  ETS  concept,  extending  the  EU’s  rule-setting  capacity  and 
strengthening  the  EU’s  leadership  role  as  a  global  champion  of 
environment protection. 

In  February  2021,  China  officially  launched  its  national 
EU-styled  ETS  with  the  initial  focus  on  the  power  generation 
sector involving 2,225 companies. Over time, the system would be 
extended to cover other sectors of high pollution, such as cement, 
steel and aluminium. The relevant companies covered during the 
launch phase can enter the process of buying and selling permits 
to emit carbon dioxide or other greenhouse gases. If a company is 
able to curb its emissions significantly, it can sell surplus permits in 
the market, but if it fails to limit its emissions, it has to buy unused 
allowances from other companies. 

Prior to adopting the ETS, China implemented seven ETS pilot 
projects in five cities and two provinces, of which specific cooper-
ation projects were undertaken between 2014 and 2017 within the 
remit of the EU-China Energy Dialogue. With China’s participa-
tion, the ETS is presently operating to cover an estimated 17-18% 
of global CO2 emissions, compared to 9% before. As a result, the 
EU’s  method  of  reducing  CO2  emissions  is  being  promoted  to  a 
global level, although China employs slightly different techniques. 
China has also replaced the EU as the world’s largest environment 
credit trading market.

 Once policy objectives on environmental protection are aligned 
after bilateral dialogues, the next step is to conduct concrete pro-
jects to deliver those objectives. One example of such project is the 

The EU-Dialogue Structure52

China-EU Water Platform (CEWP) Dialogue,43 a three-tiered dia-
logue founded in 2012. The CEWP was intended to implement1) 
policy exchange activities, and 2) research and innovation activi-
ties such as the EU-funded Horizon 2020 project PIANO (Policies, 
Innovation And Network For Enhancing Opportunities for Chi-
na-Europe Water Cooperation). According to its 2018-2019 work 
programme,  the  PIANO  project  covered  four  areas,  which  were 
river basin management and ecological security, rural water and 
food security, water and urbanisation, water and energy security, 
as well as the programme of a number of horizontal activities with 
an organisational dimension and three work packages (WP). 

CEWP  also  helps  to  bridge  business  opportunities  both  in 
China and the EU. The Chinese market for water technologies was 
estimated at US$100 bn (€91.4 bn) in 2016 (Global Water Intelli-
gence 2017) which was among the largest in the world, and with 
an expected growth rate of 28% between 2016 and 2020 (Global 
Water Intelligence, 2017) thanks to both public and private invest-
ments of a substantial scale. However, due to a variety of reasons, 
including language barriers, establishing and expanding operation 
in the Chinese water tech market could be a very difficult under-
taking  for  European  businesses.  Chinese  companies  face  similar 
difficulties when they try to access the European water tech mar-
kets.  Serving  as  a  bridge,  the  CEWP  organises  business  ‘match-
making’ and provides key sources of information to promote busi-
ness opportunities for companies from both the EU and China.44 

43  With  the  support  of  the  EU  Water  Initiative  (EUWI)  and  based  on  reciprocity  and 
mutual  benefit,  the  China-Europe  Water  Platform  (CEWP)  was  established  in  2012 
to achieve the objectives of realising good governance in managing water resources, 
enhancing mutual understanding on approaches in integrated water resources policy 
development and implementation, promoting the exchange of innovative knowledge 
and technologies to meet common challenges, creating opportunities for private sec-
tor and research institutes on both sides to undertake business development and joint 
research  programs  of  common  interest.  According  to  the  Declaration  signed  at  the 
CEWP high-level Conference in Finland in 2017, during the next two years the CEWP 
would focus on reaching the UN Sustainable Development Goals associated with water 
and on promoting a water-related circular economy. This initiative takes place via the 
even deeper ‘water partnership’ between the EU and China and by increased coopera-
tion with other international players in the water sector, not only in Europe and China 
but also outside.

44 

 For details, see https://www.cewp.eu/organization.

Weinian Hu and Jacques Pelkmans53

Within this context, it must be highlighted that public investments 
in  water  technologies  were  launched  following  the  Chinese  gov-
ernment’s  regulatory  initiatives  which  are  accompanied  with 
investment programmes. 

On  the  other  hand,  under  the  Environment  Policy  Dialogue, 
the  bilateral  cooperation  programmes  on  Environment  Govern-
ance  and  Environment  Sustainability  were  conducive  to  instil 
greater  awareness  of  environment  protection,  both  at  govern-
ment  and  grassroot  levels.  Raising  awareness  requires  long-term 
commitment in general. Awareness on environmental protection 
in  China  was  initially  poor.  Economic  development  was  par-
amount  “at  all  costs”,  including  environmental  costs.  In  recent 
years, though, improving environment, with specific targets such 
as carbon emission reduction levels,45 has been an on-going policy 
priority  for  which  the  government  also  allocated  much  financial 
support for implementation. Accompanying this policy drive is the 
government’s financial schemes to support China’s green industry. 
Already  in  2015,  China  became  the  world’s  biggest  investor  of 
renewable  energy,  spending  a  total  of  US$103bn  (€94.14bn),  or 
36% of the world total.46 This overall commitment has generated 
significant opportunities for deepening EU-China cooperation on 
climate change for clean technology transfer, and policy coordina-
tion at global level, etc. 

The above policy re-orientation would not have been possible 

45  On September 22, 2020, President Xi Jinping declared, at the General Debate of the 
75th Session of the United Nations General Assembly, that China would scale up its 
Nationally Determined Contributions (NDCs) by adopting more vigorous policies and 
measures, and aims to have CO2 emissions peak before 2030 and achieve carbon neu-
trality before 2060. On December 12, 2020, President Xi Jinping announced some fur-
ther commitments for 2030 at the Climate Ambition Summit: China will lower its CO2 
emissions per unit of gross domestic product (GDP) by over 65% from the 2005 level, 
increase the share of non-fossil fuels in primary energy consumption to around 25%, 
increase the forest stock volume by 6 billion m3 from the 2005 level, and bring its total 
installed capacity of wind and solar power to over 1.2 billion kW. See China’s Achieve-
ments, New Goals and New Measures for Nationally Determined Contributions, avail-
able  at:  https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/China%20
First/China%E2%80%99s%20Achievements,%20New%20Goals%20and%20New%20
Measures%20for%20Nationally%20Determined%20Contributions.pdf. 

46  See  China  cementing  global  dominance  of  global  energy  and  technology,  6  January 
2017,  the  Guardian.  Available  at:  https://www.theguardian.com/environment/2017/
jan/06/china-cementing-global-dominance-of-renewable-energy-and-technology

The EU-Dialogue Structure54

without enhanced awareness of environment protection. The EU 
and  China  launched  the  Environment  Governance  Programme 
(2010-2015)  to  enhance  awareness  at  both  governmental  and 
grassroots  levels.  The  programme  aimed  to  strengthen  environ-
mental  governance  in  China  through  enhanced  administration, 
public  access  to  information,  public  participation,  access  to  jus-
tice and corporate responsibility in the environmental field. Under 
the Environment Governance Programme, 15 projects with four 
themes were rolled out in order to enhance environmental govern-
ance in China based on the premise of the Aarhus Convention.47 
The  Convention  has  four  themes  encompassing  public  access  to 
environment  information;  public  participation  in  environment 
planning  and  decision-making;  access  to  justice  in  environment 
matters and corporate environment responsibility. The whole pro-
gramme was funded by the EU for €15 million, and implemented 
by  China’s  Ministry  of  Commerce  and  the  Ministry  of  Environ-
ment.  

The same dynamic partnership is found in the EU-China Part-
nership on Climate Change and BCM on Climate Change, which 
was forged in 2005 at the same time when the country had become 
the  world’s  largest  carbon  emitter.48  The  Dialogue  on  Climate 
Change is a platform for bilateral cooperation within the multilat-
eral context of the UN Framework Convention on Climate Change, 
where  both  parties  coordinate  their  political  positions  related  to 
the Paris Agreement. The policy areas covered by bilateral climate 
change cooperation include domestic emissions reduction, carbon 
markets,  low  carbon  cities,  carbon  capture  and  storage,  green-
house  gas  emissions  from  aviation  and  maritime  industries  and 
hydrofluorocarbons. 

47  The Convention  on  Access to Information, Public Participation  in  Decision-Making 
and Access to Justice in Environmental Matters was adopted on 25 June 1998 in the 
Danish city of Aarhus (Århus). It entered into force on 30 October 2001. The Aarhus 
Convention establishes a number of rights of the public (individuals and their associ-
ations) with regard to the environment. The Parties to the Convention are required to 
make the necessary provisions so that public authorities (at national, regional or local 
level) will contribute to these rights to become effective. 

48  China became the world’s biggest investor in renewables since 2012 when $ 65 billion 

was invested.

Weinian Hu and Jacques Pelkmans55

Within the context, to bring dialogue to action, the Action Plan 
adopted in 2018 seeks to address the issues related to clean coal, 
energy efficiency, as well as renewable energies. Subsequently, and 
in view of China’s ambition to establish a nationwide ETS,49 spe-
cific  projects  were  undertaken  to  support  the  design  and  imple-
mentation  of  greenhouse  gas  emissions  trading  in  China.  Addi-
tionally, there was the project on China-EU Near Zero Emission 
Coal  (NZEC)  for  developing  and  demonstrating  carbon  dioxide 
capture and storage technology in China by 2020, a project which 
turned out to be too optimistic for many years. 

2.6 A platform for capacity-building

Among  the  EU-China  economic  and  sectoral  dialogues,  capaci-
ty-building was a major objective in the beginning in order to facil-
itate China’s WTO accession process. Later, most of the dialogues 
were transformed into platforms to assist the country’s further inte-
gration in the WTO trading system and to address trade irritants 
for  example  on  fisheries.  Since  many  of  China’s  WTO  accession 
commitments are WTO-plus in nature,50 the technical challenges 
that China was facing against the economic transitions were high. 
EU’s (and other countries’) technical assistance programmes were 
conducive in order to help China comply with its WTO accession 
commitments.  Thus,  many  working  group  and  expert  meetings, 
which are a component of many bilateral dialogues, were organ-
ised in order to transfer to China the EU’s knowhow and to discuss 
practical  issues  encountered.  Such  dialogues,  including  the  Dia-
logue on  Consumer Products, Industrial Products & WTO/TBT 
Consultation,  have  facilitated  China  to  implement  WTO-com-
pliant legislation and practices.

The functioning of the expert group meetings organised within 
the framework of the Dialogue of IPR Protection is an example. 
Over  the  years,  the  Dialogue  on  IPR  Protection,  established  in 
2004, has developed a comprehensive framework of dialogues at 

49 

 For details, see EUCHINA-ETS (eu-chinaets.org). 

50 

 See Hu W. (2019a).

The EU-Dialogue Structure56

policy, working group and expert levels. Besides conducting bilat-
eral meetings for information-sharing on IPR legislation and prac-
tice,  and  policy  coordination,  the  IPR  Dialogue  has  the  purpose 
to identify weaknesses in IP protection on both sides and present 
proposals for improvement. 

To  complement  the  bilateral  IPR  dialogue  activities  at  policy 
level,  the  IP  Working  Group  was  established  in  2005  and  is  an 
integral  part  of  the  IPR  Dialogue.  Taking  place  twice  a  year,  the 
agendas of each Working Group meeting are drafted with consul-
tations  among  stakeholders,  including  industries,  academia  and 
practitioners, in order to make sure that the discussions are ‘rele-
vant’ to the IPR issues that the parties face in reality. The location 
of  the  Working  Group  meetings  alternates  between  the  EU  and 
China. 

At expert level, the overall activities, which cover all the tech-
nical issues in IP areas, such as copyright, trademark, patent, GI, 
are organised by the IP Key Project for already more than a decade. 
Participants  of  the  activities,  such  as  technical  training,  experts 
seminars and field trips, include policy makers, judiciary and aca-
demics from both the EU and China. 

Note that, although in the beginning the IP Key Project was an 
EC-funded project, it is now co-funded by the Commission and 
the  Chinese  Ministry  of  Commerce.  This  change  of  the  funding 
pattern may reflect the fact that on IPR protection China no longer 
requires aid for capacity-building, but has developed its ability to 
enact WTO-complied laws and policies. In this sense, the Dialogue 
may very well serve as a platform for consultation, too 

Another example of using the bilateral dialogue mechanism as 
a platform for the EU to conduct capacity-building activities is the 
Dialogue on Public Procurement. It was launched to assist China 
to  deliver  its  WTO  accession  commitment  and  to  accede  to  the 
WTO  plurilateral  Government  Procurement  Agreement  (GPA) 
“as  soon  as  possible”.  It  was  only  in  2000  that  China  enacted  its 
first public procurement laws in order to pave the way to launch its 

Weinian Hu and Jacques Pelkmans57

WTO GPA negotiations and to accede to the Agreement “as soon 
as possible”, in accordance with its WTO accession pledge. Prior 
to that, public procurement activities were ‘centrally planned’ and 
had little relevance to trade but aimed merely at spending of public 
funds. Nonetheless, as public procurement has a ‘public’ dimen-
sion,  the  procurement  activities  were  therefore  linked  closely  to 
SOEs in the past and SOEs were usually favoured by procurement 
contracting authorities since they were all from the same “family”. 
For this reason, public procurement was regarded as distinct from 
other trade disciplines, such as IPR protection, and has proven to 
be a difficult issue to  tackle. After all China has yet to enforce a 
properly  functioning  SOE’  market,  instead  of  governmental  or 
quasi-governmental  functions.51  Fundamentally,  public  procure-
ment  was  not  a  trade  issue  for  China,  but  one  of  public  finance 
whereby public funds would trigger the application of the public 
procurement rules.

In 2006, one year before China submitted its initial GPA acces-
sion offer to the WTO, the Regulatory Dialogue on Public Procure-
ment was launched between China’s Ministry of Finance and DG 
Markt of the European Commission. The Dialogue has the man-
date to serve as a forum for policy consultation and discussion in 
order to enhance the technical expertise and capability in the area 
of government procurement policy of China’s Ministry of Finance. 
The Dialogue is  also  expected  to increase mutual understanding 
and  awareness  of  current  and  forthcoming  policy  approaches, 
legislation  and  related  issues,  both  in  China  and  in  the  EU.  To 
breakdown  the  mandate  in  details,  the  Dialogue  should  identify 
mutual interest that would enable China and the EU to share their 
experiences  and  to  follow  new  developments  in  legislation,  incl. 
enforcement of domestic government procurement rules, and in 
international fora such as the WTO GPA. To achieve these objec-
tives, the Dialogue is undertaken by means of regulatory exchange 
and seminars. Over the years, a number of joint studies were con-
ducted in order to explore ways for China to propose an ambitious 
offer for acceding to the GPA in an expeditious manner. 

51 

 See Hu, W. (2019b).

The EU-Dialogue Structure58

Though China has yet to submit an ambitious offer for its GPA 
accession,52 in recent years the Chinese authorities implemented a 
series of measures to improve the system domestically. For example, 
an  e-procurement  method  was  adopted  so  that  public  procure-
ment  opportunities  available  at  central  and  local  governmental 
levels are published on a dedicated website for everybody to see.53 
After the quality of transparency has been ensured, public scrutiny 
has  been  introduced  and  the  system  is  now  subject  to  judiciary 
review.  This  progress  is  a  great  leap  forward  given  the  historical 
background of China’s public procurement regime, where govern-
ment expenditures were kept strictly within the governments, so 
were the procurement contracts, which were not public. Now that 
public procurement is subject to public scrutiny, the accountability 
of the governments is also enhanced. 

With  the  publication  of  public  procurement  opportunities  at 
different  administrative  levels  being  centralised,  it  breaks  down 
secrecy surrounding the system and thereby helping to eliminate 
possible nepotism and corruption. Moreover, China implemented 
the  public-private-partnership  (PPP)  model  for  efficiency  when 
using public funds and in executing procurement contracts. This is 
a remarkable development, because the government relinquished 
some power, including monopoly. This is a ‘revolutionary’ process, 
and  the  EU  has  contributed  much  expertise  and  influenced  the 
modernisation of China’s public procurement regime through the 
dialogue platform.54

Protecting  EU  GIs  in  the  Chinese  market  under  Europe’s  sui 
generis  system  is  another  example  where  the  bilateral  dialogue 
mechanism has served as a platform for capacity-building, so that 
China was able to conduct a series of legislative undertakings to 
eventually roll out the sui generis GI protection scheme. EU-China 

52 

53 

 China’s latest offer, the 7th, submitted in October 2019, was still considered inadequate 
because in a number of critical areas (incl. thresholds, entity coverage and offsets) the 
professed openness was not commensurate with what GPA parties offered. See United 
States Trade Representative (2020), 2019 Report to Congress on China’s WTO Compli-
ance, United States Trade Representative, p.38. 
 See 中国政府采购网 (ccgp.gov.cn).

54 

 Pelkmans, Hu, Francois et al. (2018).

Weinian Hu and Jacques Pelkmans59

cooperation on GI is conducted under the Dialogue of IPR Pro-
tection. 

China  first  provided  protection  to  GI  products  by  trademark 
law,  based  on  the  so-called  ‘new  world’  scheme,  advocated  by 
countries  like  the  US,  Australia  and  Canada.  China  enacted  the 
Provisions on the Protection of Geographical Indication Products 
in 2005, as a result of Sino-French cooperation on GI dating back 
to  1994.  Subsequently,  thanks  to  the  technical  cooperation  pur-
sued by the EU for decades, after aligning its GI protection regime 
with  the  EU’s,  a  sui  generis  protection  scheme  was  rolled  out  in 
China. The  whole  process  took  a  long  time  which  was  nonethe-
less to be expected because, apart from enacting the above-men-
tioned Provision, the Chinese legislature drafted the implementing 
rules,  introduced  a  new  corresponding  GI  registration  system 
equipped with examination procedures, amended the Trademark 
Law (in order to stipulate the co-existence relationship between a 
GI product and its prior trademark), launched a new GI symbol 
which superseded three previous symbols (representing three dif-
ferent GI protection regimes in China, trademark, sui generis and 
raw agricultural GI products). 

Alongside  legislation,  technical  assistance  in  implementation 
and sharing the best practice are indispensable since the sui generis 
GI protection scheme is a typical European concept about which 
the Chinese enforcement authorities initially had little idea about. 
Thus, the EU-China “10+10” joint pilot project was launched in 
2012 in order for China to experiment with the procedure of EU 
GI  registration,  including  examination,  publication,  opposition, 
and appeal. After that, the EU and China published the “100+100” 
GIs (100 GIs from each side) in June 2017 so that the registration 
procedure  was  launched.55  The  publication  of  the  200  GIs  was  a 
technical but imperative procedure because the 200 GIs must be 
examined  for  their  respective  registrability  in  the  market  con-
cerned before they could be included in the bilateral GIs Agree-
ment as annexes. The additional technical complications that come 

55 

 For details of EU-China cooperation on GI protection, see Hu (2018) 

The EU-Dialogue Structure60

along with the examination procedure are that “interested parties” 
are entitled to oppose a GI registration.56 

When  implementing  the  EU-style  GI  protection  regime  in 
China, the EU-China IPR Dialogue has duly served as a platform 
for capacity-building and for the enforcement authorities to learn 
how to protect the GI/IP rights conferred. In this regard, capaci-
ty-building activities consisted of training, expert seminars, field 
visits  and  personal-exchange;  and  bilateral  meetings  at  political 
level brought impetus to moving forward this process.

A platform for policy coordination, communication, 
exchange of information

Meetings conducted under especially the Pillar of Economic and 
Sectoral  Dialogues often serve trade  policy  coordination both at 
bilateral and multilateral levels. This is illustrated by the HLETD 
agendas in recent years in relation to, for example, identifying an 
interim solution after the WTO Appellate Body ceased to function. 

Additionally,  policy  coordination  means  sharing  information 
on  respective  policy  strategies  and  legislation  changes  on  both 
sides  for  consultation.  The  Dialogues  on  IPR,  State  Aid,  Com-
petition  Policy,  etc.  are  all  embedded  with  a  purpose  of  policy 
coordination.  Policy  coordination,  information-sharing,  public 
consultation,  etc.  instil  the  quality  of  transparency  in  bilateral 
trade relations, which is equally a WTO commitment that China 
is obliged to implement. Therefore, at various dialogue meetings, 
public  consultation  takes  place,  too,  and  the  EU  can  provide  its 
input, or request for clarification, and the Chinese side can use the 
dialogue mechanism to better communicate to the EU motivations 
behind legislation, and vice versa.  

56 

 See Article 1.16.1, US-China Economic and Trade Agreement, 

Weinian Hu and Jacques Pelkmans61

2.7 US-China policy consultation (vis-à-vis the EU-China 
dialogue architecture)

Despite all the achievements, one may ask whether the recources 
that  the  EU  has  devoded  to  its  EU-China  dialogue  architecture 
are worthwhile. It is maybe interesting to look at how the US and 
China  have  conducted  their  policy  dialogues,  in  order  to  appre-
ciate the approaches that the EU has undertaken. 

The  US  and  China  conduct  bilateral  dialogues,  too,  but  only 
three  of  them,  which  include  the  U.S.-China  Joint  Commission 
on Commerce and Trade (JCCT),57 the U.S.-China Strategic and 
Economic Dialogue (S&ED)58 and the U.S.-China Comprehensive 
Economic  Dialogue.59  It  is  observed  that  two  non-trade  issues, 
i.e. climate change and social safety net, are incorporated into the 
mandate  of  the  S&ED  Dialogue,  and  the  dialogues  have  led  to 
tangible outcomes. 

For example, on climate change, China and the US have com-
mitted to cooperate on a number of areas related to climate and 

57  The  Joint  Commission  on  Commerce  and  Trade  (JCCT)  is  an  annual  dialogue  that 
addresses commercial and trade issues between the US and China. The dialogue is co-
chaired on the US side by the US Secretary of Commerce and the US Trade Represent-
ative, and chaired on the Chinese side by the Vice Premier responsible for trade and 
investment policy. Given the scope of the commercial relationship, other agencies not 
under the direct jurisdiction of the chairs frequently participate, such as the US Depart-
ment of Agriculture and the PRC Ministry of Industry and Information Technology: 
https://2014-2017.commerce.gov/tags/us-china-joint-commission-commerce-and-
trade-jcct.html.

58  Since its establishment in 2009, meeting bi-annually, the U.S.-China Strategic and Eco-
nomic Dialogue (S&ED) has served as a platform for the two sides to make progress 
on core issues in the economic relationship. Through the S&ED, the US has secured 
actions from China that level the playing field for U.S. workers and firms, deepen coop-
eration on global challenges such as a climate change, and promote critical market-ori-
ented reforms in China. 

59 

 The U.S.-China Comprehensive Economic Dialogue (CED) was established by Presi-
dent Trump and President Xi in April 2017 to enable the two countries to address and 
resolve  the  comprehensive  set  of  economic  issues  in  their  relationship,  representing 
the highest-level bilateral economic forum. The dialogue is co-chaired by U.S. Treas-
ury Secretary Steven T. Mnuchin and U.S. Commerce Secretary Wilbur Ross and their 
Chinese counterpart Vice Premier Wang Yang, who serve as Special Representatives of 
the two presidents on the economic relationship: https://www.treasury.gov/initiatives/
Pages/china.aspx. 

The EU-Dialogue Structure62

energy, including to encourage the transition toward low-carbon 
technologies; the role of public finance in supporting low-carbon 
technologies,  climate  resilience,  reducing  greenhouse  gas  emis-
sions internationally, and to rationalise and phase out inefficient 
fossil  fuel  subsidies  by  a  certain  date.  This  dialogues  continued 
amidst the Sino-US trade war ignited in 2018, and the rising geo-
political tensions seen after the Biden Administration took office in 
2021. On 17 April 2021, the US and China, the world’s two biggest 
carbon  polluters,  released  their  joint  statement  for  cooperation 
in multilateral processes in order to, among others, curb climate 
change (and enhancing domestic actions), and maximise interna-
tional investment and finance to support the transition from car-
bon-intensive  fossil  fuel-based  energy  to  green,  low-carbon  and 
renewable energy in developing countries. On other measures of 
strengthening  the  implementation  of  the  Paris  Agreement,  both 
sides  will  continue  their  actions  to  decarbonise  industry  and 
power,  including  through  circular  economy,  energy  storage  and 
grid reliability, low-carbon transportation, energy efficient build-
ings, etc., as they have committed before under the same frame-
work of S&ED dialogue. 

Equally,  on  social  security,  which  is  another  non-trade  issue 
discussed under the framework of the S&ED, in 2016 on the topic 
of “developing the social safety net to support household consump-
tion”, China committed to better align the incentives at all levels of 
the government to support household consumption by improving 
local taxation so that local governments would have the access to 
revenues in order to support their growing social welfare spending 
responsibilities. Also, China committed to strengthen medical and 
pension  benefits  for  all  residents,  build  more  sustainable  social 
security funds, and lower insurance contribution rates.60 

Compared to the EU-China Dialogue Architecture, the smaller 
network of three US-China dialogues covers many trade and eco-
nomic issues of bilateral interests. They aim at discussing issues in 

60 

  See  2016  U.S.-China  Strategic  and  Economic  Dialogue  U.S.  Fact  Sheet  –  Economic 
Track, Press Release, 06 July 2017, US Department of Treasury: https://www.treasury.
gov/press-center/press-releases/Pages/jl0485.aspx.

Weinian Hu and Jacques Pelkmans63

a  longer  perspective  –  the  strategic  track  (e.g.  non-proliferation, 
energy,  global  institutions,  Iran,  Afghanistan),  but  also  trying  to 
identify (near immediate) concrete solutions – the economic track 
(including climate change and social security) – when addressing 
trade  and  the  financial  services  irritants,  etc.  On  the  economic 
track,  the  bilateral  dialogue  meetings  seem  to  prioritise  results 
over process, by using a “reverse engineering” approach to effect 
policy change after intended results are agreed upon by both sides. 
This may seem an effective approach, but appears coercive, none-
theless. The consultations conducted between the US and China 
on GI protection is a case in point, with which results intended by 
the US were achieved at each meeting, reflecting a result-to-policy 
effectiveness (box 6). 

Box 6: US-China cooperation on protection of geographical 
indications

Because  the  Chinese  market  offers  huge  potential  for  US  and 
EU farm exports now and in future, and since US farm exports’ 
market  access  may  be  impeded  by  those  EU  GIs  protected  in 
China if a US farm good share a common name with an EU GI, 
the US has been very active in policy consultation with China 
as far as the latter’s GI legislation is concerned. Such US-China 
engagement  is  also  established  through  the  bilateral  dialogue 
mechanism between the two countries. 

Indeed, what both sides have concluded on GI protection at a 
few annual US-China JCCT meetings was implemented in Chi-
na’s GI policy and strategy, and they are consequently incorpo-
rated in the EU-China GI Agreement. This outcome illustrates 
that  bilateral  policy  consultation  could  be  very  effective  for 
near-immediate rule changes.  

In  relation  to  the  Chinese  market,  the  US’  policy  objective 
on  GI  protection  seems  two-fold.  It  is,  firstly,  to  guarantee  its 
farmers’  commercial  interests  in  market  access  in  China,  and 
secondly,  to  be  ‘EU-proof ’  meaning  that  opportunities  for  US 
farmers’ agri-food exports should not be impeded if a good hap-
pens to share the common name with that of the EU GI’s pro-
tected in China. 

The EU-Dialogue Structure64

To achieve this objective, for example, in 2014 at the US-China 

JCCT meeting China agreed that:

1) a term, or its translation or transliteration, is not eligible for 
protection as a GI in its territory where the term is generic in 
its territory; 

2)  the  relationship  between  trademarks  and  GIs  is  to  be  dealt 
with in accordance with relevant articles in the TRIPS Agree-
ment and that legal means are available for interested third 
parties on the above grounds to object to and to cancel any 
registration or recognition granted to a GI;

3) where a component of a compound GI is generic in the Chi-
nese territory, GI protection will not extend to that generic 
component.
Moreover,  at  the  US-China  JCCT  meeting  in  2015,  China 

further reiterated that 

the commitments agreed a year ago should apply to all GIs, 

including those protected under international agreements; 

it would follow transparency for developing cancellation pro-

cedures for already-granted GIs. 

It  is  observed  that,  subsequently,  perhaps  on  China’s  insis-
tence all the above outcomes on GI protection are incorporated 
in the EU-China GI Agreement concluded in November 2019. 
Later,  the  same  positions  are  reiterated  in  the  US-China  Eco-
nomic and Trade Agreement, signed in January 2020,61 in which 
a  set  of  factors  that  China  must  give  due  consideration  when 
determining if a term is generic is also included in the Agree-
ment.62 The set of factors is nothing new; it has been agreed by 
China following a previous JCCT meeting.

61 

 For details of US’ engagement with China on GI within the context of the JCCT, see 
USTR (2019), “2018 USTR Report to Congress on China’s WTO Compliance, United 
States Trade Representative”, February, p.137.

62 

 See Section F, US-China Economic and Trade Agreement.

Weinian Hu and Jacques Pelkmans65

2.8 Conclusion

The  EU-China  Dialogue  Architecture  materialise  the  bilateral 
comprehensive strategic partnership in a substantive manner. The 
altogether around 70 dialogues, under the pillars of political, eco-
nomic  and  sectoral  as  well  as  people-to-people  exchanges,  serve 
many functions, from aligning policy objectives (often with spe-
cific  projects  for  concrete  deliverables),  solving  trade  irritants 
between  the  two  parties,  exploring  trade  and  investment  oppor-
tunities, to advancing the EU’s value-based trade strategy. On the 
latter, after conducting more than a decade of dialogues on sub-
jects such as environmental protection, China has since changed 
its  approach  to  non-trade  policy  objectives  from  mere  “cooper-
ation” to binding obligation, as seen from the provisional text of 
the CAI on sustainable development. This is a victory for the EU, 
as it confirms the EU’s capacity to advance its value-based trade 
strategy, even towards China, a global trade power. 

The  purpose  for  the  EU  to  conduct  dialogues  on  non-trade 
issues  is  supposedly  to  transpose  EU’s  values  to  China  through 
trade activities. However, such dialogues were mostly launched in 
order to assist China to mitigate the societal impact in the run up to 
the country’s WTO accession. But in recent years, they have been 
re-styled as a means to advance the EU’s values, within the frame-
work of international obligations, including the Paris Agreement 
on Climate Change, and the eight ILO core conventions. It is worth 
pointing out that those EU-values benefit the Chinese society, and 
are in sync with the Chinese government’s goal of establishing “a 
harmonious  society”,  or  “a  well-off  society  in  an  all-round  way”. 
These shared objectives form the foundation for bilateral dialogue 
and cooperation, and later leading towards China’s binding com-
mitments for implementation. Undeniably, as a result of long-term 
engagement,  many  trade  policy  objectives  are  achieved  for  both 
the EU and China, chiefly in relation to environmental protection, 
an area that the EU champions also in technology. 

The EU-Dialogue Structure66

In  parallel  to  the  so-called  non-trade  policy  objectives,  the 
bilateral economic and sectoral dialogues help bring about trade 
objectives,  jobs  and  economic  growth,  to  the  EU.  Not  only  that, 
on a couple of trade disciplines, such as geographical indications, 
aviation service and the ETS, the EU is successful in persuading 
China to adopt the EU’s distinctive policy models, amplifying the 
EU’s rule-making power in trade. 

It is true that not all the non-trade policy objectives can be real-
ised, at least not in a foreseeable future, human rights protection is 
one area, eliminating forced labour is another. For the former, the 
dialogue remains a form of exchange of ideas. One may complain 
that it is “superficial”, but transposing EU’s concept of human rights 
protection, i.e. political rights, implies political regime change, so 
it is inadmissible for China. For the latter, though under the CAI 
China’s  commitment  to  ratify  the  ILO  Conventions  on  Forced 
Labour is legally binding, the ratification is expected to take a very 
long time to materialise. In the first place the CAI must be signed 
and ratified between the EU and China and secondly, due to judi-
cial changes that will be required such as to amend China’s penal 
code.   

The  general  purpose  for  conducting  the  dialogues  under  the 
Pillar  of  People-to-People  Exchange  is  to  enhance  the  EU’s  soft 
power, the effectiveness of this exercise would most likely remain 
subtle,  but  could  be  incremental  in  the  long  run  among  China’s 
next  generations.  Nonetheless,  already  abundant  commercial 
gains have emerged for the EU from the many people-to-people 
exchange activities, especially tourism and higher education.   

Ultimately,  the  functions  of  the  bilateral  dialogues,  such  as 
tackling the challenges in bilateral trade relations, extending EU’s 
rule-making power in trade and sustaining a comprehensive part-
nership, illustrate a multifaceted relationship between the EU and 
China in the same fashion as the EU articulated in its “A Strategic 
Outlook” in 2019. In order to advance its comprehensive strategic 
partnership, based on specific subjects, the EU should 1) deepen 
its engagement with China to promote common interests at global 

Weinian Hu and Jacques Pelkmans67

level;  and  2)  seek  more  balanced  and  reciprocal  conditions  to 
governing  the  bilateral  economic  relationship.63  In  this  regard, 
the  Dialogue  Architecture  will  continue  to  serve  as  a  platform 
to  engage  both  sides.  As  China  has  become  more  sophisticated 
in  policy-making  and  skilful  in  implementation,  the  functions 
of  exchange  of  views  and  consultation  might  well  become  more 
prominent overall.  

63 

 The EU sees the need to “adapt to changing economic realities and strengthen its own 
domestic policies and industrial base”. See Joint Communication, “EU-China – A stra-
tegic  outlook”,  JOIN(2019)  5  final,  Strasbourg,  12  March  2019,  p.  1.  The  document 
“refines” the EU’s approach to China, as laid down in the 2016 EU Strategy on China, 
to be “more realistic, assertive and multi-faceted”. See the Foreign Affairs Conclusions 
of 18 March 2019. The EU Strategy on China was adopted by the Council on 18 July 
2016, doc. 11252/16.

The EU-Dialogue Structure3. EU VALUES, INTERNATIONAL 
CONVENTIONS AND CHINA 

The EU has long been concerned about sustainable development 
in China. This pre-occupation refers both to the ‘green’ pillar con-
sisting of environmental policies and those pursuing the mitiga-
tion of climate change, and to the ‘social’ pillar of internationally 
recognised  labour  standards  in  ILO  core  Conventions  and  the 
accomplishment  and  sound  implementation  of  adequate  social 
protection  for  its  citizens,  in  particular  workers.  The  present 
chapter presents an extensive analysis of these major pillars of sus-
tainable development in China. On that basis it attempts to answer 
two series of three research questions. 

The research surveys a long time span, some 25 years since the 
mid-1990s. Initially, the cooperation (and trade policy where rel-
evant) with China was mainly development-oriented for both pil-
lars, but this began to change once the EU and China concluded 
the Strategic and Comprehensive Partnership in 2003. Ever since, 
China  and  the  EU  usually  worked  via  Dialogues,  at  ministerial 
level  as  well  as  with  annual  Summits,  in  which  joint  program-
ming was decided. They spawned several series of projects (some, 
very large), applied programmes, working groups, exchanges and 
action  plans  with  significant  funding  for  a  period  of  nearly  two 
decades, and in energy even longer. This long-run working rela-
tionship avoided a legalistic approach with enforceable standards 
and/or targets set in FTAs or otherwise. Nevertheless, the EU and 
China  have  worked  fairly  consistently  on  sustained  progress  in 

69

both pillars, and frequently in operational, technical and practical 
terms rather than mere declaratory statements. However, this does 
not mean that the two partners did not enter commitments. Thus, 
in the green pillar both partners adhered, with ratification, to no 
less than 12 MEAs and related Protocols and Amendments. This 
is far more than the specific MEAs referred to in EU FTAs, even 
though China and the EU have never concluded a FTA together. 
In the social pillar the situation is more complicated and also less 
satisfactory. The leading multilateral set of commitments are ILO 
Conventions,  and  in  particular  the  eight  core  Conventions.  But 
China has not ratified four of these eight. Moreover, there are no 
international legal commitments for social protection, except for 
some  aspects  (some  other  ILO  conventions),  although  this  field 
has been effectively broadened via more encompassing ILO Decla-
rations, for example (to which some FTAs refer). 

There is another critical difference between the green and the 
social  pillar:  whereas  the  green  pillar  generates  major  negative 
cross-border  or  global  externalities  (mostly,  via  global  warming 
but  selectively  also  with  air  and  water  pollution;  and  positively 
with forestation if large enough), this is basically not the case for 
the social pillar, unless one is willing to argue that poverty risks and 
neglect of OSH distort the level-playing field in trade and invest-
ment by avoiding significant labour costs when exporting. How-
ever,  if  one  would  support  the  level-playing  field  argument,  this 
may also apply to the green pillar if one observes a strong avoid-
ance of the cost of ‘clean’ production. The level-playing field argu-
ment linked to the second pillar has not played a significant role in 
EU/China trade relations when it would have been best applicable, 
that is when China was still a relatively poor developing country. 
However, China is now an upper middle income country and the 
argument  is  much  less  plausible  insofar  as  sustainable  develop-
ment is concerned.64 

64  The level-playing field debate with respect to China is of course much broader than 
sustainable development. It also relates to systemic aspects. See European Commission 
(2017), Pelkmans (2018) and BusinessEurope (2020). 

EU Values, International Conventions and China  70

We understand ‘coherence’ of external policies with respect to 
the subject of this eBookas the coherence of EU trade and invest-
ment policies vis a vis China with the pursuit, if possible jointly 
with  China,  of  sustainable  development  in  China.  It  is  possible, 
especially recently – but only in the green pillar – that the EU can 
actually  improve  or  be  stimulated  by  China  in  the  area  of  green 
technologies such as renewables, e-vehicles and some of its com-
ponents. In actual practice, ‘coherence’ should be read as the pur-
suit of EU values – such as sustainable development – via EU trade 
and investment policies and the accompanying EU-China coop-
eration.  In  the  case  of  EU/China,  the  combination  of  EU  trade 
policy and very elaborate and active cooperation is truly unique. 
This  uniqueness  is  reflected  in  the  sheer  quantity  of  EU/China 
Dialogues (some 68!, some 50 or so on economic and trade-related 
issues, including sustainable development) but also in the consist-
ency and continuity over time since the Strategic and Comprehen-
sive Partnership began. Many of these Dialogues or activities set 
up by them create bilateral working relationships and this is often 
–  but  not  always,  for  example  when  issues  are  sensitive  -  gener-
ating a degree of trust and recognition. In turn, this can often lead 
to better and more tangible results. And such results may inspire 
further cooperation.

  The  typical  EU  cooperative  approach  to  sustainable  devel-
opment  in  external  policies  has  never  been  practiced  with  other 
trading  partners  to  the  same  extent  as  with  China.  More  activi-
ties and greater efforts do not necessarily produce better results, 
of course. In Hu & Pelkmans (2020) we show that, selectively, the 
great efforts of pursuing a multiple set of goals via many EU/China 
Dialogues have paid off. We shall now study in greater detail the 
EU cooperative approach in promoting sustainable development 
with and mainly in China. In doing this we rely predominantly on 
the two papers focussing on the green pillar (Pelkmans, 2021) and 
the  social  pillar  (Hu  &  Pelkmans,  2021).  In  some  respects  these 
papers  have  a  common  foundation,  to  wit,  in  order  to  establish 
more accurately what exactly the EU preferences in values are, we 
rely on an ambitious FTA – the EPA with Japan, ch. 16 – and itemise 

Weinian Hu and Jacques Pelkmans71

both for ‘green’ and for ‘social’ what provisions can be found. This 
high  standard  of  sustainable  development  is  used  for  inspecting 
EU/China cooperation in this area, conscious of the fact that the 
EU and China do not have a FTA together and that China is not 
yet, although close to, a developed country. 

3.1 Identifying ‘EU values’ from EU FTAs and 
multilateral obligations

An  operational  way  to  identify  with  greater  precision  what  EU 
values, here under the heading of ‘sustainable development’, really 
are, is to study an ambitious FTA, the EPA with Japan. In ch. 16 of 
EPA,  not  counting  the  article  on  consultation  and  enforcement, 
because the EU and China do not have a FTA where this would 
apply, there are 37 items for the green pillar, and 25 for the social 
pillar, 7 of which are identical between the two because they are 
not specific to ‘green’ or ‘social’. Not only are the ‘green’ elements 
more numerous but quite a few are a derivative of or confirm mul-
tilateral commitments in MEAs already ratified by China and the 
EU or other treaties or conventions (e.g. on sustainable fisheries 
or timber trade). In Pelkmans (2021), a detailed exercise is under-
taken  to  verify  for  all  37  elements  identified  for  the  green  pillar 
whether China might accept the provision.65 The conclusion is that 
the large majority of the 37 specifications could be signed by China 
without  any  problem.  The  draft  CAI  treaty  signed  in  December 
2020 goes less far in ‘green’ issues but it is, after all, an investment 
treaty.  It  is,  however,  the  first  time  that  China  legally  commits 
bilaterally on several green issues. The multilateral elements weigh 
heavily in all this. 

The specific ‘social’ elements are only 16 and they are almost 
entirely dedicated to labour standards or rights, not to ‘social pro-
tection’, which is implicitly seen as a domestic issue. Labour rights in 
EPA are, not unlike the ‘green’ issues, closely attuned with multilat-
eral obligations. Therefore, striving for adequate social protection 

65  With substantiation with the help of citations from official Chinese declarations or EU/

China documents.

EU Values, International Conventions and China  72

is hardly or not to be found in FTAs although it is long and widely 
recognised that it matters for a decent living and for development. 
The EU cooperative approach, on the other hand, can take social 
protection  fully  into  consideration  and  has  actively  promoted  it 
in EU/China cooperation. Not only is there no counterpart in EU 
FTAs for social protection, the EU itself is also hampered by the 
division of social competences which have been mainly allocated 
to the EU Member States. Unlike in FTAs, a legalistic framework, 
in the cooperative approach selected EU Member States were most 
interested to work together with the European Commission and 
China  on  various  programmes  and  action  plans  which  would 
enable China to make social progress inspired by European experi-
ences. In other words, FTAs can be a good and instructive guide to 
identify the details of what otherwise are very general formulations 
of (green) EU values but that is far less the case for the social pillar. 
Insofar  as  FTAs  do  give  guidance  on  (social)  values,  the  leading 
reference is the set of core ILO Conventions and precisely for the 
core Conventions China has been unwilling to engage in serious 
Dialogues or projects as no less than four of them have not been 
ratified by China.66 Here the draft CAI treaty signed in December 
2020  might  signify  a  partial  breakthrough,  if  indeed  the  Agree-
ment will be ratified, because China has committed – perhaps in 
the longer run – to ratify two of the four core Conventions, namely 
those on forced labour.67 Nonetheless, the kernel of the core Con-
ventions  is  and  remains  the  pair  of  conventions  on  the  right  of 
association and on collective bargaining, together the bedrock of 
the ILO. A (plausible) assumption is that the Chinese leadership 
and the CCP consider these two conventions as a potential threat 
to  their  regime. They  fear  a  self-inflating  mechanism  of  workers 
and perhaps others to opt for new unions or challenge the Party 
when  wishing  to  neutralise  alternative  organised  voices,  once 
workers being truly free to choose. If true, there is no chance that 
these two conventions will be ratified. 

66  As  discussed  subsequently,  with  one  exception,  occupational  safety  &  health,  where 
China and the EU have conducted a highly applied OSH programme in coalmining 
and chemicals. 

67 

 n Hu & Pelkmans (2021) we show how penal law is involved and argue that a reform 
of penal law might be a slow process. 

Weinian Hu and Jacques Pelkmans73

3.2 Social values: blending bilateral and multilateral 
commitments

It is not entirely clear what exactly is the ‘social pillar’ of sustain-
able development. A first definition of the social pillar consists of 
the  combination  of  ‘social  protection’  (as  understood  worldwide 
by  leading  international  organisations)  and  ‘international  labour 
standards’ (i.e. rights of workers, including the fundamental ones 
as  recognized  by  the  ILO  in  its  core  Conventions).  This  would 
seem to be the most obvious approach but it neither fully coincides 
with the range of themes and dialogues practiced between the EU 
and China nor with the ‘EU standard’ for chapters on sustainable 
development in EU FTAs. 

Social  protection  can  be  defined  by  its  overall  aim  and  four 
components.68 The aim of social protection is to ‘reach or main-
tain  an  adequate  standard  of  living  and  good  health  throughout 
their lives’. Such social protection has four components: (1) basic 
income  security  for  children  (hence,  access  to  nutrition,  educa-
tion, care and necessities); (2) basic income security for persons 
in active age (those unable to earn sufficient income, such as sick-
ness, unemployment, maternity and  disability); (3) basic income 
security for older persons; (4) essential health care (incl. maternity 
care) under conditions of availability, accessibility and quality.

Social  protection  has  become  a  commonly  accepted  norm 
for almost all countries, even when poor countries might not or 
not yet be able to afford all of its respective components. It is also 
explicitly  referred  to  in  SGD  1  as  a  kind  of  groundwork  for  any 
serious  socio-economic  and  human  development.  International 
economic  organisations  such  as  ADB,  UN-ESCAP,  the  ILO  and 
the World Bank all deal intensively with social protection in var-
ious ways. However, this was not yet the case – certainly not any-

68  Here we use the definition and explanation of UN-ESCAP (2018), the UN Economic 
Commission for Asia and the Pacific, in its booklet “Why we need social protection”. 
See  www.unescap.org  and  go  to  ‘social  development  policy  guides’.  This  publication 
leans heavily on ADB’s work (on its Social Protection Indicator) and the ILO for its 
regular World Social Protection Report. 

EU Values, International Conventions and China  74

where near the same extent – in the mid-1990s when China was 
first confronted with the issue. 

The  other  component  consists  of  international  labour  stand-
ards. There  are  many,  as  developed  and  agreed  over  time  by  the 
ILO.  The  accepted  practice  in  trade-related  sustainable  develop-
ment is to prioritize the eight so-called ‘fundamental (or core) ILO 
Conventions’.69 This practice follows the 1998 ILO Declaration on 
Fundamental Principles and Rights at Work in which all eight are 
enumerated. ILO Conventions are based on tripartite agreement 
and  it  is  obliged  to  submit  them  for  ratification  to  the  relevant 
authority in an ILO member country (usually a parliament). The 
score in ratification is very high: in January 2019 92% (1376 rati-
fications) had been achieved  and another 121 were still required. 
They include the following: 

1.  Freedom of association and protection of the right to orga-

nise (1948; no. 87)

2.  Right to organise and collective bargaining (1949, no. 98)

3.  Forced Labour Convention (1930, no. 29; and its 2014 Pro-

tocol)

4.  Abolition of Forced Labour Convention (1957; no. 105)

5.  Minimum Age Convention (1973; no. 138)

6.  Worst Forms of Child Labour Convention (1999; no. 182)

7.  Equal Remuneration Convention (1951; no. 100)

8.  Discrimination  (Employment  and  Occupation)  Conven-

tion (1958; no. 111) 

In 2020 China had ratified 26 ILO Conventions70 (out of 190) 
but of the eight Core ILO Conventions, only four: no. 5 (minimum 
age, C138), no. 6 (worst forms of child labour, C182), no. 7 (equal 
remuneration, C100), and no. 8 (discrimination, C111). 

69  See  https://www.ilo.org/global/standards/introduction-to-international-labour-stand-

ards/conventions-and-recommendations/lang--en/index.htm 

70  However, five of these ratified Conventions are no longer in force

Weinian Hu and Jacques Pelkmans75

Moreover,  the  ILO  Governing  Body  has  designated  another 
four  Conventions  as  ‘governance’  instruments  in  its  2008  Decla-
ration on Social Justice for a Fair Globalisation, for the purpose of 
a proper functioning of the international labour standards system. 
They include: 

i.  Labour Inspection Convention (1947, no. 81)

ii.  Employment Policy Convention (1964; no. 122)

iii.  Labour  inspection  (Agriculture)  Convention  (1969;  no. 

129)

iv.  Tripartite  Consultation  (International  Labour  Standards 

Convention (1976; no. 144).

China  has  ratified  two  of  these  four:  C122  on  employment 
policy and C144 on tripartite consultation. However, it is not cus-
tomary to include the latter four in trade-related bilateral obliga-
tions e.g. in FTAs or in unilateral GSP (or, for the EU, GSP+) con-
ditions.

Altogether, the social pillar in trade-related sustainable devel-
opment Dialogues or agreements (like FTAs) constitutes therefore 
quite  a  substantial  set  of  values  or  value-related  obligations  and 
policies,  including  social  security  and  assistance.  China  assumes 
an ambivalent position in the ILO. China is one of the founding 
members in 1919. It works with the ILO in various programmes or 
studies, including for example a special four-years programme on 
‘Decent Work’ in 2016.71 At the same time, it has neither ratified 
the Conventions on the freedom of association and the right-to-
organise  nor  the  one  on  collective  bargaining,  the  very  bedrock 
of  the  ILO  and  its  values.  It  is  likely  that  China  has  not  ratified 
these  two  most  fundamental  Conventions  because  China  might 
consider  them  as  an  undermining  or  destabilising  its  political 
and  social  system  of  governance,  based  on  an  absolute  reign  of 
the Party (CCP) and its controlled single All-China Federation of 
Trade Unions [ACFTU] which retains a monopoly. 

71  ILO (2016), China-Decent Work Country Programme 2016 – 2020, Beijing/Geneva.

EU Values, International Conventions and China  76

Another way of identifying social values the EU prefers, is to 
extract  them  from  EU  FTAs,  in  their  sustainable  development 
chapters. A summary is provided in Box 7.

Box 7: Labour and social specifications in EU FTAs

We  rely  on  the  social  specifications  of  the  EU  FTA  with  Japan 
(EPA) in its chapter 16, as it is an ambitious FTA, a high standard 
compared to most, if not all, other FTAs in the world.72 In the 
‘context and objectives’, there are general commitments on sus-
tainable development, without distinguishing ‘social’ and ‘green’. 
This refers to e.g. trade promoting sustainable development and 
to the idea that economic and social development and sustain-
able development are mutually reinforcing. Furthermore, there 
are references to seven multilateral agreements and declarations 
on  sustainable  development  and  labour.  The  right-to-regulate 
section is equally valid for both green and social. The provisions 
on international labour standards and conventions, to which the 
EPA refers, comprise e.g. ‘decent work’ as the ILO sees it, a recon-
firmation of ILO obligations and commitments (esp. in the 1998 
ILO  Declaration  on  Principles),  a  firm  and  clear  reference  to 
‘fundamental rights at work’ (including specifically references to 
core ILO Conventions on the freedom of association and of col-
lective bargaining; on the elimination of forced labour; abolition 
of child labour; and discrimination in employment and occupa-
tions), a commitment to pursue ratification of ILO Conventions 
as  well  as  effectively  implement  them,  whilst  not  using  labour 
standards for protectionist purposes.

72  Hu & Pelkmans (2021, Table 1, pp. 13-15) provide detailed specifications of the social 

elements of the FTA. 

Weinian Hu and Jacques Pelkmans77

Other sections relate to engagement to promote corporate social 
responsibility,  transparency  provisions  and  the  cooperation 
between the partners in an international or multilateral context, 
including the ILOs Decent Work agenda. China’s main problem 
is  found  in  the  non-ratification  of  four  core  ILO  Conventions. 
However, Vietnam – with a similar political orientation, struc-
ture (e.g. a monopoly of the Party) and ideology as China – has 
ratified a FTA with the EU which specifies the values in the ILO 
Conventions. Meanwhile, Vietnam has ratified 7 of the 8 Con-
ventions (unlike China) – the one lacking is the freedom of asso-
ciation.”
Source: Hu and Pelkmans (2021).

The EU has quite a history of multilateral attempts to connect 
trade  with  what  was  once  called  ‘unfair  labour  conditions’  and 
labour standards. It was the leading initiator (with e.g. the US and 
Norway) to begin incorporating such values in the WTO during 
the WTO Ministerial in Singapore in 1996.73 Although this attempt 
failed, it is likely that China must have noted the careful and dip-
lomatic positioning of the EU on these points. Probably this was 
cautiously discussed in the first ASEM meetings of trade ministers 
just before and after 2000 (where China played a role, whilst pre-
paring for WTO membership). A few years later EU-China coop-
eration on social policy issues began. Nevertheless, it did next to 
nothing to alter the fate of the ILO core labour standards in China. 
As noted, China has ratified only four of the eight core conventions 
and 3 of them by 1973 or earlier. In other words, there was no con-
nection with reforms or opening up. The fourth core convention 
(on the worst forms of child labour, no. 182) was ratified in 1999 
and one might speculate that it was a relatively easy ‘gesture’ in the 
run-up to WTO membership. In the two decades since that rati-
fication, there were few, if any, signs that China would ratify more 
core conventions.

However, during the 1990s and later, China did begin to pursue 
domestic social policies systematically. The SOEs could no longer 

73 

 For detail, see Hu & Pelkmans (2021, Section 4).

EU Values, International Conventions and China  78

do  it  for  their  staff  and  collectives  –  always  with  a  minimalistic 
solidarity – were changing into modern farms. The Labour Law is 
the first major law on labour relations adopted by China in 1994. 
Previously  labour  matters  had  been  addressed  solely  by  regula-
tions.  Under  the  Labour  Law,  for  example  Article  3  guarantees 
equal right to employment and choice of occupation, protection of 
occupational safety and health, social insurance and welfare, etc. 
Article 5 instructs the State to “… take various measures to pro-
mote employment, … lay down labour standards, regulate social 
incomes,  perfect  social  insurance  system,  …  and  gradually  raise 
the living standard of labourers. Article 12 prohibits discrimina-
tion against “ethnic group, race, sex or religious belief ”. Women’s 
equal rights compared to men in employment as well as employ-
ment rights of the disabled are guaranteed by Articles 13 and 14, 
respectively. Article 15 prohibits recruiting minors under the age 
of 16, unless with formal approval (for recruiting minors for arts, 
physical culture, e.g. circus artists) and in which case the right to 
compulsory  education  must  be  guaranteed.74  In  addition  to  the 
primary legislation against discrimination and child labour, China 
also issued a series of secondary legislation as legal interpretation 
to govern some specific circumstances.75 

In  terms  of  freedom  of  association,  though  Article  7  of  the 
Labour  Law  guarantees  the  right  to  participate  in,  and  organise, 
“trade unions in accordance with the law”, all trade unions must be 
under the governance of the All-China Federation of Trade Unions. 
Clearly, this critical provision introduces a different understanding 
of  “freedom  of  association”  and  “collective  bargaining”.  And  one 
that very few countries in the world would agree with. But it does 
help to explain employment relations in China, for example in rela-
tion to voluntary joining of the trade union, settling labour-man-
agement  disputes,  good  governance/management  of  enterprises 

74 

 Available at: https://www.ilo.org/dyn/natlex/docs/ELECTRONIC/37357/108026/.

75 

 See Hu & Pelkmans (2021, section 5.2) for details. 

Weinian Hu and Jacques Pelkmans79

and  employment  disputes  (human  resources).76  In  addition  to  a 
different understanding, there can be no doubt that the political 
system has also influenced China’s perspectives for ratification. It 
has  silently  delayed,  indefinitely,  the  ratification  of  the  two  con-
ventions on freedom of association and on collective bargaining.”

3.3 Green values: blending bilateral and multilateral 
commitments

Using FTAs as reference is insightful but also has its limits. Nev-
ertheless, the blending of bilateral and multilateral commitments 
is very powerful in an ambitious example like EPA. However, even 
without a FTA between the EU and China, it is crucial to notice 
that  the  multilateral  track  is  very  important  for  EU-China  trade 
policy  and  cooperation,  in  particular  for  ‘green’  policy-making. 
Table 1 shows why. 

76 

  For  the  details  of  China’s  legislation  to  uphold  the  labour  rights  of  “freedom  of  as-
sociation”  and  “collective  bargaining”,  see  https://www.ilo.org/dyn/natlex/natlex4.lis-
tResults?p_lang=en&p_country=CHN&p_count=1095&p_classification=02&p_class-
count=55. 

EU Values, International Conventions and China  80

Table 1: Adhering to MEAs: convergence between the EU and China

Treaty

Full title(s)

CITES

London 
Convention 
on marine 
pollution

Vienna ozone 
Convention

Montreal 
Protocol

Basel Conven-
tion

(Washington) Convention 
on international trade in 
endangered species of wild 
fauna and flora

(London) Convention on 
the prevention of marine 
pollution by dumping 
wastes and other matter 
(linked to IMO)

1996 Amendment to the 
London Convention

Vienna Convention for the 
protection of the ozone 
layer

Montreal Protocol on 
substances that deplete the 
ozone layer (specifies the 
concrete regulations for 
many substances, under 
the Vienna Convention, see 
above)

Revisions to the Protocol, 
including 2019 Kigali 
Amendment on removing 
hydrofluorocarbons by 2040

Basel Convention on the 
control of transboundary 
movements of hazardous 
wastes and their disposal

BAN amendment (on a 
total ban of such shipments 
including old ships) (in 
force 2019)

China 
ratified

yes

EU  
ratified

yes

Notes

China has 
no ‘reser-
vations’, 
some EU 
MS do

Yes

Yes

yes

yes

yes

yes

Yes

Yes

Yes*

Yes

Yes

Yes

yes

yes

Largescale 
illegal 
CFC-11 
production 
detected in 
China in 
2018

China: 
85% 
reduction 
by 2045

Weinian Hu and Jacques PelkmansRamsar  
Convention

Biodiversity

yes

yes

Yes

Yes

Yes

Yes

yes

yes

Ramsar Convention on 
wetlands of international 
importance, esp. waterfowl 
habitat

Convention on Biological 
Diversity (CBD)**

Cartagena Protocol on 
biosafety (2003)

Nagoya Protocol (or 
ABS) on access to generic 
resources and the fair and 
equitable sharing of benefits 
arising from their utilisation

Nuclear safety Vienna Convention on 

Yes

Yes

Yes

yes 

Yes

yes

yes

yes

yes

yes

nuclear safety

Joint Convention on the 
safety of spent fuel mana-
gement and on the safety of 
radiactive waste manage-
ment

Convention on early notifi-
cation of a nuclear accident 

Convention on assistance 
in the case of a nuclear 
accident or a radiological 
emergency

(Paris) UN Convention to 
combat desertification in 
those countries experien-
cing serious drought and/or 
desertification, particularly 
in Africa (UNCCD)

Combatting 
desertification

81

Ratified by 
Euratom

(idem)

(idem)

(idem)

China & 
EU are 
parties and 
partners 
providing 
support

EU Values, International Conventions and China  82

Climate 
change

UNFCCC, UN Framework 
Convention on climate 
change

Kyoto Protocol, under the 
UNFCCC

Paris Agreement under the 
UNFCCC (2015)

Yes

Yes

Yes

Yes

yes

yes

As a 
developing 
country 
in 1997, 
China had 
lighter and 
backlo-
aded and 
reduction 
obligations

Stockholm 
Convention

Rotterdam 
Convention 

Stockholm Convention on 
POPs (persistent organic 
pollutants)

Rotterdam Convention on 
the prior informed consent 
procedure for certain hazar-
dous chemicals in interna-
tional trade

yes

yes

yes

yes

China has ratified the Kigali Amendment on 17 June 2021, see https://
ozone.unep.org/all-ratifications accessed on 11 Jan. 2022, but only with the 
status of ‘acceptance’. It has an ODS licensing system but not (yet) one for 
hydrofluorocarbons. 
** All UN members have ratified except the US (a signatory). However, the US has 
initiated large implementation programmes.

Table 1 shows that no less than 12 MEAs, 11 amendments, 3 extra 
Protocols and 4 supplementary conventions/treaties have been rat-
ified by China and the EU alike.77 In addition, in fisheries there are 
two UN treaties (UNCLOS and UNFSA), regional arrangements 
in  RFMOs  and  SFPAs  which  offer  a  great  scope  to  improve  dis-
ciplines  in  fishing.  In  timber  trade,  the  EU  has  been  very  active 
under FLEGT and has convinced China – huge importer of trop-
ical  wood  –  to  import  from  FLEGT  VPA  countries  under  strict 
regulations and certificates. China has itself become much stricter 
on illegal logging at home, with a full prohibition in China itself. 

77  The one not ratified by China is the UN Watercourses Convention (1997), essentially 
because  China  prefers  to  go  for  bilateral  cooperation  with  its  many  neighbours,  not 
always for the common benefit (e.g. the Mekong Delta).

Weinian Hu and Jacques Pelkmans83

Altogether, such a multitude of multilateral and regional commit-
ments greatly helps bilateral cooperation, too, even when there is 
no FTA with a sustainable development chapter. 

3.4 The green and social fall-out from the Chinese 
growth machine

Once China decided to gradually introduce a market economy in 
the late-1970s, its economic growth quickly became very high and 
sustained, indeed, averages of over 10% real were observed regu-
larly. A critical qualification is that this was “growth at all costs”. 
The principal costs were found in the environment, CO2 and other 
emissions,  neglect  of  labour  standards,  lack  of  social  protection 
and disregard of public health. Growth was long an obsession and 
there is still a “growth at all costs” mindset (OECD [2019] p. 71) 
today. China’s civil service system should share some of the blame, 
too, since the incentive for promotion within the public adminis-
tration system is largely based on economic growth in the locality, 
therefore  civil  servants  focus  on  short-term,  quick  and  strong 
growth,  including  FDI.  This  section  deals  with  China’s  super-
growth, accomplished over several decades, its ultimate success in 
lifting many hundreds of millions out of extreme poverty and its 
largely negative fall-out, both in ‘green’ terms and socially. 

Amongst  the  numerous  policy  signals  and  incentives  that 
e.g.  provincial  leaders  and  officials  discern,  apparently  the  most 
powerful  success  factor  still  remains  high  growth  despite  a  wide 
range of other policy concerns. High economic growth is of car-
dinal importance both centrally and provincially and this is best 
observed when cyclical downturns or negative influences from the 
world economy hit China (ignoring COVID-19 for now). The typ-
ical response is to try to stimulate the economy, not so much to 
keep  it  from  going  into  recession  but  merely  preventing  it  from 
(perhaps  only  slightly)  missing  the  high  growth  target  by  1%  or 
2%.78 

Figure  2  provides  the  long-run  Chinese  economic  growth 

78 

 This statement is valid before the COVID-19 crisis hit. 

EU Values, International Conventions and China  84

rates  with  three  distinct  but  related  indicators  over  4½  decades. 
Starting from the late 1970s, the path has been record-breaking. In 
the 1990s the average annual nominal economic growth has been 
around 10% and only after 2000 economic growth was beginning 
to level off structurally. Figure 2 depicts real growth which is nev-
ertheless still high.

The Chinese growth machine was preceded by agricultural lib-
eralisation in the late 1970s which demonstrated forcefully what 
incentivized  farmers  and  agro-food  entrepreneurs  are  capable 
of, with incredible progress in only a few years. In an impressive 
survey  of  40  years  of  Chinese  agricultural  development  Huang, 
Rozelle  et  al  (2019)  summarise  the  main  findings  in  the  analyt-
ical literature. Agricultural reforms were initiated with the intro-
duction  of  the  ‘household  responsibility  system’,  dismantling  the 
people’s  communes  and  contracting  out  cultivated  land  to  indi-
vidual households in each village, at first usually for 15 years (later 
extended to 30 yrs). All studies show that in the initial period of 
liberalisation agricultural productivity increased very significantly, 
also helped by land transfers (hence, larger farm size) , more and 
improved inputs, better equipment and public investment in rural 
infrastructure. After some years, this also caused the rural surplus 
of labour looking for employment outside the sector. 

Weinian Hu and Jacques PelkmansFigure 2: China’s consistently high economic growth: 1973-2018

85

Source: OECD (2019)

Subsequently, the Chinese growth model was essentially based 
on  huge  investments  in  heavy  industry  (like  steel,  aluminium, 
cement) facilitated by extremely high savings rates due to the lack 
of  a  welfare  state  or  of  broad  social  protection  during  the  1980s 
and 1990s. Another growth driver consisted of strong export ori-
entation of low-skilled-labour-intensive and low tech goods, based 
on  cheap  labour  (with  very  low  non-wage  costs),  scale  and  long 
working  hours  (only  sometimes  translating  to  overtime  pay  as 
extra  income  for  workers).  Especially  initially,  this  export  spe-
cialisation took place in numerous special economic zones (SEZ): 
between 1980 and 1992, no less than 444 SEZs were created, largely 
in coastal cities like Shenzen, Zhuhai, Shantou and Xiamen,79 fol-
lowed by another 219 until 2016 all over the country. 

79 

 See UNDP, CIDP & SIC (2020), National Human Development Report, special edi-
tion, p. 80 ; see www.hdr.undp.org/sites/default/files/nhdr_cn.pdf 

EU Values, International Conventions and China  86

3.5 Three transformations enabling high and sustained 
economic growth

High and sustained economic growth cannot possibly take place 
without  profoundly  altering  the  underlying  economic  structures 
and specialisations. The higher such sustained economic growth, 
the  more  dramatic  the  required  or  resulting  underlying  changes 
must be. We provide a short sketch of three ‘transformations’ ena-
bling the Chinese variant of high and sustained growth. It should 
of  course  also  be  remembered  that  China  was  trying  to  catapult 
itself  out  of  a  command  and  planned  economy  with  little  initial 
freedom, whether economic or otherwise. We briefly discuss three 
transformations in the Chinese economy which have been crucial 
for  facilitating,  if  not  propelling,  economic  growth,  namely,  the 
emergence of Township & Village Enterprises (TVEs), the radical 
reforms  of  state-owned  enterprises  (SOEs)  and  the  rapid  rise  of 
internal migration in China of rural (mostly low-skilled) workers 
out of agriculture into industry and simple services into regional 
centres in their counties or provinces or the fast-growing East in 
hitherto unusually large quantities. 

The surprising and successful emergence of TVEs

TVEs emerged in the late 1970s from the modest rural industrial-
isation attempts by commune & brigade enterprises, which were 
renamed TVEs in 1984.80 Since the hukou system prevented labour 
migration  at  the  time,  the  successful  liberalisation  of  agriculture 
threatened  to  release  a  huge  outflow  of  labour  from  agriculture 
that could go nowhere. The only way out would be a massive rural 
industrialisation which would never be possible without different 
and  more  incentives-driven  forms  of  enterprise.  Initially,  most 
TVEs were collectively owned by several families. They chose to 
focus on what was dubbed the “5 small industries”, namely small 
farm  tools,  small  home  appliances,  small  commodities,  small 
hardware and small chemical fertilizers, all goods suffering from 

80 

 This section draws on UNDP, CIDP & SIC (2020), pp. 110-119.

Weinian Hu and Jacques Pelkmans87

major  shortages  (given  the  overemphasis  on  heavy  industries). 
The incipient market demand for these goods was enormous and 
little competition could be expected at first, also because private 
industry  was  still  restricted.  In  addition,  TVEs  were  established 
for coalmining activities and, at first in the coastal areas (because 
of long experience in the sector), in textiles and clothing. Initially, 
local governments were keen to support TVEs through financing, 
land use and employment; moreover, TVEs mainly worked with 
farmers, hence the land contract system was regarded as a safety 
net which led TVEs to save on social security. 

By  1987  the  output  of  TVEs  surpassed  China’s  agricul-
tural  output  for  the  first  time,  an  amazing  milestone.  In  the  late 
1990s  TVEs  began  to  emphasize  corporate  ownership  reform, 
some shares were even listed in the Shenzen and Shanghai stock 
exchanges.  Later  still  many  TVEs  became  private  enterprises  so 
as to gain more flexibility. However, the days of easy markets with 
little  competition  and  relatively  low-cost  entry  were  then  over. 
Having  low-skilled  workers  was  no  longer  sufficient  and,  more-
over, with hukou being relaxed (after, say, 2005 or so) and wages in 
the East much higher, labour costs rapidly increased. Nowadays, 
TVEs can hardly be recognized as a special category. In 2017 the 
TVEs altogether employed no less than 164 million people which 
is amazing knowing that TVEs did not yet exist before 1978 and 
the central government observed their rise passively. 

TVEs are important if one wants to understand the social pre-
dicament of China at the time. They provided ample possibilities 
all  over  China  to  escape  precarious  employment  (family  labour 
;  self-employment)  and  acquire  (more)  decent  jobs  and  higher 
wages.  The  success  of  TVEs,  especially  in  the  first  two  decades, 
greatly  supported  local  infrastructure,  development  and  govern-
ance, in the absence of national government support for the coun-
tryside. What often happens in developing countries, a hollowing 
out of the country side and a lack of perspective, has not or much 
less happened in China. At a later stage, it is primarily the workers 
from  TVEs  migrating  to  the  East  and  forming  the  mainstay  of 
urban industrialisation. 

EU Values, International Conventions and China  88

The radical reforms of SOEs 

Other than agricultural collectives, the Chinese economy largely 
consisted of SOEs in the 1970s. SOEs could be small, medium-sized 
and  large.  The  decision  of  opening  up  the  Chinese  economy 
implied at the same time a powerful reform imperative: hence the 
name of the first ten years, called “Reform and Opening up”. Thus, 
during the first 10 years or so of the ‘Reform and Opening Up’, the 
issues  consisted  of  providing  enterprise  autonomy  (and  keeping 
part of the profit), implementing a contract responsibility system 
and separating government functions from management and own-
ership questions. In the still fairly closed and not yet so competi-
tive Chinese market, these improvements led at first to growth of 
SOEs with SOE employees going up from 33 million in 1978 to 42 
million in 1985, whilst yuan-based output tripled. This was almost 
certainly more a question of scale than efficiency. But it would be 
a short-lived revival given the more competitive environment with 
(i) the rapidly growing  private sector - even though private com-
panies could not enter, de jure or de facto, certain sectors – and 
(ii) the entry of foreign FDI in specifically assigned sectors located 
in export processing zones with high productivity, not to mention 
(iii) the TVEs. As a result the share of SOE-dominated industries 
fell dramatically to 30% in 1995. SOEs were increasingly regarded 
as  (i)  inefficient  (too  much  labour  and  excessive  investments), 
(ii) with low output given those resources, (iii) and having labour 
redundancies.  When  the  first  decade  was  over,  China  pondered 
about  market-oriented  reforms  as  Central  Europe  and  even  the 
Soviet Union were doing. 

In the early 1990s, with the Chinese leadership having observed 
the experiments of ‘crashing out’ of command economies in Cen-
tral and Eastern Europe – especially in the former Soviet Union 
and in e.g. Poland with its ‘big bang’- China decided to go for con-
trolled gradualism and supported social adjustment. Indeed, China 
observed  the  negative  fall-out  of  radical  if  not  reckless  transfor-
mation in some European countries such as corruption, allowing 
new tycoons to arise swiftly, bank failures (e.g. in Russia in 1998) 

Weinian Hu and Jacques Pelkmans89

and the great risk of social disruption due to job losses. However, 
supporting  social  adjustment  amounted  to  a  tall  order  as  China 
did not have any social policy or social security system, other than 
the ‘iron rice bowl’ offered by SOEs and the egalitarian minimal 
security of collectives. But precisely the SOEs’ ‘íron rice bowl’ of 
permanent  jobs  and  a  host  of  free  services  to  their  workers  like 
housing, education, health care and old-age pensions came under 
ever  greater  pressure  with  the  increasing  market-orientation  of 
state-owned  firms.  It  became  one  of  the  prominent  reasons  why 
SOEs could not become competitive, with market discipline and 
indeed competition on the rise. In the late 1980s and during the 
1990s, not only the non-labour costs (covering those quasi-social 
services) per worker turned out to be critical for SOE competitive-
ness but the removal of overstaffing too. In fact, the so-called ‘hard 
budget  constraint’  for  SOEs  arose  when  local,  regional  and  fed-
eral government were less and less able or willing to cover losses 
suffered  by  numerous  smaller  SOEs,  and  frequently  also  larger 
ones. The conviction spread that especially many small SOEs were 
simply not viable. 

Tackling both cost factors was most sensitive in a society where 
a separate state function (with tax-and worker contribution-based 
funding,  answering  social  entitlements  of  workers)  called  ‘social 
protection’ did not exist. Moreover, adjustment of workers via job 
relocation between enterprises was initially unusual and far from 
easy.  Some  of  this  relocation  was  increasingly  absorbed  by  the 
numerous new private enterprises, though often on terms far worse 
than in SOEs. Worse still, mobility of workers between regions or 
provinces, let alone from the West of China to the coastal prov-
inces or the North-East, was severely inhibited by the restrictive 
hukou system. West-East mobility of workers was only feasible if 
one would accept non-contractual arrangements in private com-
panies,  low  wages  and  extremely  long  hours,  without  much  or 
any support from local authorities for the quasi-social services (as 
the non-eligibility for quasi-social services, at least education and 
housing, followed from not-having a local hukou). Altogether, “as 
the market economy deepened, balancing social equity and eco-

EU Values, International Conventions and China  90

nomic efficiency has become a fundamental question in the reform 
of  SOEs.”81  With  the  SOEs  relinquishing  ‘their’  social  policies,  a 
brand-new system of social policies had to be built up. 

In  1993  two  breakthrough  initiatives  were  announced,  as  an 
incipient  policy  response  to  the  crisis  of  SOEs  and  the  quest  for 
social equity. First, SOE reform aimed at ‘sustainable development 
of SOEs’ (a soft term for ‘viability’), the continuous improvement of 
economic efficiency and rising employee incomes. To do so in ever 
more competitive and open markets, large SOEs had to be re-invig-
orated while relaxing control over [many] small ones. The Chinese 
government  pushed  for  restructuring  and  debt/equity  swaps  for 
the large ones and mergers, contracting for – and sales of – smaller 
SOEs, with a harsh principle guiding the end result: survival of the 
fittest.  It  did  not  yield  sufficient  results  by  1998  when  the  Asian 
financial crisis only made things worse. Excessive staff redundan-
cies were still there, excess capacity in some sectors prevailed, and 
SOE managers seemed incapable of adapting to fiercer competi-
tion. SOEs suffered massive losses and non-performing loans with 
banks shot up to over 20%. Employees were also suffering slower 
wage  growth  -  and  medical  care  coverage  evaporated.  Another 
round  of  loss-covering  subsidies  seemed  inevitable  even  though 
policymakers understood that such spending would be ineffective 
to  help  SOEs  turn  around.  A  further  round  of  SOE  reform  was 
initiated  for  3  years  led  by  PM  Zhu  Rongji.  Some  reforms  were 
only more of the same82 but this time there was more emphasis on 
technological transformation (supporting profitable firms), bank-
ruptcy  regulation  and  dismissal  of  staff.  No  less  than  20  million 
workers were laid off in less than 3 years, several tens of thousands 
of  small  &  medium  sized  SOEs  restructured,  thousands  of  such 
small SOEs bought out and hundreds ending up bankrupt.83 This 
clean-up made a substantial improvement possible. 

81 

 UNDP et al., 2020, p. 135

82  Again,  more  debt-equity  swaps,  this  time  with  4  newly  founded  (state-owned)  asset 

management companies.

83  Where possible, workers had priority in receiving compensation paid from remaining 

assets, instead of creditors. 

Weinian Hu and Jacques Pelkmans91

Second, in 1993 China’s first social protection scheme was ini-
tiated  in  response  to  the  dismissal  of  workers  in  SOEs.  Laid-off 
workers  (mainly  if  not  only  from  SOEs,  especially  small  ones) 
became  an  increasing  problem  and  also  caused  a  more  general 
increase  in  urban  poverty,  ironically  in  an  economy  which  was 
growing  with  record  speed.  The  number  of  laid-off  workers  was 
already  an  unheard-of  3  million  in  1993  and  multiplied  sixfold 
by 1998 to 18 million.84 These were the days that the negotiations 
about China’s WTO membership were at its height and the US, the 
EU and Japan wanted to be re-assured that China would genuinely 
become a market economy, with the role of SOEs being central to 
that issue. By 1999 the emerged Chinese ‘social safety net’ consisted 
of three initiatives to socially support SOE reforms: (a) unemploy-
ment insurance, (b) a living allowance for laid-off workers and (c) 
the ‘dibao’, later called the minimum labour allowance, the urban 
minimum living standard assistance paid to laid-off workers and 
other  poor  urban  households.  In  the  following  few  years,  this 
set-up  was  improved  by  creating  ‘re-employment  centres’  which 
combined the hand-outs to laid-off workers with an assurance that 
major  social  security  benefits  were  not  cut  off,  while  providing 
training and helping to find new jobs. In fact, very much a form 
of ‘active labour market policies’ advocated nowadays everywhere. 

China set out for yet another regulatory reform of SOEs (also 
under WTO pressure) and established, in 2003, the State-owned 
Assets Supervision and Administration Commission of the State 
Council, supervising 196 very big non-financial SOEs. Via mergers 
and  restructuring,  these  have  now  reduced  to  98  in  December 
2017.85  And  the  number  of  small  and  medium-sized  SOEs  were 
slashed  by  hundreds  of  thousands  but  in  2014  there  were  still 
18,800  SOEs  in  industry  and  3,750  in  construction.  In  banking 
and insurance there are few SOEs, but all have large market shares 
(dominance).  To  what  extent  these  SOEs  are  efficient  enough  to 
survive on their own is difficult to answer in general but it is most 
unlikely that they would again become the cause of serious poten-
tial social anxiety.

84  Source : UNDP et al., 1999

85  See Pelkmans, Hu et al., 2018, chapter 14) for far more detail on SOEs in China. 

EU Values, International Conventions and China  92

Restrictive ‘hukou’ and intra-China migration of rural 
workers 

Like  many  other  developing  countries,  China  suffered  from  a 
serious gap in the standard of living and in opportunities between 
the urban and rural population. By the mid-1980s, besides seeking 
non-agricultural jobs in the same county or province with TVEs 
(see above), a form of regional migration, both pull and push fac-
tors  led  to  an  ever-increasing  flow  of  intra-China  (mostly  rural) 
migrants seeking employment in the East of China, with its urban 
areas, heavy industry and mining as well as some low-skilled-la-
bour-intensive export sectors. The rural push factors consisted of 
the combination of scarce (e.g. job) opportunities for young peas-
ants, very low income per capita (indeed, widespread and outright 
poverty)  and  labour  surpluses  on  numerous  farms  as  a  result  of 
rapid productivity growth in agriculture after its liberalisation. The 
pull factors included at first job opportunities with TVEs in coun-
ties nearby and (a little later) a great and ever-increasing demand 
for  low-skilled  or  unskilled  workers,  also  at  quickly  increasing 
wages in or near the big urban areas of East China. The numbers 
of rural migrants in China rose to staggering numbers, at its peak 
around 2005 as high as some 230-plus million, almost equal to the 
entire  working  population  of  the  EU-27  at  the  time!86  Roughly, 
this total is an addition of nearly 150 million so-called ‘non-hukou 
migration’  to  big  cities  and  another  80  million  to  nearby  coun-
ties (where often obtaining a local ‘hukou’ was allowed, given the 
vicinity of the home); many of these 80 million worked in TVEs. 
The hukou system is an ancient form of registering individuals or 
households. Its factual implication is that certain entitlements are 
tied to the registered location of the person or household, thereby 
severely hindering migration in China and leading to sharper dis-
crimination of rural citizens in urban areas (e.g. housing, schools 

86  However,  there  are  significant  problems  with  the  proper  disentangling  of  statistical 
information  on  what  non-Chinese  observers  would  call  ”migrants”.  This  cannot  be 
treated here, for a careful analysis see Chan (2013). The most important reason for the 
confusion is that Chinese statistical reporting is made along the lines of various rather 
restrictive controls of intra-China mobilities, especially before the early 2000s. The data 
in the text are from Chan (2013). 

Weinian Hu and Jacques Pelkmans93

for children). 

China’s initial employment and social security systems launched 
amidst SOE restructuring were based mainly on a resident’s hukou, 
employer identities (e.g. SOE, foreign-invested-enterprise, collec-
tive,  self-employed,  etc.)  and  employment  localities  (e.g.  urban, 
rural,  township,  etc.).  As  a  result,  when  the  rural-urban  migra-
tion  became  so  massive,  migrant  workers’  social  rights  and  wel-
fare were not taken care of, simply because mobility was not cap-
tured by the system, and migrant workers lost their (rural) hukou, 
therefore  their  entitlement  to  social  welfare. This  failure  became 
a  huge  challenge  to  the  system.  Migrant  children  in  urban  areas 
lost access to education. Migrant children’s rural hukou registra-
tion did not entitle them to attend city schools. Because employers 
would frequently not pay for health insurance, despite obligations 
since the late 1990s, workers could be in for painful surprises in 
case  of  diseases  (or  felt  forced  to  travel  far  away  to  home  where 
they were entitled to care). Finally, access to decent and payable 
housing was also very poor. 

The long-time acceptance of this discrimination and exploita-
tion of many millions of low-skilled migrant workers can only be 
explained  by  their  critical  importance  for  the  export-led  growth 
model of China. Low-cost competitiveness had absolute priority, 
yet was impossible without the migrants. Better social protection 
for  migrants  only  began  to  be  introduced  in  the  late  1990s,  and 
began to have beneficial effects only a decade or so later. 

3.6 The green costs of China’s super growth

The  environmental  (non-climate)  ‘negatives’  with  a  long-run 
impact on eco-systems and the economy are mainly seven: water 
pollution, man-made water shortages, urban air pollution, indus-
trial toxic and hazardous waste, soil erosion, forest and grassland 
degradation,  and  habitat  destruction  and  species  loss.  Although 
some of these are usually local, several of these costly ‘negatives’ 
meanwhile fall under MEAs and hence would potentially be sub-

EU Values, International Conventions and China  94

ject to EU/China cooperation and/or discussion under EU trade 
policy. One might also wonder whether and to what extent bilat-
eral or multilateral trade in goods might not have been distorted 
by  a  radical  neglect  of  the  costs  to  ecosystems  or,  indeed,  by  the 
avoidance  of  incurring  mitigation  or  pre-emption  costs  by  Chi-
nese companies exporting goods. In short, competitiveness at the 
expense of workers, consumers, citizens and nature. This consider-
ation is particularly pertinent given China’s pretty extreme reliance 
on export-led growth for decades. 

On  the  other  hand,  economic  growth  also  facilitates  the 
improvement of typical environmental indicators, at least poten-
tially.  If  investment  rates  are  as  high  as  in  China  ever  since  the 
1980s (far above those in OECD countries), such investments can 
be channelled towards cleaner production, may encourage greater 
material  efficiency  and  energy  efficiency  as  well  as  promote  the 
conservation  of  scarce  resources.  High  economic  growth  gener-
ates steadily higher incomes and public revenues which can more 
easily  be  used  for  stimulating  new  environment-friendly  tech-
nology. Moreover, as in all parts of the world, affluence can be a 
great lubricator of adjustment and structural reform which can set 
in motion a process of greening the economy over time. 

With respect to the climate impact of high and continuous eco-
nomic growth, it is not much different. CO2 emissions are a pos-
itive function of growth, but more forcefully so if fossil resources 
are prominent in energy generation and transport. It is a bit more 
complicated  for  other  greenhouse  gasses  (GHGs)  such  as  ozone 
and methane. It also depends what the fossil resources are which 
are used most. Here China is in a separate class: nowhere in the 
world is coal used more intensely for energy and heating than in 
China. The abundance of coal and its very low price has been crit-
ical for the decades that China was still a poor developing country, 
whether for energy generators, industry or households. For trans-
port, oil is mostly imported, i.e. if and to the extent that cars and 
trucks become more fuel-efficient or indeed electric, the two birds 
of energy security and lower CO2 emissions can be hit with a single 

Weinian Hu and Jacques Pelkmans95

stone.  But  until  the  mid-1990s,  China  had  relatively  modest  car 
and truck traffic, many city folk were still biking and long journeys 
were  done  by  train.  In  other  words,  it  was  overwhelmingly  coal 
which caused high CO2 emissions and they were rapidly increasing 
as well, precisely as a result of very high economic growth. In fact, 
the non-climate environment issues and CO2 are to some extent 
interdependent  because  the  use  of  coal  also  generated  very  high 
emissions of particulates and of SO2 (sulphur dioxide). 

Acknowledging that there are two sides to the environmental 
and climate impact of high economic growth in China, it is still 
true that the negative effects prevailed in China for two reasons. 
One is that the rate of growth was so high for so long that – given 
the  mindset  of  growth-at-all-costs  -  the  very  rapid  increase  of 
resource use in order to allow that growth easily dominated. The 
other reason is that China long pretended to go for new technology 
and  (slow)  substitution  of  highly  inefficient  outmoded  capital 
goods and domestic heating products by modern equipment and 
methods, without opting for first-best solutions such as curtailing 
coal volumes, energy pricing, taxation of emissions and /or tough 
enforcement  monitored  seriously  at  the  central  level.  New  tech-
nology  and  market-driven  substitution  cannot  generate  enough 
reduction of e.g. emissions fast enough in the absence of proper 
energy pricing and/or taxation (incentivizing such processes) and 
in the presence of such high economic growth. 

In the mid-1990s both policies and indicators of environment 
and climate in China were not yet so easy to ‘read’ and understand. 
For  that  reason,  we  rely  on  2  authoritative  reports  by  the  World 
Bank,  with  co-authorship  of  Chinese  specialists  87  and  support 
from  China’s  main  environmental  agency  at  the  time  (NEPA). 
Below some core indicators on environment and on climate from 
China of the mid-1990s will be set out. Before doing so, it should be 

87  On  environment  (non-climate),  mainly  air  and  water,  see  World  Bank  (1997),  Clear 
water, blue skies, China’s environment in the new century, Washington DC, September, 
pp. 113 ; and on climate questions, see World Bank (1996), China: issues and opinions 
in Greenhouse Gas Emissions Control (ed. Johnson, Li, Liang & Taylor), WB Discussion 
Paper no. 330, June, pp. 66. 

EU Values, International Conventions and China  96

realized that China may have plenty of coal, but limited resources 
otherwise. A few indicators: 

a.  China has some 18% of the world’s population but barely 

7% of arable land

b.  Agricultural  land  per  capita  is  only  28%  of  the  world’s 

average

c.  Forests and wilderness (in 1995 88) per capita is only 15% of 

the world’s average

d.  Water  resources  per  capita  are  one-third  of  the  world 

average

e. 

In  energy resources,  it is  a major  net importer of oil and 
gas, including LNG (today)

With respect to air pollution, particulates89 as well as sulphur 
(SO2),  NOx,  volatile  organic  compounds  (VOCs)  and  carbon 
monoxide  are  the  damaging  emissions  for  humans.  In  China  in 
the 1990s both industrial boilers (inefficient and with low smoke-
stacks) and small household stoves were genuine culprits: indus-
trial  boilers  consumed  33%  of  China’s  coal  and  emitted  an  even 
higher percentage of ground-level pollution in cities ; households 
consumed  only  15%  of  coal  but  contributed  an  amazing  30%  to 
ground-level pollution. Between 1985 and 1995, particulate con-
centrations  in  cities  had  fallen  significantly,  but  in  large  cities 
they were still 4 times the maximum WHO guideline, whereas in 
smaller cities they were some 3 times the guideline. It was therefore 
still very unhealthy. As to SO2, the decline was small (in concenta-
tion), and in big cities the level remained still 2 ½ times the WHO 
guideline,  again  far  from  healthy.  When  citizens  entered  home, 
hence stepping out of the air pollution, they were often worse off 
because indoor air quality was (especially in winter 90) miserable. 

88  The period matters because around that time China initiated a massive reforestation 

programme for many years.

89  Both fine (less than 10 microns) and ultrafine (less than 2.5 microns) 

90  Due to combustion of raw coal and wood for cooking and heating. By 1995, Chinese 
citizens had more and more access to gas for the home and, if coal was still used, with 
cleaner coal and more efficient briquettes. 

Weinian Hu and Jacques Pelkmans97

Altogether,  citizens  suffered  disproportionately  from  respiratory 
diseases,  the  leading  cause  of  death  in  rural  areas  and  the  third 
cause in cities. There was also a serious lead problem (esp. for chil-
dren) resulting from industrial emissions and from leaded patrol 
because only one-half of patrol production was unleaded. Negative 
externalities across China and beyond – so no longer local only – 
were caused by long-range transport of sulphur, resulting in acid 
rain, damaging agriculture, ecosystems and materials. 

Water pollution in China of 1995 was serious as well. Some 40% 
of monitored river sections flowing past cities did not meet min-
imum quality levels. Water shortages complicated matters further 
as upstream cities or others often stopped the water flow in order 
to stock water, thereby causing relatively greater pollution down-
stream.  Municipal  and  industrial  wastewater  were  at  first  hardly 
treated;  since  the  early  1990s  this  was  improving  for  industrial 
waste  of  regulated  industries  but  not  for  municipal  wastewater. 
In  agriculture  intensive  use  of  nitrogen  fertilizer  and  pesticides 
were a source of serious water pollution. Pesticides added to this, 
a problem for birds. Chemical oxygen demand [COD] pollution 
in  water  was  often  originating  from  larger  livestock  farms  since 
meat production on farms increased enormously. About half of the 
monitored  northern  China  river  sections  did  not  even  meet  the 
lowest  standard  for  water,  making  the  water  even  unsuitable  for 
irrigation. Only 8% was grade 3, that is, the minimum standard for 
contact with humans!

Furthermore,  there  were  other  environmental  issues  such 
as  environmental  degradation  in  the  forms  of  soil  erosion,  land 
degradation,  deforestation  and  desertification,  with  one  study 
91 estimating  the  costs at 5% of  GDP. This compares  to a cost of 
8% of Chinese GDP in 1995 for air and water pollution discussed 

91  Smil (1996) as quoted in the WB (1997) study, p. 23.

EU Values, International Conventions and China  98

above.92  Hence,  a  staggering  roughly  13%  of  GDP  was  at  stake, 
and this does not include the costs of CO2 emissions (which are 
summarized below). In a simulation up to 2020 under a ‘business-
as-usual’ scenario, and taken into account the projected increase 
in income, the cost of 8% of GDP rises to a cost of 13% of GDP. 
The latter would consist of 600.000 premature deaths per year, 5.5 
million cases of chronic bronchitis, more than 5 billion restricted 
activity days and 20 million cases of respiratory illness each year. 
Thus, even if human considerations would assume a lower priority, 
it would still be in the Chinese interest to address these huge social 
and health costs as a major burden on the economy. 

When  it  comes  to  GHG  emissions  –  primarily  CO2  –  China 
in  1990  emitted  about  half  of  the  US  total  and  of  the  European 
total (equal at the time) but far less per capita than the US CO2 
emissions per capita (only some 12%!  93). But between 1990 and 
1995  CO2  emissions  in  China  went  up  up  by  nearly  300  mtC, 
some two- third, and reaching 800 mtC. And a baseline scenario 
for 2020 arrives at some 2200 mtC under plausible assumptions. If 
this simulation would be roughly correct, it meant in the late 1990s 
that, in order to keep the level of global CO2 emissions constant 
at  the  1990  level  94,  the  rest  of  the  world  would  have  to  decrease 
their emissions by roughly one-third merely to let the Chinese grow 
that much. This inference alone can be seen as a strong encourage-
ment for the EU to engage with China in joint solutions, projects, 
Dialogues and what not, to help and nudge China into a radically 
different path.

The 2200 mtC simulation in 2020 is a derivative of an astounding 
increase in coal used, jumping from some 1.3 bn tons of raw coal in 
1995 to no less than 3.1 bn tons of raw coal. This must imply, when 
considering policy in the late 1990s, an expectation of incredible 
surges of SO2 emissions and of particulates by 2020, if no strategy 

92  Given the still relatively low wages and costs of living in 1995 in China, the estimate of 
the statistical value of life is only $ 60 000 (and, in the human capital approach, even 
a mere $ 9000 for urban China). Nevertheless, the total costs are $ 54 bn and $ 20 bn 
(human capital approach). See World Bank, 1997, op. cit., p. 23. Similar damages would 
have costs in e.g. Europe amounting to a 20-fold to 25-fold of this amount in US $. 

93  Over 30% in the case of the EU (as the EU has much lower emission p.c.).

94  A standard measuring rod in the UNFCCC employed by all country signatories.

Weinian Hu and Jacques Pelkmans99

would be applied. However, the baseline scenario already includes 
market-induced improvements in energy efficiency over 25 years, 
without any new strategy, primarily due to changes in economic 
structure.  These  changes  result  from  a  lesser  emphasis  on  heavy 
industry,  more  performant  equipment  when  replacing  capital 
goods, the rise of (much less polluting) services in overall GDP and 
improvement of heating & cooking inside households given higher 
incomes 95. These implied improvements ensure that, by 2020, not 
10 000 mtce of coal but “only” 3300 mtce of energy use is the model 
outcome, most of which is coal. Interestingly, a daring simulation 
of  3  options  for  reducing  GHG  emissions  by  2020  is  presented: 
high energy efficiency (330 mtC less), alternative energy [i.e. low-
carbon intensive fuels and renewables, with the warning that, with 
the state-of-the-art of 1995, these would be more costly than coal 
– note that coal at the time was not taxed directly or via emissions 
(up to 237 mtC less)] and afforestation (to be undertaken aggres-
sively for a long period, with 221 mtC less). The upshot would be 
that GHG emissions would, over 25 years, only slightly less than 
double. However, all three options are demanding and invite inter-
national aid and open trade in environmental goods as much as 
possible, according to the World Bank team. Thus, there is a devel-
opment motive for donors but just as much a direct (commercial 
and climate) interest for e.g. the EU to step in and find effective 
ways  to  support  if  not  amplify  the  Chinese  attempts  to  address 
these environmental and climate challenges. 

Altogether, the baseline around 1995 for the environment and 
climate  is  highly  problematic  and  –  given  the  very  high  growth 
path China was determined to continue – worrying. In terms of EU 
/ China cooperation, still in its infancy, the divergence between the 
two in indicators and strategic perspective could hardly be greater. 

95 

 In the simulation, it means that input-output coefficients would alter over time leading 
to lower energy use

EU Values, International Conventions and China  100

3.7 The social costs of China’s super growth

The Chinese growth model was first of all based on huge invest-
ments  in  heavy  industry  (like  steel,  aluminium,  cement)  facili-
tated by extremely high savings rates due to the lack of a welfare 
state  or  of  broad  social  protection  during  the  1980s  and  1990s. 
Another  growth  driver  consisted  of  strong  export  orientation  of 
low-skilled-labour-intensive and low tech goods, based on cheap 
labour (with almost no non-wage costs), scale and long working 
hours  (sometimes  translating  to  overtime  pay  as  extra  income 
for workers). With rapid productivity growth in agriculture after 
the liberalisation in the late 1970s, rural areas became a source of 
cheap rural surplus labour. This surplus labour first flocked into 
TVEs (as noted, new type of small enterprise in rural areas, ini-
tially  often  commonly  owned  by  former  farmers  or  technicians) 
within their own counties or province. Typically, such low-skilled 
intra-China  migrants  of  rural  origin  often  had  no  or  weak  con-
tracts and little (if any) social protection. With private enterprise 
given  more  freedom  and  foreign  direct  investment  coming  in 
later, numerous other rural workers found their way to hundreds 
of special economic zones, soon to be linked to international val-
ue-chains. All that counted initially in terms of labour and social 
protection  were  jobs,  not  the  quality  of  work,  nor  worker  rights 
(despite communism) except in the public sector (but less and less 
in SOEs). 

It is often said that China disregarded environment and climate 
(it did indeed, as shown above) for several decades, but its incip-
ient  style  of  semi-state  capitalism  was  also  disregarding  elemen-
tary aspects of labour rights and social protection, as well as their 
enforcement.  With  the  opening  up  of  rural  agriculture  and  the 
relaxation of intra-China mobilities for workers and students, the 
view was that poverty could only be overcome by many millions of 
jobs and internal migration to areas where the jobs were found or 
created. The results were stunning: hundreds of millions of migrant 
workers  moved  around  inside  China,  to  townships  and  cities  in 
their regions as well as to the fast-growing East of China. Despite 

Weinian Hu and Jacques Pelkmans101

the  enormous  challenges,  (registered)  unemployment  remained 
quite low and – by (say) 2015 - more than 800 million Chinese had 
been lifted out of extreme poverty. The growth model surely had its 
social costs, as will be discussed, but it must be acknowledged that 
China did achieve a key element of social progress when coming 
from a very minimal base – it was successful in creating numerous 
jobs for decades and hence a minimum of income. This elemen-
tary form of progress for so many people had been thought to be 
impossible in such a short while. 

However,  a  second  social  threat  was  immanent.  In  the  early 
1980s some 80% of Chinese employment was generated by SOEs. 
Knowing that the former Chinese command and planning economy 
was based solely on ‘state-run’ enterprises and agricultural collec-
tives (without a profit motive), the long march towards a market 
economy  hinged  primarily  on  deep  and  wide-ranging  reform 
in  three  parallel  ways:  profound  and  sustained  SOE  reform,  the 
emergence of successful TVEs (Township & Village Enterprises) 
and the rise of private business as from the early 1980s. Over sev-
eral decades, gradually changing incentives, disciplines and legal 
rules for SOEs emerged side-by-side with newly emerging private 
enterprise, although initially underprivileged compared to SOEs. 
The rise of private firms smoothed the transition towards a market 
economy because at first the SOEs were not forced to adjust rad-
ically and – more often than not – losses that did show up were 
simply covered, whilst unemployment – a major fear of the lead-
ership – remained low. The big surprise – also for the leadership96 
was the successful rise of TVEs, a new enterprise form that did not 
even exist before 1978. By 1997 TVEs provided 18% of all employ-
ment in China; in 1998 some 28% of China’s GDP was generated 
by them and 35% of exports.97 

96 

 Deng Xiaoping said in 1987 “the most unexpected thing that came out of rural reform 
is the sudden rise of the TVEs… [..]… The central government should not be given the 
credit for it”. Quoted from the 2020 China National HD Report, special edition, op.cit., 
p. 119. 

97  UNDP/CIDP & SIC (2020), p. 118. Hu & Pelkmans (2021, Box 2) clarifies the role of 

TVEs in the 4 decades long Chinese reform process. 

Promoting 'Green' and 'Social' Values with ChinaWhen loss-making was no longer automatically covered by sub-
sidies or credit lines with state banks, beginning in the early 1990s, 
smaller SOEs massively went bankrupt or merged into larger firms 
whilst  shedding  surplus  labour. This  added  up  to  many  millions 
of  workers.  Moreover,  all  SOEs  dislodged  their  non-  economic 
functions  such  as  education,  social  protection,  social  housing 
and health care. This double shock for tens of millions of workers 
in only a few years could not be compensated somehow by high 
economic  growth,  although  this  of  course  did  help  to  generate 
additional demand for labour. When viewed in a longer time per-
spective, China has absorbed these problems quite quickly, though 
there cannot be any doubt that there must have been many tempo-
rary losers at the time.

103

4. EU/CHINA SUSTAINABLE 
DEVELOPMENT COOPERATION: 
TOWARDS CONVERGENCE?

With the status and some critical background of sustainability in 
China of the mid-1990s explained, we can now proceed with the 
precise  research  questions.  We  do  this  here  because  it  is  only  in 
the mid-1990s or towards 2000 that the EU began to take an active 
interest  in  pursuing  a  sustainability  agenda  with  China.  And  of 
course, it is indispensable to appreciate the starting point in China 
around that time, a kind of baseline.98 We are interested in whether 
EU  trade  and  external  cooperation  policies  vis  a  vis  China  have 
been coherent and can be verified in terms of effectiveness. This 
can  be  made  more  operational  as  follows.  We  focus  on  the  two 
pillars of sustainable development and ask whether China and the 
EU have become more convergent in policies and in terms of per-
formance (for example, expressed in indicators). Subsequently, the 
query  is  whether  the  EU  has  actively  and  continuously  pursued 
policies to stimulate such convergence between China and the EU. 

For the ‘green’ pillar of sustainable development – environment 

and climate mitigation – we pose three research questons: 

What is the process of convergence between the EU and China 
in  the  status  of  environment  and  climate  factors,  as  captured  by 
relevant indicators of sustainable development?  

 What is the process of convergence in environmental and cli-

98 

 Like is common practice in regulatory impact assessment. 

104

mate-related policies between the EU and China over the period 
1995 – 2020? 

Did  EU  trade  policy  and  cooperation  vis  a  vis  China  with 
respect  to  sustainable  development  systematically  pursue  the 
NTPOs of environment and climate mitigation since the late 1990s 
and to what extenty has this pursuit been effective in supporting a 
process of convergence? 

The proper delineation of sustainable development for the pur-
pose of EU trade policy and cooperation is far from easy, however. 
For the green pillar the focus is on all the relevant specifications 
in the sustainable development chapters in recent EU FTAs, with 
EPA as the (ambitious) example. These chapters of FTAs express 
the ambitious EU preferences about values. 

It  should  be  realized  that  China  was  at  first  –  in  the  relevant 
period  –  a  developing  country  and  even  25  years  later,  it  is  best 
characterized  as  an  upper-middle-income  economy.  Can  one 
expect  convergence  in  sustainable  development  with  such  an 
economy  late  2020?  A  priori  one  should  not  expect  that  or  at 
least,  if  a  process  of  convergence  has  been  set  into  motion,  it  is 
unlikely to be completed and this must be taken into account. The 
convergence, as expressed in the answers to the first two research 
questions, is therefore to be regarded as a process. One should not 
expect this process to be completed late 2020, except perhaps selec-
tively.    Moreover,  stylizing  EU’s  ambitious  trade-related  sustain-
able development preferences from recent FTAs may be a sound 
idea in and by itself, but what about trade relations with the many 
WTO  partners  not  having  a  FTA  with  the  EU?  And  China  falls 
into that category. Thus, there are two reasons to be cautious about 
the ‘reading’ of EU’s trade-related sustainable development prefer-
ences from recent EU FTAs: China has no FTA with the EU in the 
first place,99 and China is not yet a developed country (although it 

99  China and the EU have built up several instances of fairly ‘deep’ cooperation in sus-
tainable development, as will be shown. Invariably, what is included in the texts how-
ever, are phrases that such arrangements ‘do not imply binding legal commitments’ for 
the partners, a clear signal that partners carefully distinguish cooperation, even when 
‘deep’, from FTA-like commitments. 

Weinian Hu and Jacques Pelkmans105

is getting increasingly close) which might be expected to be able to 
‘afford’ such ambitious preferences. 

Full convergence in sustainable development between the EU 
and China therefore should not be expected so easily and, even if 
the process is developing, is unlikely to be completed at this stage. 
Stronger, by adopting the preferences as ‘stylized’ from the sustain-
able development chapter of the EPA between Japan and the EU, 
the ambition is tantamount to the highest one found in any FTA 
today. It does not stand to reason to expect China to fully pursue 
such ambitious aims in 2020. Using the sustainable development 
chapter  of  recent  EU  FTAs  therefore  has  the  function,  and  only 
this function, to sharply define or articulate EU’s trade-related sus-
tainable development preferences. Finally, much of the following 
rests on the initial presumption of the late 1990s that, in sustain-
able development, China is to converge to the EU ’s objectives. In 
2020, however, or in the coming years, it is not excluded that the 
EU might wish to converge - in some aspects – to what China has 
meanwhile shown to be capable of (see e.g. Pelkmans, 2021, sec-
tion 6.2.3 on components of e-vehicles and renewables ). 

For the ‘social’ pillar of sustainable development – respect for 
the ILO core Conventions and an adequate system of social pro-
tection – we have three equivalent research questions: 

1. 

In transforming from a system of central planning without 
private  ownership  towards  a  market  economy,  has  China 
addressed  the  respect  for  international  labour  standards 
and built up a system of social protection based on indi-
vidual entitlements?

2.  What  is  the  process  of  convergence  in  policies,  laws  and 
entitlements  with  respect  to  labour  ‘standards’  and  social 
protection between China and the EU over the period 2000 
-2020?

3.  Has EU trade policy vis a vis and cooperation with China 
on  sustainable  development  systematically  pursued  the 
NPTOs  of  labour  ‘standards’  and  social  protection  since 

EU/China Sustainable Development Cooperation: Towards Convergence?106

2000  and  has  this  pursuit  been  effective  in  supporting  a 
process of convergence? 

The research is equally EU trade policy relevant here, because 
sustainable  development  is  recognized  as  a  large  part  of  the 
NTPOs dealt with in RESPECT, even when focusing “only” on its 
social pillar. Hu & Pelkmans (2021, Section 2) identify three dis-
tinct though partly overlapping approaches to the definition of the 
‘social pillar’ of sustainable development are discussed. Although 
this discussion sheds some light on often ignored issues of demar-
cation in debates on sustainable development, we have opted for a 
pragmatic solution, that is, the social pillar is considered to consist 
of respect for the eight ILO core Conventions (as in EU FTAs) and 
an  adequate  system  of  social  protection,  as  indicated  by  leading 
international economic organisations.100 

In  what  follows  we  first  scrutinize  the  Chinese  strategy  or 
policy development in the green pillar in the 20 – 25 years, after 
have characterized the extent of convergence as captured by salient 
outcome or performance indicators and then attempt the same for 
labour  standards  and  social  protection.  More  detail  and  factual 
information on these two areas can be found in Pelkmans (2021, 
section 5) and Hu & Pelkmans (2021, sections 5, 7 and 8), respec-
tively. 

4.1 Measuring ‘green’ convergence  

It is understandable, in the case of China, to start by verifying its 
Five Years Plans, the principal guides for policy aims and policy 
development. However, it turns out this verification is of limited 
use.  Studying  three  consecutive  Five  Years  Plans  between  2000 
and  2015  demonstrates  that,  in  China,  there  was  an  emerging 
awareness  –  more  with  citizens  than  with  the  government  –  of 

100   In doing so, the question of ‘employment policies’ is ignored, even though China was 
keenly interested in employment policies in EU countries at the outset (for instance, in 
the first Dialogue in 2005). However, it should be realised that China’s model and plans 
placed the rapid increase of jobs as an effective form of fighting poverty on top of its 
priorities for decades. 

Weinian Hu and Jacques Pelkmans107

the quickly deteriorating environment, but little to no determina-
tion to halt and reverse the process. For the many details we refer 
to Pelkmans (2021, section 5.1) but a few examples can illustrate 
some of the problems. In SO2 emissions (from coal) the status in 
2000 was 1995 x 10.000 tons and the 2005 target 1800. However, 
the realisation in 2005 was more than 20% higher than the starting 
point, in turn slightly reduced by 2010 and again a little by 2015. 
However, the realised level of SO2 emissions by 2015 was higher 
than  the  realised  level  in  2000!  The  driver  behind  this  failure  is 
coal. Another example is COD where it proved difficult to reduce 
the enormous volumes and especially non-industrial waste (that 
is, agricultural and from cities). Also on air and water quality, the 
problems  were  alarming.  For  example,  the  share  of  monitored 
water  flows  near  cities  failing  to  meet  even  Grade  V  (the  worst, 
not  good  for  anything)  was  still  26%  in  2005.  In  air  quality,  as 
recent as 2010 only 72% of cities were meeting Grade II of China’s 
national standard, which is not a very ambitious one. Moreover, 
there  were  strong  suspicions  that  data  was  very  incomplete  as  a 
result of weak enforcement efforts. Much later when enforcement 
began to be taken serious, incredible underreporting was detected, 
for  instance  for  illegal  dumping  of  waste  in  rivers  and  lakes  (in 
important areas some 20 x to up to 60 x what the known data was) 
and with respect to soil pollution. 

Also  in  CO2  emissions  the  level  and  trend  were  deeply  wor-
rying.  CO2  emissions  were  increasing  very  rapidly  and  seemed 
unstoppable. By the time China ratified the Kyoto Protocol (2002) 
CO2  grew  as  fast  or  faster  than  the  very  high  rate  of  economic 
growth, implying a doubling every seven years. In the Five Years 
Plans no attention was paid to CO2, only to coal as being so central 
to Chinese growth. The Agency (later ministry) responsible of the 
environment  lacked  the  competence  to  deal  with  CO2,  that  was 
retained  by  the  NDRC,  a  powerful  ministry  expected  to  ensure 
high growth. The only bright spot was (re)forestation at a steady 
rate in a programme that was foreseen to take some 40 years and 
would  augment  the  share  of  forest  land  in  all  land  from  15%  to 
over 26% by 2035. This programme surely helped to absorb some 

EU/China Sustainable Development Cooperation: Towards Convergence?108

CO2 emissions but its main motivation was found in anti-deserti-
fication, anti-flooding and anti-erosion in less populated parts of 
the country. 

An analytical perspective

Since  the  Five  Years  Plans  are  presented  in  incomparable  ways 
(for the indicators) and littered with intentions, they are ill-suited 
for analysis. In order to obtain an overall view over decades and a 
series of Five-Year Plans and to be better capable of coming to a 
succinct assessment, the following relies on a recent OECD study 
produced  in  cooperation  with  the  DRC  (Development  Research 
Centre) of the State Council of China.101 It facilitates a further reli-
ance on indicators and helps to assume an analytical perspective, 
unlike the Plans which tend to sum up numerous measures and 
policy suggestions for operational purposes. 

In  Figure  3  some  telling  long  run  environmental  trends  in 
China  are  depicted.  The  focus  is  on  industry,102  long  the  main 
culprit  of  environmental  damage  by  far.  One  finds  that  industry 
was (in 1990) overwhelmingly the principal generator of waste103 
and that is still the case in 2014. It has improved considerably in 
waste  water  discharges.  With  respect  to  SO2  Figure  2  confirms 
that industrial SO2 was stubbornly going up, with of course much 
larger volumes in 2014. The same goes for CO2 emissions, the high 
share coming from industry still increased and the volumes grew 
multifold by 2014. Although energy efficiency in China strongly 
augmented  over  the  2½  decades,  the  share  of  industrial  energy 
consumption nevertheless increased, mainly due to very high eco-
nomic growth. The GDP spoke shows that all this happens with a 
constant  share  of  industry  in  GDP  (of  some  40-plus%)  between 
1990 and 2014. 

101  M. Linster & C. Yang (2018)

102  Defined as manufacturing, mining & quarrying and energy. 

103  Even  though  agricultural  waste  was  not  included  in  the  statistics,  so  the  industrial 

shares are too high

Weinian Hu and Jacques PelkmansFigure 3: Environmental profile of Chinese industry

109

Source: Linster & Yang (2018, p. 13)

A complementary position about China in 2015 with 9 indica-
tors of green growth is provided in Figure 4. Most striking are the 
productivity  indicators.  Whereas  energy  productivity  is  around 
60% of the average OECD level, and carbon productivity at some 
45%, material productivity is only some 23% and overall produc-
tivity about one fifth of the OECD level. The yardstick used here 
is  multi-factor  productivity  adjusted  for  negative  environmental 
impacts. A telling illustration is the generation of $ 1000 of GDP: 
whereas  China  uses  180  ktoe  of  primary  energy  and  1930  kg  of 
materials other than energy, the OECD on average uses only 110 
ktoe of primary energy (some 60%) and only 420 kg of materials 
(just  23%);  moreoever,  the  OECD  emits  260  kg  of  CO2  from 
this  energy  use  and  China  540  kg,  more  than  double.  China  is 
beginning to transform its growth model, which relied on heavy 
industry  fueled  by  coal  and  consuming  huge  amounts  of  mate-
rials and resources, which some have characterized as ‘predatory 
exploitation’. It is not an exaggeration to conclude that this kind of 

EU/China Sustainable Development Cooperation: Towards Convergence?110

rapid growth (‘at all costs’) can only be sustained at the expense of 
environmental quality. Less noticed is the recent extreme reliance 
on imports of such resources: according to Linster & Yang, op. cit., 
China relied for more than half of its supplies of oil, gas, iron ore, 
copper,  lead  and  zinc  on  imports  in  2011  ;  by  2014,  China  con-
sumed nearly half the world’s metals, an extreme dependence that 
may well backfire and cannot possibly be a long-term solution for 
a single country when other emerging economies want to develop.  

Figure 4: China’s green growth indicators relative to OECD in 2015

Source: Linster & Yang, 2018, p. 15.

Weinian Hu and Jacques Pelkmans111

Although  energy  productivity104  has  steadily  improved,  it  is 
clearly below that of the BRIIS countries and even more below the 
OECD  average. Thus,  efficiency  gains  should  be  stepped  up  and 
coal must be capped and reduced urgently. The coal cap (though 
not  by  law)  by  2020  foreseen  in  the  13th  Plan  is  4.1  bn  tonnes 
which is unbelievably high (and even higher than the 3.1 bn tonnes 
obtained  in  the  simulation  done  on  the  late  1990s).  China  has 
long committed to lower its carbon intensity (CO2 emissions per 
unit of GDP, here 2005 level) by some 60-plus% (in 2030 and by 
40% in 2020) but when GDP rises very fast this measure remains 
completely unrelated to the negative externalities inside and out-
side  China!  The  13th  Plan  incorporates  the  intention  to  begin  a 
cap-and-trade system a la the EU’s ETS but the introduction fell 
behind schedule and the scope is limited to the electricity sector. 
On the 1st of February 2021, the formal beginning of the Chinese 
ETS was announced but the factual operation only occurred in the 
late summer. 

The  inefficiency  of  materials  consumption  is  extreme  and,  in 
turn, this has also led to very large waste flows, even though indus-
trial waste reduction has become more successful recently. In any 
comparison  between  countries  one  must  of  course  correct  for 
the industrial structure of China, as compared to countries with 
a strong reliance on light industry and services, but the contrast 
is  nevertheless  stark.  Thus,  (non-energy)  material  productivity 
of  China  is  comparable  to  Canada  (a  resource  country,  whereas 
China hardly is one) but only some 7% - 8% of that in the UK or 
Japan and some 15% or so of that in France or Korea! 

SO2  and  CO2  emissions  increased  in  China  both  absolutely 
and relatively between 1990 and 2014 (Figure 5). Official NOx data 
is only available as from 2006. The rise of CO2 and SO2 during the 
1990s was steep, implying that the situation in 2000 was already 
problematic.  Figure  5  (cf.  left  side)  clarifies  the  enormous  tasks 
China faces when combining future economic growth and decou-
pled  trends  of  CO2,  NOx  and  SO2.  The  high  SO2  level  of  2000 

104   Defined as how much GDP is generated from one unit of energy.

EU/China Sustainable Development Cooperation: Towards Convergence?112

was only returned to – after a surge – in 2012 and is since slowly 
declining, thereby beginning to reduce – after a lag – the acid rain 
problem  as  well  as  related  problems  of  air  quality.  The  trend  of 
NOx is sharply up and the 2015 level is still more than 60% higher 
than in 2000. The very rapid increase of CO2 emissions hugs the 
steeply  rising  trendline  for  energy,  which  is  predominantly  coal. 
This trendline is below the GDP trend (so, energy growth and CO2 
emission growth are decoupled from GDP growth) but that is little 
consolation when CO2 emissions, already from high initial levels, 
continue to increase so rapidly. We will come back to this subse-
quently.

Figure 5: China and the OECD: Environmental trends and economic 
growth

Source: Linster & Yang, op. cit., p. 24.

Air  quality  is  another  major  problem  in  China.  Since  2013 
(and even before) China attempts to impose air quality standards 
based on the high WHO indicators (much higher than EU stand-
ards).105 The high WHO threshold for fine particulates (2.5 PM) is 
35 ‘mu’g/m3, most OECD countries have much lower thresholds, 
hence, better air quality. In December 2016, however, the levels of 

105   For SO2, NO2, PM10, PM2.5, CO and O3.

Weinian Hu and Jacques Pelkmans113

PM 2.5 concentration in 30 Chinese cities were a multiple of these 
thresholds, between almost four times the high WHO threshold 
to as much as eight times.106 The health toll in terms of respiratory 
diseases must be quite high as various studies from the late 1990s 
show. It is useful to know that today’s studies suggest a similar or 
worse adverse impact.107

But there is good news too.108 The OECD environmental policy 
stringency  index  –  indicating  strictness  of  environmental  laws  - 
for China has sharply moved upwards since about 2010 and begun 
to approach OECD levels. However, the index does not measure 
enforcement. Environmentally related tax revenues have gone up 
very steeply in 2007/8 and stayed roughly at that level for the fol-
lowing  8  years,  close  to  the  OECD  revenues  as  a  share  of  GDP. 
Both appear to be a genuine break with the past: tougher rules and 
pricing  negative  externalities  had  long  been  called  for.  Another 
item  of  good  news  is  the  rapid  development  of  green  technolo-
gies.  Wind  and  solar  industries  are  booming  and  are  leading  in 
the world. They already produced some 15% of Chinese energy in 
2015. 

More and more recent ‘green’ indicators for China

The  numerous  data  about  the  last  two  decades  shows  –  for  the 
most part – a damaged environment and a serious neglect of cli-
mate policy in China. However, with Xi Jinping’s ‘ecological civili-
zation’ a new urgency is expressed. Also the Paris Agreement and 
the upcoming Biodiversity conference in Kunming strongly sup-
port such a new urgency. The following will therefore emphasize 
the most recent data and some background factors. However, since 
this material is data-intensive, only a summary can be presented 
here, and reference is made to Pelkmans (2021) for further detail. 

106  See Linster & Yang, op. cit., p. 25, Figure 14.

107  A prominent example is provided in a leading survey by Jin, Anderson & Zhang (2016, 
p. 2). A quote is telling: “The ambient air quality pollution in China has been estimated 
by the Global Burden of Disease to lead to 1.2 million premature deaths from one year’s 
(2010)  exposure  in  China,  and  in  multiple  studies  to  cause  annual  economic  losses 
equivalent to between 1% and 7% of China’s GDP”. 

108  Idem, pp. 29-31.

EU/China Sustainable Development Cooperation: Towards Convergence?114

Climate-related indicators

There is lingering doubt about China’s capacity or willingness of 
controling coal and CO2. The lingering doubt is underpinned by 
the newest three basic facts. First, China as the largest CO2 emitter 
on the globe added 2.5% over 2018 to its CO2 emission and again 
a small amount in 2019. The cuts realised by many countries – and 
certainly in the EU - are absent in China. Second, with coal being 
the  central  problem  in  Chinese  climate  policy  [acknowledged 
by China itself], 2018 saw some 30 GW of new coal-fired power 
capacity  added,  another  30GW  in  2019  and  a  planned  100GW 
under construction in 2020! Third, and often overlooked, Chinese 
(state-owned) banks continued to lead the world in financing new 
coal-fired  plants  all  over  the  world  (in  part,  under  the  Belt  and 
Road umbrella). These three indicators undermine the credibility 
of China’s climate mitigation commitments. What China does is to 
target a continuous reduction of coal as a share of primary energy: 
this works, as the 2016 share of 62% has fallen to 57.7% in 2019. 
But this lower share seems more the consequence of rapid growth 
in renewable energy than of a reduction of coal itself. 

On  the  other  hand,  an  opposite  trend  can  also  be  observed 
serving  the  climate.  First,  China  leads  the  world  in  renewable 
power  deployment,  and  in  2018  added  no  less  than  43%  of  the 
global  new  capacity.  An  increase  of  36%  is  expected  for  2019. 
Second, also in electric vehicles China leads the world: some 45% 
of all electric cars are found in China and no less than 99% of elec-
tric buses. Third, of the 9 nuclear power plants in the world which 
recently  were  for  the  first  time  connected  to  the  grid,  7  were  in 
China. Fourth, reforestation and forestation is actively pursued in 
China since the late 1990s, so much so that a considerably higher 
share of surface area is now covered by forests: from 16% of the 
country in 1999 to more than 22% in 2015. There are complaints 
about biodiversity in the newest forests but for the climate it is pos-
itive and it also works against floods (e.g. of rivers) and soil erosion 
as well as desertification. Thus, the first inference is that selective 
quotes on China can be misleading, either way. 

Weinian Hu and Jacques Pelkmans115

By  far  the  biggest  problem  for  China  and  for  the  rest  of  the 
world, hence also the EU, is the combination of coal in China and 
its  CO2  emissions.  The  consequences  have  been  very  worrying 
indeed. China in 2018 emitted much more in global shares than 
either its population or its GDP shares: some 28% of global CO2 
emissions. This compares with a 10% share of the EU, 15% for the 
US  and  only  7%  for  India.  Although  China  is  catching  up  in  its 
cumulative  emissions  ‘stock’  since  1750  (14%  in  2019),  the  US 
(26%) and the EU (22%) have emitted much more over time. How-
ever,  with  the  present  speed  and  CO2  volumes  China  will  soon 
arrive  at  similar  amounts,  leaving  less  room  for  other  emerging 
economies  to  grow  with  some  CO2.  Per  capita,  in  2019  China 
emits only 6.9 ton, with the US 15.1 ton; still, China has long sur-
passed the EU here (4.5 ton). 

Coal  has  proven  to  be  crucial  for  China’s  growth,  so  much 
so that its carbon intensity [ CO2 per unit of GDP] is by far the 
highest in the world: 0.37 (see Figure 6). For a long time, China 
has defended itself with the principle (in the UNFCCC treaty) of 
‘common but differentiated obligations’, implying that developing 
countries  –  given  their  historically  low  cumulative  emissions 
–  cannot  be  strictly  bound  when  trying  to  catch  up  in  terms  of 
development  with  OECD  countries.  Not  only  has  China  rapidly 
caught up with OECD countries, it also became aware of its own 
vulnerability for the effects of climate change and the impossibility 
of maintaining its strategy leaving other developing countries less 
room for CO2 emissions in the near future.

EU/China Sustainable Development Cooperation: Towards Convergence?116

Figure 6: Carbon intensity in the world: 2018

Source: Sandalow (2019)

With  the  Paris  agreement,  China  has  finally  set  a  date  for  its 
CO2 emission peak in 2030 - more than 3 decades after the EU 
– with several provinces adamant to peak even before. China pre-
sents an interesting argument for this timing: by 2030 China will 
have a p.c. income of roughly US$ 25 000, whereas the US peak 
occurred when p.c. income was around US$ 42k (in 2005) and the 
Japanese peak at US$ 37k in 2007.109 Behind the huge CO2 emis-
sions lies the Chinese coal issue. China’s incredible and uninter-
rupted growth hinged – in part - on cheap and massive availability 
of coal. How unique this ‘model’ is can be seen in Figure 7.                  

109   All incomes in PPP-2005 US dollars. Incidentally, there are still considerable uncer-
tainties  about  CO2  emission  data  from  China,  for  a  host  of  reasons  (see  Sandalow, 
2019, for a summary on pp. 22-24).

Weinian Hu and Jacques PelkmansFigure 7: World coal consumption 2018

117

Source: Sandalow (2019)

One can appreciate the early decades (say, up to the late 1990s) 
when the imperative of development was so pressing. But around 
the time of Chinese ratification of the Kyoto Protocol (in 2002), 
the awareness and strategic urgency of putting a limit on coal use 
seemed to be still absent. Indeed, between 2000 and 2013 Chinese 
use of coal tripled (!!) from an already high level. After 2013 there 
was an variable pattern of more modest growth. Even when 90% of 
the 100 largest coal-fired power plants are ‘ultra-supercritical’ (i.e. 
highly efficient), the sheer quantity is a primary issue, and so was the 
reticence about ‘pricing in’ the negative externalities. Today there 
are ambiguous signals from China, both about new capacity added 
and about deliberately scrapping new and planned capacity110. As 
noted, what is in the making is domestic carbon trading. For some 
7 years China has been experimenting with its own ETS, helped by 
EU ETS experts. It is operatonal since the summer of 2021, after 
a formal start in February. In any event, carbon will be priced and 
this is badly needed. Coal is already taxed locally but how effec-
tive  this  is  is  unclear.  For  all  the  enormous  efforts  in  renewable 
energy (including nuclear, ‘clean’ in CO2 terms) China has under-

110  For details see Sandalow, op. cit., pp. 62-65. In any event, as noted above, coal capacity 

has increased both in 2018 and 2019, and the same is likely for 2020. 

EU/China Sustainable Development Cooperation: Towards Convergence?118

taken, and the rapid increase in imported LNG, provincial officials 
still  have  incentives  to  approve  new  capacity  (as  growth  matters 
most, and coal brings in tax revenue). At the same time, renewable 
energy grows rapidly (as Figure 8 in Pelkmans [2021] shows).

The 13th Plan aims at 15% non-fossil energy in primary energy 
consumption in 2020 and 20% in 2030. This is realistic, so it seems. 
At  the  same  time,  a  series  of  other  measures  are  taken  about 
capacity, offshore wind, innovation, reducing curtailment  111 and 
scaling up distributed solar generation. The old and generous feed-
in-tariff  system  is  being  dismantled  and  auctions  take  its  place 
instead. Costs have fallen so much that electricity can soon be sold 
at prices equal to or lower than coal-based power, so grid parity 
can be pursued. This is especially the case for solar. 

Air and water quality

In the EPI 112 of 2018 (where the overall ranking of China is 120 out 
of 180 countries) China occupies place no. 177 (of 180) for air pol-
lution of SO2 and NOx, a record far below its standing in terms of 
development. Why China has considerable inhibitions in radically 
cutting such emissions which are strongly disliked by the people 
113 and lead to very large human health costs, is hard to discern. Is 
it because growth would be a little lower with less massive reliance 
on coal ? Is it because China already imports so much energy and 
its import dependence would rise once more ? Is it because of the 
lobbying power of the mining and electricity industry? It is only 
recently that president Xi has changed track and actively promotes 
‘ecological civilization’ precisely because that is what people want. 
In terms of treaties and of the UN SDGs, the EU might perhaps 
raise these issues in bilateral exchange, but it is more than obvious 
that the overwhelming interest of the Chinese people themselves 

111  Temporary  interruption  (hence,  curtailment)  of  electricity  flows  from  renewable 

sources, as the grids cannot handle them

112 The EPI [=Environment Protection Indicator] is co-produced by Yale’s Environment 
Institute and the World Economic Forum. It is a composite indicator with 16 sub-indi-
cators, beginning in 2006. The EU/EEA countries typically lead the ranking. 

113   For polls, see Sandalow, 2019. 

Weinian Hu and Jacques Pelkmans119

would be expected to be the guide for Chinese policy-makers and 
yet it was not really done seriously for a long time. A comparison 
of indicators for the mid-1990s and around 2015 points to 5 telling 
items:

i.  Air pollution contributes to 1.6 million premature deaths 

(so, particulates and other)

ii.  Some 500 million residents in Northern China lost more 
than  2.5  bn  years  of  life  expectancy  due  to  air  pollution 
from coal burning

iii.  Almost  100  bn  people  suffer  from  chronic  obstructive 
pulmonary disease, with air pollution suspected to be the 
leading cause

iv.  Deaths from cardiovascular and pulmonary disease (in 272 
cities) are closely related to very fine particulates (PM 2.5)

v.  PM 2.5 and ozone emissions (from 6 sectors) cause roughly 
1.1 million premature deaths with a cost of some US$ 38 
bn per year.  

The  damage  caused  by  widespread  water  pollution  and  the 
problematic quality of drinking water or even water for irrigation 
is great and widespread. In combination with the structural water 
shortage the country is suffering from, the challenges for a strategy 
of remediation of water in China are no less than daunting. A sum-
mary of the crucial shortcomings will be provided here but this is 
done in analytical and policy terms. However, such terms hardly 
convey  an  appropriate  picture  of  the  practical  issues  and  fears 
of  the  citizens  114.  Moreover,  the  water  imbalance  inside  China 

114  Confronted with numerous ‘black and odorous’ waters (in cities), greenish lakes and 
rivers due to eutrophication, some rural communities refusing to eat the agri-products 
they produce and sell due to the polluted irrigation water they use, numerous creeks 
and small rivers ending up in the big rivers in China (like the Yangtze River) which no 
longer carry water and the anxiety of citizens and workers along big rivers knowing 
of thousands of unreported sewage outlets spilling straight into the river or lakes. In 
some areas of China, chronic exposure to water pollution has led to the emergence of 
hundreds of ‘cancer villages’, where rates of tumours linked to water pollution far ex-
ceed the national average. Even in relatively well-off cities like Shanghai, many citizens 
filter or boil water because of lack of trust and anxiety about old and leaking water pipe 
networks.

EU/China Sustainable Development Cooperation: Towards Convergence?120

is  structural  and  profound,  essentially  caused  by  climatic  differ-
ences  of  precipitation.  But  it  worsens  the  problem  considerably: 
Northern China covers 64% of the territory, 46% of the population 
and 60% of the cultivated areas, yet it has only 19% of the national 
water resources 115. China has attempted to remedy this structural 
deficit by two huge South-North connections but the flows are so 
large that there are costly implications for the source areas and it 
is still not enough, let alone, if urbanisation continues unabated. 

An authoritative and independent116 China Water Assessment 
by the ADB (2018) identifies seven principal water issues, some of 
which are interdependent:

a.  Water shortage, caused by natural insufficiencies but also 
low water use efficiency; this shortage is worst in the Hai 
river area, and in those of the Liao and Yellow rivers.

b.  Severe water pollution, caused by untreated pollutant dis-
charge  (often  having  exhausted  the  assimilative  capacity 
of water bodies); eutrophication of some lakes and reser-
voirs has not reduced much and groundwater pollution is 
spreading.

c.  Aquatic ecosystem degradation, often in advanced stages, 

some perhaps beyond the option of restoration

d.  Weak  water-related  disaster  mitigation  capacity,  overbur-
dened  by  frequent  floods  and  droughts  (probably  wors-
ened by industrial and infrastructural activities)

e.  Low water-use efficiency ; efficiency is improving recently 
but much needs to be done about leakage rates of city water 
supply pipeline networks (as high as 15%), the (too) high 
water use per unit of industry value-added (as well as by 
citizens) and low farmland irrigation efficiency

f. 

Insufficient water services, especially in the management of 
water supply and wastewater services; only 70% of surface 

115   ADB (2018), p. xiii

116   But in cooperation with the Ministry of Water Resources

Weinian Hu and Jacques Pelkmans121

drinking  water  meet  the  national  water  quality  standard; 
urban  wastewater  management  is  poor  but  rural  waste-
water collection and treatment is weaker still. 

g.  Weak water governance, given ineffective water legislation 
for decades, poor enforcement, little coordination between 
jurisdictions,  limited  public  involvement  in  water  affairs 
and – a critical point, too often conveniently ignored – the 
absence or at best hesitant introduction of price signals or 
taxation. A lot of water is wasted for the latter reason alone, 
in a country that already has so little access to water. 

Altogether, water pollution and overuse are a serious hindrance 
of development and , worse, a major health issue causing prema-
ture deaths of many and illnesses for others. Producing cheap at 
such health costs is also plainly distortive globally and the same 
goes when generating such environmental damage. 

Thus,  China  has  a  very  serious  water  problem  for  decades. 
This problem is in fact a combination of water scarcity (which is 
most severe in the North), serious water pollution of rivers, lakes 
and canals in urban areas, drinking water quality due (apart from 
pollution) to ageing underground pipe networks and huge ques-
tionmarks  about  groundwater  and  deep  ground  water  sources. 
There were long considerable governance issues, too, in particular 
for  interjurisdictional  issues  as  well  as  enforcement  capacity. 
The  U-turn  came  in  2013  with  the  preparation  of  the  13th  Five 
Year  Plan,  the  ‘Water  Ten  Actions’  Plan  of  2015  and  the  period 
of drafting the 2017 Water Pollution and Control Law. The ADB 
(2018)  water  assessment  of  China  is  closely  associated  with  the 
new ‘water security’ strategy and it recommends five goals: acceler-
ated ‘green economy’, modernizing water infrastructure, advanced 
water services, improved aquatic ecosystems protection and reha-
bilitation,  and  modernized  water  governance  and  management 
systems. This U-turn alone, if credibly implemented, would bring 
China much closer to strategic perspectives on water in the light 
of sustainable development held in the EU. There are six catego-

EU/China Sustainable Development Cooperation: Towards Convergence?122

ries  of  surface  water  quality,  the  distribution  of  which  is  shown 
in Figure 8 for July 2019.117 The worst are grade V (not for human 
consumption, or swimming or even irrigation, perhaps for basic 
industrial  cleaning)  and  ‘worse  than  grade  V’  –  useless  for  any-
thing,  together  some  11.7%  of  surface  water.  Even  the  16.6%  of 
grade IV is restricted in use for health and safety. Drinking water 
is supplied from grade I and II water, some 42.1%. 

Figure 8: Distribution in China of surface water by water quality, in 
July 2019

Source: Statista.

However, China did invest in reducing wastewater discharges 
ever since (say) 2000 (the 10th Plan), especially those from industry. 
Figure 3 above shows a significant cut in industrial wastewater dis-
charges up to 2014. Given the initially weak official data, a detailed 
contribution by Ma, Zhao et al (2020) showing the improvement 

117   See www.statista.com/statistics/1064877/china-share-of-surface-water-by-quality 

Weinian Hu and Jacques Pelkmans123

of surface water quality between 2003 and 2017  118 demonstrates 
the  great  strides  China  has  made  over  one  and  a  half  decades. 
Therefore, the U-turn in water policy since 2013-15 appears more 
of a strong acceleration than a completely new strategy.

MEE reported both good results and stronger enforcement in 
January  2020  119.  Good  quality  surface  water  increased  3.9  per-
centage  points  compared  to  2018  and  severely  polluted  water  is 
down by 3.3 percentage points. MEE announced that no less than 
90% of bodies with black and odorous water will soon be curbed 
in targeted areas. Enforcement has become more credible: sewage 
outlets  were  detected  and  inspected  with  sonar,  infrared,  aerial 
surveys  and  on-site  inspections.  As  a  result,  more  than  60  000 
sewage outlets were detected along the trunk and branches of the 
Yangtze river and the Taihu lake, some 30 times (!) those reported 
by  local  authorities.  Another  19000  were  found  along  the  coast 
of the Bohai sea, some 25 times what was reported. It seems that 
enforcement is finally taken serious. 

The  World  Bank  (2018),  whilst  being  complimentary  about 
the U -turn as discussed and the massive investments undertaken, 
is  nonetheless  rather  critical  about  water  governance  in  China. 
A  prominent  governance  and  policy  issue  is  that  a  lot  of  water 
is  wasted.  Chinese  people  and  many  of  its  firms  do  not  seem  to 
appreciate the value of water as long as the price is too low. Water 
pricing is still sensitive 120 but critical for pre-empting the wasting 
of water. The MEE realizes this and even advocates - and experi-
ments with - the trading of water rights. The World Bank notes that 
other upper-middle-income countries use far less water per unit of 
value-added. Also for irrigation such countries are far more effec-
tive  with  a  unit  of  water  for  the  land.  Similarly  the  preservation 
of  eco-systems  has  been  dramatically  disregarded.  Thus,  natural 

118 The authors have used time-series of monthly mean concentrations of COD, NH+4-N 
and dissolved oxygen (DO) derived from site-level measurements across China as well 
as 10 major river basins. For other technical and statistical details, see Ma, Zhao et al, 
op. cit. 

119  See 

https://news.cgtn.com/news/2020-01-17/China-s-good-surface-water-quality-

rose-in-2019-ecology-ministry 

120  Water was free of charge until around 1980. 

EU/China Sustainable Development Cooperation: Towards Convergence?124

ecological systems such as wetlands  121, coastlines, lakes and riv-
erbanks keep decreasing in size for decades. More generally, land 
affected by soil and water erosion has reached some 31% of China’s 
total land area. The governance of interjurisdictional water issues 
is  far  too  weak  and  uncertain.  Better  integration  across  policy 
areas and between regions or basins is badly needed. 

One potentially very costly and complex issue is deep ground-
water pollution. So far, in China it is often attempted to drill for 
deep  groundwater  (typically  down  to  100  m)  precisely  so  as  to 
avoid surface or shallow groundwater. Even the MEE holds, so far, 
that  deep  groundwater  is  safe.  However,  in  Curell  (2017),  some 
disturbing  evidence  shows  otherwise.  In  scrutinizing  37  deep 
aquifers for the presence of nitrate 122, only one had nitrate below 
background levels and several had worryingly high levels of con-
taminant,  besides  indications  about  a  range  of  other  pollutants. 
The author fears that only a fraction of the 4 million wells drilled 
in Northern China in the 1960s and 1970s are registered . Many of 
them leak or allow ‘bypass flows’ from the surface to much deeper 
levels.  The  scale  of  this  issue  and  the  costs  of  remediation  may 
well be comparable with that of soil pollution in countless sites i.e. 
massive and the liability question might be one way to reduce the 
problem. 

Soil pollution in China and the new strategy

Soil  pollution  has  long  been  the  cinderella  of  Chinese  environ-
mental  strategies.  It  is  complex  and  technical  to  provide  a  truly 
satisfactory exposition. We merely provide the core provisions of 
the 2018 Law on Soil Pollution Prevention and some of its ramifi-
cations in Box 8. 

121   The Ramsar Convention (Table 1, item 6) aims to protects wetlands and China has 

ratified it but it merely applies to ‘wetlands of international importance’. 

122   Nitrate is widely measured, easy to detect and highly water soluble. 

Weinian Hu and Jacques Pelkmans125

Box 8: Chinese U-turn in soil pollution, prevention and control

Soil  pollution,  though  less  ‘visible’  or  noticeable  than  air  or 
water pollution, is very severe in China. In different degrees, no 
less than one fifth of farmland in China is polluted and for the 
country as a whole it is still some 16%. Laws supposed to prevent 
or reduce it were scattered and had little ‘teeth’. Enforcement was 
weak and unsystematic, and data was incomplete and of dubious 
quality.  Moreover,  potential  exposure  to  soil  pollution  –  often 
indirect via water or agri-food or delayed by decades – is highly 
uneven,  differing  between  regions  dependent  on  industrial  or 
mining activities or the type of agriculture, as well as the local 
availability of water, in itself a major problem in China too. The 
2018  law  is  a  genuine  U-turn  but  the  costs  and  who  will  pay 
are  daunting  obstacles,  even  when  enforcement  were  well-in-
tended. The law went into force in 2019 and it is therefore too 
early to measure results. One immediate consequence is a mas-
sive survey of soil pollution in order to get better, more reliable 
data with a much more complete coverage of China. The plan is 
to obtain data from over half a million sites or areas. The main 
inorganic  pollutants  are  eight  heavy  metals:  cadmium,  nickel, 
arsenic,  copper,  mercury,  lead,  chromium  and  zinc.  Cadmium 
is the worst case with 7% of Chinese land polluted, nickel 4.8%, 
arsenic 2.7% and e.g., mercury 1.6%. 

To understand the meaning of the new law (see Li, Liu, Lin, 
Liu & Xie, 2019), one should realize that it is based on the 2016 
Action  Plan (same  title) which seeks to  build a systematic soil 
pollution  and  control  management  system  including  this  law, 
actions plans, regulations (with greater detail), risk control rules 
based on standards and technical guidelines. In addition, the law 
is to be understood in close relation with several other laws on 
agriculture,  grassland  and  agricultural  product  quality.  Targets 
are set for 2030: the safe utilization ratio of contaminated agri-
cultural land and contaminated sites should exceed 95%. 

EU/China Sustainable Development Cooperation: Towards Convergence?126

This new and much more serious approach is of great impor-
tance for Chinese citizens (e.g., in case of building sites), workers 
in many cases, farmers and animals, but it has also great signifi-
cance for the eventual ‘safe’ reputation of food both directly (e.g., 
rice, etc.) and via water pollution through leakages. The poten-
tial costs of this approach are staggering, one estimate being $ 
1.3 trillion merely for the period 2016 – 2020 123, which is some 
10%  of  China’s  GDP!  Insofar  as  the  products  produced  are  or 
were ending up in China’s exports, either directly as final ones 
or serving as intermediate ones, with these colossal amounts of 
money one can pose the query, in earnest, whether such prod-
ucts  have  not  been  or  are  still  not  artificially  cheap,  distorting 
international trade for decades. Whilst the health and consumer 
protection as well as occupational safety of the Chinese people 
are of course the prime rational for the clean-up, it is at the same 
time a powerful argument bilaterally and multilaterally for close 
cooperation with China to foster convergence on the approaches 
to fighting soil pollution. 

Where is China today with air quality? 

China’s record for air pollution – with considerable negative health 
effects for the population – has long been extremely problematic. 
China  simply  did  not  make  policy  choices  protecting  its  people 
and the environment. In 2013, in the run-up to drafting the new 
Air Pollution Law, a ‘war on air pollution’ was announced, leading 
the  13th  Environmental  Five  Year  Plan  (2016-2020)  to  be  more 
ambitious for air pollution. Although the overall focus was on 6 
pollutants, the two prime cases are SO2 and PM 2.5 (very fine par-
ticulates). 

Myllyvirta  (2020)  has  published  the  newest  data  for  2015  – 
2019 for the 6 pollutants, based on a very close tracking.124 Based 
on national averages, the results are shown in Table 2. During the 

123   See https://www.iisd.org/library/financing-models-soil-remediation-china (2018)

124   The independent CREA (Centre for Research on Energy and Clean Air) in Finland 
uses data collected on an hourly basis by Chinese agencies and published on govern-
ment websites. Lauri Myllyvirta leads this CREA work. 

Weinian Hu and Jacques Pelkmans127

four  years  of  data  available,  the  results  are  broadly  spoken  good 
to very good indeed. The perhaps most inimical pollutant PM2.5 
has fallen by 28% on average and SO2 even with no less than 56%. 
Also PM10 and CO have gone down by 27%. With NO2 the fall is 
a mere 9%, so it is still considerably above the level in 2000. And 
ozone has increased with 11%, which will have to be addressed. 

Table 2: Recent air pollution trends in China: 2015 – 2019  
(% change)

PM2.5

PM10

NO2

SO2

CO

-28%

0% 
(winter 
19)

-27%

-9%

-56%

-27%

-3% (winter 
19)

0% (winter 
19)

-12% 
(winter 
19)

-6% 
(winter 
19)

Ozone 
(O3)

+11%

n.a. 
(winter 
19)

Note: unit of measurement ‘mu’g/m3 ; national averages; ‘winter’ refers to October 
thru December 2019 and the% represent the percentage change comparing these 
with October- December 2018.

There are two serious caveats with this positive picture. Both 
caveats have to do with how China has tackled this ‘war on air pol-
lution’. First, there is evidence of shifting ‘pollution havens’ inside 
China. Studying the air pollution at provincial level, it is apparent 
that  there  are  considerable  differences  in  performance  between 
provinces, often coupled with increases in e.g. provincial steel and 
coal  output  in  the  same  period  125  or  indeed  a  shift  from  winter 
with less output to summers with higher output.126 In big regions 
like  greater  Shanghai  and  greater  Beijing,  coal  for  heating  has 
been aggressively replaced by natural gas and electricity, and this 
has led to real cuts in pollutants. However, the rest of China wit-
nessed increasing output of e.g. pig iron and cement but above all 
non-ferrous metals. Second, China has strongly relied on an ‘end-
of-pipe’ approach and this quickly runs into limits if meanwhile 

125 The so-called ‘coal bases’ are targeted to have coal industry expansion !

126  Winters show worse performance due to heating, often still on a coal basis. For data, 

see Myllyvirta, op. cit. 

EU/China Sustainable Development Cooperation: Towards Convergence?128

coal remains as important or even augments. It has been done with 
denitrification  and  desulpherization  filters  or  equipment.  This 
works for SO2 and PM2.5, but is much less effective for NO2 and 
ozone. Moreover, when filters are employed, they have a level-re-
duction effect once but if coal growth is not controlled or priced/
taxed, sooner or later pollution levels will go up again. Rather than 
capping coal output, China seeks to apply technology as a solution 
but this runs into considerable limits. It should also be noted that 
ozone is dangerous for the lungs (but in different ways that is also 
true for PM2.5 and NO2) and is a result of industrial, transport 
and power plant emissions 127, but hard to filter out.

Finally, to put the recent pollution levels in China into perspec-
tive, Figure 9 compares PM2.5 levels of 2017 in China with those 
in the OECD, and shows the progress since 2000. Despite the clear 
improvement  in  China,  the  difference  is  still  enormous.  In  the 
EU a level of up to 10 ‘mu’g/m3 is seen as acceptable given WHO 
guidelines. Even with the progress reported including 2019, much 
of  China  still  lives  with  very-fine-particulates  pollution  of  more 
than four times the high WHO guidelines. The Chinese standard 
of 35 ‘mu’g/m3 often used in official publications is far above what 
the WHO recommends and can therefore only serve as an interim 
mile stone. 

127   Ground-level ozone pollution is created when NOx and VOCs react in the presence of 

sunlight. 

Weinian Hu and Jacques PelkmansFigure 9: PM2.5 levels in China and the OECD, comparing 2000 and 
2017

129

Note: Source OECD (2019, p. 73)

Answering the first research question of the green pillar

The first research question is whether and to what extent indicators 
reveal that China and the EU converge in terms of environment 
and climate mitigation. The relevant period is from 1995 to 2020. 
The answer to this double query has to start with the initial dete-
rioration in China of practically all indicators of environment and 
climate. The sharp contrast with the EU in the first decade or 15 
years of this period, or for e.g. GHGs even longer, amounts to a 
clear divergence, not convergence. At least for some years and in 
the  climate  realm  for  most  of  the  period,  indicators  were  wors-
ening  despite  (1)  EU/China  cooperation,  projects,  programmes, 
transfer  of  technology  (e.g.  CDM  under  Kyoto)  and  Dialogues, 
and (2) increasingly firm Chinese policy intentions and strategies. 
One explanation is paramount: exceptional economic growth ‘at all 
costs’, driven by the desire to move the country towards developed 
economy status and the determination to lift hundreds of millions 
out  of  extreme  poverty  first.  Indeed,  there  was  no  such  thing  as 
‘linear convergence’ in indicators, not at all. The pattern seemed 
more like a U-curve. Initially divergent trends changed over time 

EU/China Sustainable Development Cooperation: Towards Convergence?130

in a complicated fashion, dependent on the type of environmental 
issue. In other words, China began to converge only after first let-
ting both environment and climate issues go out of hand.

This  deterioration  or  slippage  differed  between  aspects  and 
between the two main classes of policy: climate and environment. 
The by far worst performance was linked to the use of coal. The 
coal addiction seems to have been a conscious choice, presumably 
also influenced by industrial pressures as well as regional lobbying. 
The enormous negative externalities this caused over time, espe-
cially for human public health, not to speak of the broader costs 
to society, were first ignored and later treated with little more than 
lipservice.  When  interventionist  policy  became  unavoidable,  the 
options  favoured  were  in  the  technological  domain:  end-of-pipe 
techniques such as filters for denitrification and desulpharization, 
and the aggressive development of renewables in electricity gen-
eration. What was carefully avoided for a long time was both the 
use of price instruments for coal (say, taxation or an ETS China 
style) and the quantitative restriction of coal output. As noticed, 
the  end-of-pipe  techniques  (first  avoided  because  of  the  costs) 
have been successful recently, as far as they reach. They will not 
do  for  deep  further  cuts  of  SO2  and  NOx  emissions.  Moreover, 
the  taboo  on  taxation  and  on  the  rise  of  coal  prices  has  finally 
been removed. Forms of pricing of negative externalities and cuts 
of  coal  output  are  bound  to  be  the  only  truly  effective  routes  to 
live  up  to  the  Paris  Agreement  commitments  in  the  longer  run. 
Nevertheless,  in  climate  policies,  indicators  for  CO2  and  some 
other GHGs (e.g. ozone) begin to show declining growth but still 
growth despite the already extremely high level. The peak in CO2 
has not been reached yet. China’s insistence that carbon intensity 
is falling rapidly should be acknowledged but is little consolation 
when CO2 emissions – already the largest in the world – are still 
increasing.  Air  pollution  is  close  to  the  worst  in  the  world  and 
only improved since 2013 – 2015. Water standards slowly begin to 
improve as well, be it still too selectively. Water pollution has been 
ignored or belittled for a very long time, although investments in 
infrastructure and new legislation and better enforcement helped 

Weinian Hu and Jacques Pelkmans131

somewhat.  Waste  is  now  being  addressing  more  effectively,  after 
serious investments in treatment. 

On the other hand, China is very active in sustained reforesta-
tion, with strong results, and in the swift expansion in renewables, 
meanwhile generating some 15 % of electricity in 2020. In electric 
vehicles and lithion batteries it has become a world leader. Expan-
sion in nuclear energy also helps to support climate policies. 

Therefore, on the basis of the indicators dealt with so far it is 
premature to conclude that research question 1 can be answered 
in the confirmative that is, indicators showing convincingly a trend 
towards convergence between the EU and China. One can observe 
that  China  has  stopped  initially  divergent  trends  and  bent  them 
into a converging direction but a firm conclusion would need still 
more recent data and clear targets for 2025 or 2030 that are actu-
ally met. The most recent indicators should also be read in con-
junction with the transformation of China’s strategies and policies, 
which is what the second research question is about.

4.2 The social dimension of China’s transformation to a 
market economy

In the social pillar the first research question is whether China has, 
when  transforming  the  economy  from  a  centrally  planned  one 
without  private  ownership  to  a  market  economy,  addressed  the 
respect  for  international  labour  standards  and  social  protection 
based on individual entitlements?

There is a sharp contrast between the two aspects of the ques-
tion. With respect to core ILO Conventions, China did not take 
any initiative to sign and ratify four of the eight Conventions, nei-
ther  during  the  crucial  1990s  nor  later.  It  never  ratified  the  two 
conventions  forming  the  bedrock  of  labour  union  activities  all 
over the world and of course of the ILO, namely on the freedom 
of association (C87) and on collective bargaining (C98), nor those 
on forced labour and its abolition (C29 and C 105). Until the pub-
lication of the draft CAI treaty (see further) late December 2020, 

EU/China Sustainable Development Cooperation: Towards Convergence?132

there had been no clear sign that China was considering to ratify 
the  two  conventions  on  forced  labour.  This  does  not  mean  that 
China  did  not  act  in  these  domains  at  home  but  rather  that  its 
laws were enacted without any interest in being in line with such 
authoritative ILO conventions. We first elaborate China’s position 
in its domestic laws with respect to the freedom of association and 
collective bargaining, then address social protection, and end with 
a discussion of the severe social drawbacks of ‘growth at all costs’.

Freedom of association and collective bargaining in China 

Freedom of Association and Protection of the Right to Organise 
Convention  (no.87)  (hereunder  ‘freedom  of  association’)  and 
Right to Organise and Collective Bargaining Convention (no.98) 
(hereunder  ‘collective  bargaining’)  are  two  of  eight  fundamental 
conventions that the ILO has urged its members to ratify ‘at the 
earliest possible stage’.128 

‘Freedom  of  association’  refers  to  the  right  that  workers  and 
employers should enjoy to form and join organisations of their own 
choosing. This right is based on the premise that ensuring workers 
and employers to have a voice and are represented is essential for 
the  labour  markets  but  also  of  overall  governance  structures  in 
a  country,  since  non-state  actors’  participation  in  economic  and 
social  policy  is  seen  as  being  at  the  heart  of  democracy  and  the 
rule of law.

‘Collective  bargaining’  is  regarded  as  a  key  means  through 
which  employers  and  their  organisations  and  trade  unions  can 
establish  fair  wages  and  working  conditions.  Such  working  con-
ditions  include  working  time,  training,  occupational  health  and 
safety and equal opportunities between women and men. Ensuring 
the right for ‘collective bargaining’ is equally a means which pro-
vides the basis for sound labour relations, since it may address the 
rights  and  responsibilities  of  the  parties,  thus  ensuring  harmo-

128   International Labour Organization (2019), Guidance on Ratification, p.3. 

Weinian Hu and Jacques Pelkmans133

nious and productive labour relations in workplaces.129 

China is one of the few ILO members not having ratified the 
two fundamental conventions. In this regard, the unique domestic 
situations in each country determine whether a government would 
support a ratification, although ILO members are expected to not 
only to support the labour rights advocated by the ILO, but also 
ascertaining  those  rights  in  national  legislation.130  For  example, 
the United States guarantee all the ILO labour rights in its national 
legislation, but the Congress does not want to be evaluated by an 
international organisation – the ILO – on certain domestic labour 
issues. The United States so far has only ratified two ILO core con-
ventions on Abolition of Forced Labour and Worst Form of Child 
Labour. 

New  Zealand  ratified  so  far  six  ILO  core  conventions.  The 
country has not ratified the Convention on Freedom of Associa-
tion and Collective Bargaining, nor the Convention on Minimum 
Age,  although  the  rights  per  se  are  protected  by  New  Zealand’s 
domestic  labour  legislation.  The  government  has  chosen  not  to 
ratify the conventions and the opposition is from the business, due 
to a domestic traditional perception. On the former, the issue is 
the scope of lawful strike action. The New Zealand’s Employment 
Relations Act only guarantees the right to strike on the grounds 
of collective bargaining, health and safety. On the latter, Business 
New Zealand, the largest business advocacy body in the country, 
argues that there is a de facto minimum age for full-time employ-
ment; incorporating it formally in legislation would contrast with 
the traditional belief that the employment of younger persons ben-
efit young people by teaching them valuable work skills and ensure 
that children are looked after in at least some of their out of school 
hours through gainful employment. Therefore, ratifying the Con-

129   For detailed explanations of the two fundamental rights, see Freedom of Association 
and Collective Bargaining (Decent work for sustainable development (DW4SD) Re-
source Platform) (ilo.org).

130   For example, New Zealand, Singapore and the United States have not ratified the Free-
dom of Association and Protection of the Right to Organise Convention. The United 
States have not ratified the Right to Organise and Collective Bargaining Convention. 

EU/China Sustainable Development Cooperation: Towards Convergence?134

vention  would  appear  to  ‘achieve  little,  but  New  Zealand  would 
open up to a pointless challenge’.131 

Some might argue that – although not ratified – those rights 
under  the  two  ILO  fundamental  conventions  are  guaranteed  by 
the various labour laws in China. In this context, stemming from 
the  dual-identity  of  the  All-China  Federation  of  Trade  Unions 
(ACFTU), China’s only trade union organisation, a major conten-
tion is who the ACFTU actually represents, workers or the gov-
ernment and the Party? Or, is the ACFTU a non-state actor? If the 
ACFTU represents the workers, then the participation of non-state 
actors, i.e. workers, in economic and social policy is enforced – in 
both freedom of association and collective bargaining. After that, 
since  the  Chinese  government  has  unequivocally  declared  that 
it has no intention to go for a ratification132, the question would 
become a de facto, rather than a de jure, enforcement, similar to 
the case in New Zealand. In this regard, China has stated that all 
the relevant rights concerning freedom of association and collec-
tive bargaining are protected, de facto, by the Constitution (Article 
35) and the various labour laws, for example the Labour Law, the 
Labour Contract Law, and the Law on Mediation and Arbitration 
of Labour Disputes. Another point is whether representation is an 
authentic act? It would be but only if workers are effectively free to 
state and act likewise, that certain groups of workers can start their 
own union, or at least can freely express that they do not want this 
union. In addition, (a la Hirschmann), when first being a member 
in the ACFTU, there ought to be “exit or voice”, they ought to be /
feel completely free to raise their voice [opposition; disagreement] 
and equally to commence their own union, or challenge the lead-
ership of the ACFTU. In other words, representation is far more 
than just a formal act! However, if the ACFTU represents the gov-
ernment, it means workers’ interests are not at all represented by 
workers. Then, it won’t be possible to conclude that workers’ rights 

131  For  details,  see  https://www.ilo.org/declaration/follow-up/annualreview/archiveof-

baselinesbycountry/WCMS_DECL_CL_NZL/lang--en/index.htm. 

132  See  https://www.ilo.org/wcmsp5/groups/public/---ed_norm/---normes/documents/

genericdocument/wcms_752614.pdf.

Weinian Hu and Jacques Pelkmans135

within the meaning of the two fundamental conventions are fully 
guaranteed, in joining organisations of ‘their own choosing’ and in 
negotiating wages and working conditions. 

The All-China Federation of Trade Unions (ACFTU), China’s 
only trade union, is simultaneously tasked to represent the inter-
ests  of  workers133  and  of  government  and  the  Communist  Party. 
For example, based on its Constitution, ‘loyalty to the Party’ and 
‘service to the workers’ are juxtaposed as the ACFTU’s mission.134 
In  any  case,  it  is  not  clear  how  elections  are  organised  so  that  a 
worker would be qualified to be an ACFTU member to represent 
workers’ interests and to fight for their rights. Becoming an ACFTU 
member when one is young looks more like a career choice; if one 
is older, then, that would likely be a ‘reward’. The sense of election, 
meaning  competing  among  a  few  candidates,  in  order  to  hold  a 
union post, does not exist.135 But, by definition, a trade union is 
an organisation of workers, not of a political party, even though a 
party may pride itself of protecting workers’ rights and improving 
their working conditions. In a similar vein, the ACFTU has been 
expected  to  be  active  in  the  advocacy  and  representation  of  the 
employees’ interests, and, in the meantime, to be more responsive 
to the needs of society for social stability136 amidst China’s rapid 
economic  development.  These  two  interests  are  not  the  same, 
hence could collide sometimes. Moreover, according to the ACF-
TU’s “five faceted and unified” model of rights protection, adopted 
in 2007, it ranks the leadership of the party as the most important, 
while participation by the workers comes at the very bottom of the 
list.137 Indeed, there is a legitimate question as to who and what the 

133  In accordance with Article 2 of China’s Trade Union Law, the All-China Federation of 
Trade Unions and all the trade union organizations under it represent the interests [As 
above, you cannot “declare”this by law; is a choice of the workers] of the workers and 
staff members and safeguard their legitimate rights and interests. For details, see http://
english.court.gov.cn/2016-04/14/content_24528284.htm. 

134  See the Preamble of the Constitution of the ACFTU, available at: http://acftu.workercn.

cn/27/201810/28/181028081156082.shtml. 

135   See also Wang (2008)

136   Brown (2006)

137   Bai (2008)  

EU/China Sustainable Development Cooperation: Towards Convergence?136

ACFTU serves? 

The upshot is that the dual identity of the ACFTU, and its man-
date requiring it to defend (possibly) conflicting interests simulta-
neously, casts serious doubt on how effectively Chinese workers’ 
rights of freedom of association and collective bargaining are pro-
tected. 

Freedom of association

Workers’ right of ‘freedom of association’ is guaranteed by China’s 
Trade Union Law, which  states  that 25  or  more employees must 
be allowed to form an ‘Enterprise Trade Union’; if the number of 
employees falls short of the required 25, they have the option of 
forming a ‘basic-level’ trade union committee.138 However, as the 
ACFTU is the only trade union organisation in China, the workers’ 
right of joining ‘organisations of their own choosing’ has lost its 
meaning as there is nothing to choose.  

Moreover, as underlying the right for ‘freedom of association’ 
is  the  notion  of  non-state  actor’s  participation  in  economic  and 
social policy, a recurring question is whether the ACFTU is a non-
state actor? According to its Constitution, as a general principle, 
the  ACFTU  cannot  be  said  to  be  a  non-state  actor  representing 
workers, since it is ‘under the leadership of the Communist Party of 
China’.139 This being the case, ACFTU’s roles in, for example nego-
tiation and mediation in collective bargaining and labour disputes 
based on the Labour Law and the Trade Union Law,140 cannot be 
said to result from being a non-state actor.141 As a result, workers’ 
right  for  ‘freedom  of  association’  cannot  be  exercised  in  its  true 
sense. 

138  Articles 3, 10, Trade Union Law of China.

139  Available at: https://www.cecc.gov/resources/legal-provisions/constitu-

tion-of-the-all-china-federation-of-trade-unions-amended. 

140  In  relation  to  collective  bargaining  negotiations,  the  representatives  of  the  workers 
shall be designated by the labour union of the entity, and the chief representative in 
this  respect  shall  be  the  chairman  of  the  labour  union  (Article  20  of  the  Provisions 
on Collective Contract, 2004). Consequently, the trade union is a party to mediation 
and settlement of disputes (Article 50 of the Provisions on Collective Contract (2004). 
[year??]

141  For  example,  see  Bai  (2008)  and  https://democracyweb.org/freedom-of-associa-

tion-china.

Weinian Hu and Jacques Pelkmans137

Collective bargaining

The  right  for  collective  bargaining  has  two  aspects,  one  is  fair 
wages and another is better working conditions. These two rights 
are comprehensively covered by the Labour Law (1994)142 and the 
implementation of them is laid down in the Labour contract Law 
(2007). 

For  example,  Chapter  V  of  the  Labour  Law  guarantees  fair 
wages,  ‘equal  pay  for  equal  work’,  guaranteed  minimum  wages, 
holiday pay, etc. Working hours, rest and vacation rights are cov-
ered under Chapter IV, including a 300 percent of normal wages 
for  over-time  pay  if  work  is  undertaken  on  statutory  holidays. 
Occupational safety and health is “guaranteed” by Chapter VI. 

Moreover,  the  Provisions  on  Collective  Contract  (2004)  sup-
plements  the  Labour  Law  (Article  1  of  the  Provision),  specifies 
the  term  ‘collective  contract’143  and  stipulates  the  content  that 
each item, such as labour remuneration, staff reduction rest and 
vacation, labour safety and health, settlement of disputes, should 
cover (Article 3 of the Provisions).144 The Provisions also provide 
how negotiation of collective contracts may be conducted and by 
whom  (Chapter  III  of  the  Provisions),  how  a  collective  contract 
may be examined (Chapter VI of the Provisions), etc. Therefore, 
on  the  face  of  the  labour  legislation,  workers’  right  to  collective 
bargaining seems to have been guaranteed – without questioning 
the  true  character  of  the  ACFTU  which  represents  workers  at 
these negotiations. But as mentioned before, since the ACFTU has 
its duel identity in different ways, it won’t be possible to ascertain 
that  workers’  interests  are  effectively  represented,  and  rights  for 
collective bargaining are protected. 

142  For a translation of the Labour Law, see https://www.cecc.gov/resources/legal-provi-

sions/labor-law-of-the-peoples-republic-of-china. 

143  By virtue of Article 3 of the Provisions on Collective Contract, collective contract “re-
fers to the written agreement concluded between an employing entity and its workers 
on items such as labor remuneration, working hours, rest and vacations, labor safety 
and health, professional training and insurance and welfare through collective negoti-
ation according to laws, regulations and rules”. 

144  For a translation of the Provisions on Collective Contract, see http://www.asianlii.org/

cn/legis/cen/laws/pocc373/. 

EU/China Sustainable Development Cooperation: Towards Convergence?138

As  to  enforcement,  though  there  was  resistance,145  coming 
from keen competition on FDI extra- and intra-China even among 
counties, initially attributed to the resulting ‘higher’ labour costs, 
those rights promised by the Labour Law have been enforced after 
the Labour Contract Law came into force in China in 2008. 

Since  then,  analysis  has  shown  that  the  Labour  Contract 
Law increased contract coverage of migrant and other low wage 
workers  and  raised  the  proportion  of  workers  with  legally  man-
dated  social  insurances.  Therefore,  overall  the  Labour  Contract 
Law helped improve the position of workers in China146 in terms 
of wages and working conditions. But, the meaning of ‘bargaining’ 
between  workers  and  employers  for  workers’  to  claim  more  and 
better rights and pursuing workers’ interests is missing – due to 
the simple fact that it is the ACFTU that represents workers at such 
negotiations and labour disputes settlement. In reality, there is no 
record to show that the ACFTU has defended workers’ interest in 
collective  bargaining,  against  the  management.  The  opposite  is 
the  case  in  fact,  as  the  Ole  Wolff  case  has  illustrated.147  And  the 
internal ACFTU processes about labour demands in negotiations 
are rarely public, indeed, are in fact controlled by the Party and the 
state. In this regard, as illustrated before, due to the dual identity 
of the ACFTU, it is not possible to conclude that workers’ right of 
‘collective bargaining’ is protected in China. 

145   Exacerbated by local government’s economic goals, including to maintain the ‘advan-
tage’ of low labour cost against other FDI destinations, labour law implementation was 
said  to  be  ‘historically  weak.’  And  many  workers,  especially  migrant  workers,  were 
ill-treated often without a labour contract, and with deprived working conditions, such 
as  brutally  long  working  hours,  involuntary  confinement.  See  Tang  K.  (2008),  “The 
Evolution of Labor Contract Law and Comments on Two Papers”, China Centre Net; 
and  Chan  A.  (2001),  “China’s  workers  under  assault:  the  exploitation  of  labour  in  a 
globalizing economy”, Sharper. In the first place, labour rights can only be guaranteed 
when  an  employment  relationship  is  established  by  a  labour  contract.  However,  be-
fore the Labour Contract Law came into force in China in 2008, it was estimated that 
around only 20 percent of private companies sign contracts with their employees. See 
Tang (2008)

146   Freeman & Li (2013)

147   It was reported in the Ole Wolff case of collective bargaining, the ACFTU defended the 
company by claiming that the company had begun to comply with the labour law even 
though it was still acting in violation of the law. For details, see Wang (2008). There are 
also numerous reports shedding light on how the ACFTU behaves – or, is frequently 
invisible – inside factories. See the China Labour Bulletin at https://clb.org.hk 

Weinian Hu and Jacques Pelkmans139

Social protection

However, the intentions and to some extent the realisation of social 
protection  were  approached  in  a  different  manner  as  from  the 
early 1990s. After a decade during which economic growth in agri-
culture, SOEs and the newborn TVEs seemed to move in parallel 
without large shocks, and early FDI was flowing in, the 1990s were 
going to be radically different. SOEs had to adjust drastically, in 
numbers, in market shares, in modernisation and more and more 
often also in quality. The smaller ones were going bankrupt with 
the thousands and the bigger ones sometimes too, but frequently 
merged out of necessity. Hard budget constraints were exercised, 
a new phenomenon. The ‘social protection’ practiced by SOEs in 
education, social services, health and housing had to be disman-
tled in  order for such  companies  to  survive in a harsher market 
climate. Efficiency considerations began to prevail for workers and 
managers  alike.  Altogether,  this  radical  transformation  made  it 
ever more inescapable that a system of ‘social protection’ separate 
from  SOEs  but  equally  separate  from  foreign  companies,  TVEs 
or  farm  collectives  should  be  built  up.  Social  protection  began 
to  be  regarded  as  a  critical  duty  of  society  as  a  whole.  It  would 
require  a  system  with  legal  entitlements  for  individual  workers 
or  indeed  citizens,  with  a  number  of  critical  forms  of  insurance 
against  social  risks.  This  awareness  began  to  be  manifest  with  a 
new type of labour laws but quickly extended to cover some of the 
entitlements of social protection, that is what in the EU are called 
‘welfare states’. However, in those days China was still a relatively 
poor developing country, albeit one with extremely high growth. 

As  noted  previously,  social  protection  can  be  defined  by  its 
overall  aim  and  four  components.  The  aim  of  social  protection 
is to ‘reach or maintain an adequate standard of living and good 
health throughout their lives’. Such social protection has four com-
ponents: 

EU/China Sustainable Development Cooperation: Towards Convergence?140

a.  basic income security for children (hence, access to nutri-

tion, education, care and necessities); 

b.  basic  income  security  for  persons  in  active  age  (those 
unable to earn sufficient income, such as sickness, unem-
ployment, maternity and disability); 

c.  basic income security for older persons; 

d.  essential  health  care  (incl.  maternity  care)  under  condi-

tions of availability, accessibility and quality.

Social protection has become a commonly accepted norm for 
almost all countries, even when poor countries might not or not 
yet be able to afford all of its respective components. However, this 
was not yet the case – certainly not anywhere near the same extent 
– in the early and mid-1990s when China was first confronted with 
the issue (Box 9). The overall aim can be better understood once 
one  begins  to  appreciate  the  beneficial  effects  social  protection 
has for overcoming very basic constraints in development and for 
security of people. It is seen as part of ‘social and economic human 
rights’,  critical  in  reducing  and  preventing  poverty  (certainly  of 
great importance for China at the time), vital for ‘human devel-
opment’, good against social exclusion and for good health of the 
labour force and as a stimulus for long-run economic growth. 

Weinian Hu and Jacques Pelkmans141

Box 9: Human Development in China in the early 1990s

The social predicament of people depends to a large extent on 
indicators  now  caught  by  the  UNDP  Human  Development 
Index.148  The  Human  Development  Index  is  a  result  of  three 
component  indicators:  on  health,  education  and  income.  The 
idea behind the index is to assess the development of a country 
not by GDP alone. The three indicators express (a) standard of 
living, (b) a long and healthy life, and (c) being knowledgeable 
as an expression of human capital. The HDI is a limited tool (as 
there is much more to development of a country) but has none-
theless  been  very  successful  as  a  way  of  approaching  develop-
ment in a richer fashion than just money income per capita on 
average. Since 2010 ‘poverty’ is no longer defined by the UNDP 
only as an income measure; for this purpose the MPI, the ‘mul-
tidimensional poverty index’ with ten indicators instead of three 
has been developed and measured.149

In  the  early  1990s150  China’s  HDI  was  behind  the  world’s 
average; amongst the 5 BRICs China was the second lowest. Its 
health component was relatively strong and education relatively 
weak.  Only  in  its  income  per  capita  component  China  started 
as the lowest (1990) but surpassed India with a near-doubling. 
Nevertheless, the world average per capita income was still very 
far above China’s level: nearly four times as high (US$ 9160 in 
2011 PPS). 

SDG no. 1.3 expects all countries to implement nationally appro-
priate  Social  Protection  systems  and  measures  for  all,  including 
social protection floors, to end poverty by 2030. The basic principle 
should be: universal coverage. Social Protection has the potential 
to reduce insecurity for workers and helps to formalize employ-
ment contracts. This is not a small issue in Asia-Pacific: some 60% 

148  For all detail and many references, see www.hdr.undp.org/en/content/human-develop-

ment-index-hdi 

149  See UNDP & Oxford PHI (2020), Charting pathways out of multidimensional poverty

150  In Hu & Pelkmans (2021, section 3.3) China’s HDI between 1990 and 1995 is explained 

with four graphs and five tables, also in comparison with other BRICs. 

EU/China Sustainable Development Cooperation: Towards Convergence?142

(!) of the labour force is an informal worker with a very weak or 
no legal status, when it matters. Workers in the informal economy 
have no or insufficient access to any form of Social Protection. This 
means that (social) laws yield nothing even close to universality, 
except purely by name: many, if not most, workers simply have no 
status under such laws. One can enumerate a number of beneficial 
effects of Social Protection but these are either public (e.g. multi-
plier effects) or for the relevant workers at stake. For many other 
workers in the informal labour market, social protection is – more 
often than not – a dream. EU countries are a stranger to this mas-
sive ‘informalisation’ of the economy given universal coverage and 
functioning welfare states. 

A lack of Social Protection is a contributing factor to growing 
inequality  in  and  between  countries.  It  is  also  likely  to  augment 
the inequality of opportunity. Both can harm economic growth in 
the long run, but short-run profit seeking, let alone ‘greed’, is unre-
sponsive to such concerns. Inequalities often tend to become inter-
generational (and hence, turn into traps). Inequality may actually 
be economic, social and related to environment (e.g. air, water and 
soil).  This  is  one  reason  for  the  links  between  the  two  pillars  of 
sustainable development. 

The  World  Bank  emphasizes  more  the  human  capital  aspect 
and  cost-effectiveness.  Social  protection  systems  “are  transform-
ative as they not only help the poor and most vulnerable mitigate 
economic and fiscal shocks, but also help ensure equality of oppor-
tunity by giving them a chance to climb out of poverty, and become 
productive members of society.”151 Safety nets are often regarded as 
a means of harnessing human capital. The World Bank supports 
universal  access  to  social  protection.  Universal  social  protection 
coverage includes: providing social insurance through cash trans-
fers  to  those  who  need  them,  especially  children  ;  benefits  and 
support for people of working age in case of maternity, disability, 
work injury or for those without jobs ; and pension coverage for 

151  See  https://www.worldbank.org/en/topic/socialprotection/overview  accessed  on  12 

April 2020

Weinian Hu and Jacques Pelkmans143

the elderly. Assistance is provided through social insurance, tax-
funded social benefits, social assistance services, public works pro-
grams [an interesting addition] and other schemes guaranteeing 
basic income security. 

Social drawbacks of ‘growth at all costs’

During the 1990s, China’s growth at all costs occurred in defiance 
of  sustainable  development,  both  for  the  environmental  and  cli-
mate pillar (cf. Pelkmans, 2021) and the social pillar. The following 
will  mainly  focus  on  severe  socio-economic  discrimination  of 
rural versus urban workers and their families. In addition, there 
was a general disinterest in ‘decent’ work and a massive neglect by 
companies of honouring their obligations – modest as they were 
– to their workers, for the sake of competitiveness and enriching 
owners  and  managers.  It  is  good  to  realise  that  the  government 
and the Party began to consider explicit elements of a welfare state 
and enacted some of them in the second half of the 1990s but at 
first such initiatives did little to reduce this open defiance. 

Rural versus urban hukou and other forms of discrimination

For a long time, the hukou status determined one’s working and 
earning options in life. We refer to Hu & Pelkmans (2021, Box 1) 
for  a  more  detailed  exposition. The  predicament  of  rural  people 
was to work in or connected to farming, fishing and forestry. All 
this changed, beginning in the late 1970s when agricultural liberal-
isation turned out to be extremely successful, rapidly augmenting 
productivity and prompting a surplus of labour looking for other 
employment. To a surprising extent this alternative employment 
was offered by TVEs which tended to be in the same county or prov-
ince so that the hukou issue did not normally arise. For a decade or 
so, most surplus labour in rural areas was absorbed by TVEs and 
to  a  lesser  extent  by  foreign  investors,  building  labour-intensive 
product assembly and processing plants in special economic zones 
(all over the country). By the early 1990s, TVEs employed more 

EU/China Sustainable Development Cooperation: Towards Convergence?144

than 100 million people, an incredible performance knowing that 
15 years before there simply were no TVEs at all. 

But the demand for labour in mining, construction and other 
private industry remained very strong and agriculture became less 
and less capable to ‘bind’ much labour as traditionally had been 
the  case,  given  that  machinery,  better  seeds,  fertilizers,  modern 
irrigation  and  other  yield-raising  inputs  as  well  as  better  infra-
structure pushed up productivity, hence causing a secular reduc-
tion of the agricultural labour force. A steady flow of (domestic) 
migrants  to  the  East  became  the  ‘new  normal’  during  the  latter 
part of the 1980s and especially the 1990s. As will be highlighted 
below, soon the numbers of migrants turned out to be staggering. 
In  the  1990s,  international  organisations  dubbed  it  the  largest 
domestic  migration  wave  ever,  easily  involving  200-plus-million 
workers (including the short-distance migration to TVEs). Labour 
intensive industries such as toys, consumer electronics, clothing & 
textiles, but also construction (a huge sector helped by rapid devel-
opment of China), coal mines and other mining and, increasingly, 
heavy  industry  like  steel,  aluminium,  ceramics  and  shipbuilding 
became dependent on migrants. And the migrants on them. 

And  by  2010  or  2015,  one  can  portray  this  transformation 
as the ‘lifting out of poverty’ of hundreds of millions of Chinese 
compared  to  an  only  recent  past.  Reduction  of  poverty  was  the 
leading aim of Chinese development strategy, above anything else. 
The mobility and successful finding of jobs by so many millions 
of migrants in a relatively short period of time was regarded as an 
enormous success of ‘the’ Chinese model. No doubt it is. Had they 
been retained in their regions, many would have remained jobless, 
extremely  poor  and  without  perspective,  also  for  their  children. 
These consequences would have been bad enough on their own, 
yet one can hardly imagine the socio-political repercussions after a 
while. However, whilst recognizing the success of lifting hundreds 
of  millions  out  of  extreme  poverty  that  China  accomplished  via 
growth and internal migration, it would be a mistake to conclude 
that relative poverty has largely been overcome. In 2020, hundreds 
of millions Chinese still live on very low incomes indeed. 

Weinian Hu and Jacques Pelkmans145

In the 1990s, the nature and scale of socio-economic discrimi-
nation of migrants, solidly based on the hukou status and invisibly 
strengthened by a deeply felt form of conscious ‘social distancing’ 
by urban citizens everywhere, resulted in a kind of ‘caste system’ 
with  some  features  of  apartheid  as  well.  For  migrants  leaving 
their family behind it meant that the kids rarely saw their father 
or parents (and growing up with the elderly). For families joining 
the migrant(s), it meant that kids would run into systematic dis-
crimination in education and most good schools would be closed 
for them. Anyway, migrants’ wages were low, far lower than most 
urban  workers’  wages,  and  schools  were  out-of-reach  for  that 
reason  alone.  Medical  treatment  was  supposed  to  be  undergone 
back  home  -  easily  some  1000  –  2500  km  away  –  where  clinics 
were ill-equipped and lacked quality doctors. As noted before, the 
majority  of  migrants  did  not  enjoy  written  contractual  arrange-
ments, had to make extremely long hours every week – often with 
6 days a week - and had initially no form of insurance whatsoever. 
The housing facilities (if one can call them like that) were usually 
far outside towns and – more often than not – in dilapidated build-
ings or in overcrowded dormitories of the employer. 

Once China began to build, step by step, elements of a welfare 
state, these sharp distinctions between urbans and rurals were ini-
tially  cemented  in  the  new  systems.  To  be  sure,  there  were  also 
considerable  differences  amongst  the  urbans,  especially  between 
state civil servants, the military and teachers, on the one hand, and 
other urbans on the other. But such differences were far smaller 
than the cleavage between the migrants and all others. 

Other costs of supergrowth for unskilled (migrant) workers

The  growth  and  cost-competitiveness  mindset  of  Chinese  man-
agers and industrial owners during the 1990s (and even later) was 
uncompromising. They did everything to squeeze out maximum 
efforts by the workers, whilst investing little in the work environ-
ment,  including  safety  on  the  work  floor,  and  attempting  to  get 
away with not honouring social obligations by trick work or out-

EU/China Sustainable Development Cooperation: Towards Convergence?146

right deceit. Since the ACFTU showed next to no concern about 
these  bad  practices  152  and  –  at  first  –  labour  inspections  were 
almost  non-existent,  whilst  wildcat  strikes  were  risky  (or  would 
lead  to  dismissals),  the  emerging  set  of  social  laws  were  weakly 
enforced.  Suffering  from  all  this  were  unskilled  workers  but  the 
overwhelming  majority  of  them  would  be  migrants  either  from 
the rural parts of the same province or non-urban-hukou migrants 
from  far-away  provinces.  This  episode  would  foreshadow  the 
enormous  struggle  in  China  between  growth  and  cost-competi-
tiveness,  on  the  one  hand,  and  improving  on  the  near-absence 
of  enforcement  and  ‘decent  work’.  Although  there  are  numerous 
informal accounts of such practices, analytical studies are next to 
non-existent  as  reporting  and  the  publishing  of  damaging  data 
were  strictly  forbidden.  At  a  later  stage  (from  2005  or  so),  the 
China Labour Bulletin (CBL) began to report from a relatively safe 
Hong-Kong base, but the Chinese government remains extremely 
sensitive to such reporting.153 

Not  honouring  social  obligations  to  workers  could  consist  of 
non-payments of social and pension contributions to funds (once 
they came into being) and this would typically be discovered only 
when migrants would wish to transfer the entitlements or receive 
cash, or when a company went broke (due to misfortune or a fake 
bankruptcy  followed  by  relocation  elsewhere).  Frequently,  over-
time  would  not  be  paid  in  full  or  be  falsely  documented.  More 
generally,  the  majority  of  migrants  had  no  formal  contract  even 
when new laws to this effects had been introduced. 

Occupational  safety  and  health  (OSH)  in  the  workplace  was 
given very little attention, everywhere but not even in very risky 
workplaces where it was essential – in construction and mines, be 
it coalmines or mines for other resources. The result was a huge 
and  largely  avoidable  total  of  casualties,  accidents  and  occupa-

152  In Table 8 in Hu & Pelkmans (2021) it will be observed that the ACFTU only began to 

officialy be protective of migrants in 2003 !

153  In 2010, a bilateral meeting between the EU and China derailed when the invited CBL 
director  gave  a  statement  on  problematic  social  factory  practices  in  China,  and  the 
Chinese Delegation walked out in protest. 

Weinian Hu and Jacques Pelkmans147

tional  diseases.  Initially,  little  more  than  a  very  minimal  com-
pensation was paid to the family and no disability insurance for 
victims  existed.  Occupational  risk  was  regarded  as  ‘normal’  and 
sometimes even old Chinese traditions holding that prosperity of 
the community would go above the fate of the individual would be 
invoked. The struggle to improve OSH in China was difficult and 
the EU rushed to support China by EU programmes and a High 
Level China/EU OSH Dialogue. We return to this subsequently. 

China’s emerging social protection in the mid-1990s

In  the  early  1990s,  the  social  consequences  of  the  reforms  and 
structural transformation of China’s economy began to dawn on 
policy-makers.  Its  labour  market  was  not  accustomed  to  large 
(be it perhaps temporary) surplus labour shed by SOEs and due 
to  the  modernisation  of  agriculture  whilst  the  overall  Chinese 
economy  –  including  the  labour  market  -  was  rife  with  restric-
tions  and  internal  barriers,  the  greatest  one  of  which  was  the 
hukou  system.  Another  severe  restriction  consisted  in  the  one-
child policy154 which undermined the tradition that parents could 
rely on the extended family to look after them when growing old. 
The new TVEs had meanwhile absorbed ‘agricultural’ citizens as 
industrial and service workers in ever greater quantities in rural 
areas. Moreover, foreign enterprises, notably in special economic 
zones, exercised some additional demand for (mostly low-skilled) 
labour.  However,  despite  all  this  and  despite  the  very  high  eco-
nomic growth which also stimulated the demand for labour, SOEs 
generated  surplus  labour  becoming  unemployed  in  masses,  a 
daunting spectre for society and the Chinese leadership. Turning 
SOEs into market-oriented companies caused a dramatic loss in 
implicit  social  protection  whilst  the  modernisation  and  liberali-

154 The one-child policy did not apply to all of China, however. In some 35% of the country 
(mainly urban areas) the policy was strictly enforced, in some areas a second child was 
possible (after paying a fee) if the first one was a girl, and in remote areas no restric-
tions applied at all. The impact of the policy was magnified in the 1990s by the very 
low fertility rate during and after the famine caused by the Cultural revolution, which 
temporarily led to an extremely tiny number of babies in a few consecutive years, hence 
fewer children who could support parents in the 1990s. 

EU/China Sustainable Development Cooperation: Towards Convergence?148

sation of agriculture meant a rupture in the ages-old social pro-
tection by the (extended) family, as jobless youngsters felt a need 
to  move  and  seek  industrial  employment.  Indeed,  a  much  more 
market-oriented economy was in need of a logical complement: a 
system of social protection, partly on the basis of contributions by 
enterprises and workers, working like an insurance, partly based 
on the state’s budget as an idiosyncratic expression of solidarity. 

But  this  admission  came  only  slowly.  Growth  had  absolute 
priority: the fight against poverty would be won via high secular 
economic growth. In 1993, the Party proclaimed: efficiency first, 
equity later.  But with many millions of workers unemployed and 
more  labour  shedding  taking  place  year  after  year,155  whilst  new 
private companies and even (especially smaller) SOEs did not give 
many  workers  formal  labour  contracts  –  with  all  the  insecurity 
implied - it became undeniable that poverty was on the increase, 
even  when  other  parts  of  Chinese  society  were  doing  better  all 
the time. The social insecurity grew so much that a MLA (Min-
imum  Living  Allowance)  was  gradually  introduced  by  big  cities 
and provinces, based on a calculated minimum cost of living, or 
rather subsistence. Once the State Council formally allowed such 
programmes  to  be  nation-wide,  urban  MLA  membership  grew 
from 0.5 mn persons in 1999 to no less than 21 mn in 2002. How-
ever, neither actual benefits (some 10% of local per capita income) 
nor the coverage of the MLA were impressive. Rural MLA variants 
attracted  3.2  mn  rural  residents  by  2000.156  Especially  the  latter 
formed  a  break  with  a  deeply  rooted  past,  as  rural  villages  were 
long held to be responsible for the so-called ‘five guarantees’ for 
the very poor, meant to consist of orphans, disabled and e.g. child-
less elderly: food, shelter, health care, clothing and burial expenses. 

155  It is very difficult to arrive at a robust estimate of the total labour shedded by SOEs 
in the 1990s. The measurement in terms of flows is surely impressive (some 40 mn to 
50 mn redundancies probably) but a stock measure of the resulting unemployment is 
fraught with problems. As noted above, demand for labour was also sharply up year 
after year (by foreign companies, TVEs and quickly growing private firms) and the net 
result in terms of unemployment is far lower but exact figures are hard to come by. The 
unemployment figures published at the time by China are not following international 
conventions. 

156   All data in OECD (2010, pp. 135/6).

Weinian Hu and Jacques Pelkmans149

The rise of poverty, be it in a segmented way, also increased inter-
regional inequality. 

The early phase in Chinese social protection

In  the  mid-  and  late  1990s,  the  authorities  finally  reacted  with 
the enactment of several laws as the beginning of what is nowa-
days regarded as social protection. In 1992 the Trade Union law 
was  adopted  but  this  merely  confirmed  the  monopoly  and  con-
trol of the All-China Federation of Trade Unions. The same year a 
Women Rights Law was enacted,157 a most welcome minimum pro-
tection against exploitation of the often weak position of women 
vis a vis managers. In 1993, minimum wages were introduced on 
a week of 44 hours. About the initial enforcement little seems to 
be known but, given the weak enforcement of many laws related 
to  enterprises,  one  cannot  be  optimistic.  Moreover,  with  huge 
new annual inflows of migrants, the Lewis effect158 was felt in that 
the rate of increase of the minimum wage was far lower than one 
would expect given the rapid rise of prosperity. Thus, in the period 
between  1995  and  2006  the  rate  of  increase  of  average  wages  in 
253 prefectural cities was higher than 10% annually, whereas the 
minimum wage rose only with 6.5% annually, causing the share of 
minimum wage in the average wage to fall from 44% to only 27%. 

In 1994 the wide-ranging Labour Law was adopted (in force Jan. 
1995)  which  imposed  labour  contracts  for  all  full-time  workers. 
A host of entitlements for workers were mandatory, either by law 
or explicitly to be incorporated in such contracts: minimum wage 
(usually the local one), a maximum of 44 hrs a week (with much 
higher wages for overtime and e.g. 300% for work on a free day), 
specified  days  without  a  duty  to  work  (e.g.  the  Spring  Festival 
around  Chinese  New  Year,  etc.),  special  protection  for  women 
against certain heavy work and during pregnancy (following the 

157  Amended in 2005.

158  China in the 1990s seemed to be a model version of Arthur Lewis’ (1954) theory, hold-
ing essentially that wages could not increase when there was an infinitely elastic supply 
of labour at all times. 

EU/China Sustainable Development Cooperation: Towards Convergence?150

1992 law, as noted above), prohibition of violence by employers, 
prohibition of wage arrears (already then a widespread problem), 
a  general  entitlement  of  ‘social  insurance  and  welfare  treatment’ 
(art. 3), duty for the employer to ensure work safety and sanita-
tion, a general entitlement of vocational training, a prohibition of 
child labour (below 16 years), timely warning of workers and con-
sultation in case of a threat of severe cutting of the labour force 
or bankruptcy and the right to conclude collective contracts. The 
government (art. 70) is under the duty to set up a social insurance 
system  and  funds  for  compensation  when  workers  ‘become  old, 
suffer  diseases  or  work-related  injuries,  lose  their  jobs  and  give 
birth’. 

Therefore, on the face of it, the Labour Law laid down many 
entitlements  which  fit  a  modern  welfare  state,  with  numerous 
responsibilities for the employer and a few complementary ones 
for the state. However, as so often in China, there are two reali-
ties, certainly in the 1990s if not later too: besides the reality of the 
Labour Law, there was the reality of a lack of enforcement and the 
frequent attempts by employers to try to get away with a business 
model applied to their workers which remained outright exploit-
ative,  knowing  that  enforcement  was  soft  or  simply  absent.  The 
many millions of migrants from rural areas (and without a local 
urban hukou) usually accepted either temporary work (for which 
a contract with all the specifications mentioned above was legally 
not required) or accepted an oral engagement from managers. In 
either  case,  these  workers  did  have  to  work  the  full  week  and  – 
more  often  than  not  –  many  hours  of  overtime.  Many  migrants 
returned home around the Spring Festival and would not neces-
sarily return to the same factory – so, in fact they preferred imme-
diate short-run cash payments instead of the very slow build-up of 
social security entitlements over a long period which – in the short 
run – would lower their cash income. Indeed, their de facto wages 
were often so low that many felt it was not worthwhile to engage 
in such long-run savings. Most migrants also transferred money 
home  and  this  was  a  significant  driver  of  wishing  to  dispose  of 
money  immediately.  Some  migrants  were  simply  not  aware  and 

Weinian Hu and Jacques Pelkmans151

mimicked  others,  some  tried  social  security  but  found  out  how 
long it took before they could ‘draw’ from it, other realized quickly 
that  the  transfers  of  their  entitlements  were  cumbersome  given 
the complexities of the emerging social system in China and the 
bias against migrants (e.g. the entitlements of urban workers were 
much higher in value than for migrants, as the system was based 
on local living standards back home, and also incorporated plain 
discrimination of rural workers). It could also have to do with the 
bias  in  the  coverage  of  medical  expenses  –  a  subject  on  its  own 
– where the insured payments for medical care were far too low 
and treatment had to be paid upfront (despite the law specifying 
that medical insurance ought to pay first and subsequently ask for 
reimbursement of some part of it), strengthening incentives to go 
for immediate cash without dedicated savings. 

Obviously, for companies the costs of having workers without 
contracts or only oral ones were far lower. It also meant that workers 
often were at the mercy of managers who insisted on impossible 
targets or on overtime far beyond the limits in the Labour Law. In 
some sectors, the situation was worse still, in particular in mining 
and construction, both big sectors. On top of all the objectionable 
practices of (say) textiles and clothing, toys, shoes, other consumer 
goods,  consumer  electronics,  etc.,  both  mines  and  construction 
sites were notoriously dangerous, with little or no investment in 
safe working conditions and personal protection equipment. This 
is not to say that there were no safety laws - even though they were 
vague at first and could be much improved – but rather that there 
was little or no enforcement, until accidents happened (and even 
then, only major ones would be followed by a clampdown, small 
ones would escape with a little corruption or a symbolic warning). 
Local officials were known to shield local enterprises (by looking 
the  other  way),  thereby  facilitating  growth  targets  of  the  region 
and boosting employment. In the 1990s, the sheer scale of mining 
accidents had grown so much (6000 - 10000 dead per year was not 
unusual) that a special Agency for safety in mines was established 
in 1999. One amongst several quick activities of enforcement con-
sisted in a campaign to close thousands of illegally opened small 

EU/China Sustainable Development Cooperation: Towards Convergence?152

mines with extremely risky working conditions. In construction it 
was both the speed of working (e.g. in high-rises) and the costs of 
solid protection structures (such as high scaffolds) and equipment 
which stood in the way of safety. In the 1990s, China considered 
itself still as a developing country where daily risk taking was part 
of citizen and work life. 

The  Labour  Law  had  disadvantages,  other  than  a  lack  of 
enforcement. It is an example par excellence of a Chinese law which 
becomes significant and effective only once detailed implementa-
tion laws (often called ‘regulations’) are adopted in its wake. The 
law formulates a range of laudable entitlements but is not opera-
tional in many respects. For a sensible assessment, one needs to 
consider a series of more specialized or implementation laws being 
enacted  later  or  indeed  much  later.  It  is  indispensable  as  well  to 
understand the funding of various insurances, pensions and sub-
sidized government funds like the Housing Providence Fund. In 
addition, one ought to appreciate the role and working of the All-
China Federation of Trade Unions which functions rather differ-
ently from a labour union in most countries of the world. Instead 
of a pre-occupation at all times with the pursuit of the interests of 
the workers in companies, and representing them with an explicit 
or implicit mandate to speak out clearly and act on their behalf, the 
ACFTU does not really function as the voice of workers. 

Although the staff of the All-China Federation of Trade Unions 
is much bigger, relatively, than that of unions in (say) OECD coun-
tries, with no less than one million staff members, there is often 
very little or no union activity in factories or for workers until there 
are elections or a labour or safety conflict arises. Typically, in such 
cases, the Union will try to mediate between angry workers and 
management so as restore peace and tranquillity on the work floor, 
for the sake of smooth production, instead of backing reasonable 
demands of badly treated workers. However, the All-China Union 
has  a  monopoly  and  is  very  closely  associated  with  the  Chinese 
Communist Party, indeed so much so that the links with the Party 
preoccupy  staff  members  more  than  the  classical  union  work.  It 

Weinian Hu and Jacques Pelkmans153

is also known as a bureaucratic institution. The upshot is that this 
Union does little or nothing actively to ensure enforcement of con-
tracts of workers, let alone that workers get a contract in the first 
place, or that aberrations in the day-to-day treatment of workers 
are effectively addressed. Worse, many elections of worker repre-
sentatives in companies are co-arranged between management (!) 
and the All-China Union, without giving any voice to the workers 
in the first place. The right to strike was removed from the consti-
tution in 1982, a remarkable move for a Party that came to power 
via  strikes  and  revolt.  It  is  often  noted,  however,  that  strikes  are 
not forbidden. In fact, there are numerous small wild-cat strikes 
but (in the 1990s) they are hardly ever published. In recent years, 
with mobile phones and social media, it is more difficult for the 
government to pre-empt publication. 

The Hong-Kong based CLB159 has developed a strike map in an 
attempt – an admittedly incomplete attempt – to get a rough proxy 
of labour disputes, their origin and location. Because workers do 
not have an effective ‘voice’ in companies and enforcement does 
not protect them, wild-cat strikes are the only option, even when 
such disruptions can be risky given the authoritarian regime. Nei-
ther for the thousands of (usually small) strikes nor for the major 
strikes or worker protests, has there ever been one recorded which 
was organised by the All-China Federation of Trade Unions! From 
numerous reports and even court cases it is known that there are 
more than enough good social and other sound reasons for that 
mighty Union to make itself felt and heard. For workers to start a 
new trade union of their own is forbidden, it has to be organized 
under the All-China Federation.

159   China Labour Bulletin, see https://clb.org.hk . For the strike map, see http://maps.clb.
org.hk/strikes/en . Unfortunately, the data underlying the map is recent and does not 
go back to the 1990s. In China itself it is considered a crime publishing such data. 

EU/China Sustainable Development Cooperation: Towards Convergence?154

Answering the first research question of the social pillar

The  first  research  question  is  whether,  in  transforming  the 
economy during the 1990s and later to a market economy, China 
has addressed the respect for international labour standards and 
built up a system of social protection based on individual entitle-
ments?  With  respect  to  the  ILO  core  conventions,  the  answer  is 
simple: China has not ratified four of the eight core conventions 
and only very recently showed some interest in two of these four, 
namely on forced labour (with prudent commitments in the draft 
CAI Agreement). In the other two it has not shown any interest (as 
far as the authors know). The most one can say is that, on ‘collective 
bargaining’, it has arranged some domestic regulations facilitating 
this at the company level but always under control of the ACFTU. 

With respect to social protection, China has attempted to build 
up  a  system  of  social  protection  during  the  1990s  and  later.  It 
depends where one marks the cut-off point but during the 1990s, 
this  build-up  was  at  first  fragmented  and  hesitant.  This  is  very 
understandable  because  China  had  to  undergo  a  most  radical 
transformation and also had no experience with separate legal and 
state-funds-supported social protection, based on individual enti-
tlements, even less its administration. What essentially happened 
in the 1990s is that several social laws emerged, partly on the rights 
and  entitlements  of  individual  workers  or  categories  of  workers 
(e.g. women), partly on a more generic basis, the most important 
of which was the 1994 Labour Law. The latter comprised a series of 
general commitments of social protection, besides labour rights, 
and  obligations  of  companies.  Unfortunately,  this  law  and  some 
other ones had more the character of promises and a sense of per-
spective, but not yet the detail and operationality of implementa-
tion  regulations.  At  the  same  time,  given  the  sad  experiences  of 
workers shed by SOEs, but without much social protection at the 
time, the pressing needs of many jobless workers – often from far-
away rural areas – had to be addressed urgently. Hence, the dibao 
(in  Shanghai)  was  invented  as  a  MLA  (subsistence  allowance) 

Weinian Hu and Jacques Pelkmans155

and a Housing Providence Fund, a Unified Basic Pension insur-
ance system for enterprise workers, basic medical insurance and 
unemployment insurance were all swiftly introduced before 2000 
to cope with the situation. 

In  other  words,  China  has  improved  the  predicament  of 
workers  (and  indeed  all  citizens)  in  China,  not  merely  via  high 
economic  growth  but  also  by  means  of  a  broad  system  of  social 
protection, with universal coverage where appropriate. We survey 
at some length the painful social side of ‘growth at all costs’, mostly 
at the peril of low or unskilled migrants workers from poor prov-
inces.  The  SOE  reforms  in  the  1990s  were  harsh,  with  dramatic 
labour shedding and little or no social security at first, and some 
stop-gap measures later. China in the 1990s was still a developing 
country and hence it cannot be surprising that the human devel-
opment indices were also still rather weak, although rising fairly 
rapidly (though better for per capita incomes and health than for 
education). 

4.3 Research question 2: EU/China policy convergence 
as of 2020

The  present  section  will  attempt  to  answer  the  second  research 
question on convergence of green policies, or at least policy prefer-
ences in terms of similar aims, and their implementation by 2020. 
We  start  with  a  focus  on  greenhouse  gases  and  ‘Paris’  commit-
ments’ as well as on emerging ‘responsible business’ in China. We 
complement this with a different verification using the sustainable 
development chapter of EPA as a way to compare China’s and the 
EU (feasible) green commitments. There is much technical detail 
required for such an analysis. In order to cope with this, we refer 
briefly to EU/China cooperation on timber and trade and on sus-
tainable (and illegal) fishing, based on Hu and Pelkmans (2021). 
Box 11 discusses the green pillar of the sustainable development 
chapter of the draft CAI treaty, the first time China has actually 
agreed to binding green obligations in a bilateral agreement. Fur-
thermore,  China  has  made  great  strides  in  greening,  that  is,  in 

EU/China Sustainable Development Cooperation: Towards Convergence?156

e-mobility with cars, buses and scooters, in renewables and with 
forestation. 

Together these two approaches provide the basis for an assess-
ment where and to what extent China has converged with the EU 
in the environment and climate components of sustainable devel-
opment as far as trade and investment is concerned. 

China’s environmental and climate strategy today

Having digested extensive fact-finding on the (often) very prob-
lematic  indicators  for  water,  air  and  soil  pollution  in  various 
forms, a brief remark on institutions is appropriate. In the 25 years 
studied, China began with a weak Agency, changing to a stronger 
Agency, next to a ministry which did not have the power to address 
climate mitigation, and since 2018 finally a fully-fledged environ-
mental ministry. In 2018, climate and other environmental issues 
and strategies have been brought under a single ministry MEE: the 
ministry of ecology and environment. From a functional point of 
view, this makes sense. Coordination between these two branches 
of environmental policies is of obvious importance: several pollut-
ants  are  strongly  linked  with  coal,  hence  accompany  CO2  emis-
sions. There is also the argument that the mighty coal sector might 
be less able to block hard decisions in a ministry that does not deal 
with industries as such. Nevertheless, there is a fear that the new 
ministry will not be able to wield the power that the NDRC had 
when it dealt with CO2 (although one can have doubts whether 
this was to the benefit of the environment). 

Another aspect that would seem to be pretty certain to come up 
is stricter enforcement of targets and of amended environmental 
laws. It has already been noted that the OECD Environmental Strin-
gency Index moved up sharply after 2010 and approached OECD 
levels. But this index is not about enforcement. And enforcement 
has been a major weakness in China’s environmental and climate 
policies. Laws often do not work well. If it is not about corruption, 
the  literature  is  unanimous  about  other  principal  reasons.  In  a 

Weinian Hu and Jacques Pelkmans157

country widely seen as autocratic and with top-down government 
style (especially via the Party), the surprising reasons are sporadic 
enforcement, low penalties and weak monitoring. Indeed, if local 
officials  have  no  explicit  incentives,  little  happens.  This  fact-of-
policy-life in China has deep roots. In Pelkmans (2021) a special 
Box 3 is inserted to ask attention for this problem. Chinese gov-
ernance  is  ‘departmental-regional’  fragmented  and  their  leaders 
respond to explicit incentives for policy priorities on which they 
have  to  deliver.  Green  policies  rarely  rank  high.  Environmental 
bureau’s  are  underfunded.  Laws  (especially  before  2015)  tended 
to suffer from four deficiencies: low legislative qualities, too many 
principles, the substance is too basic and the laws are inherently 
difficult to enforce. Environmental rights used not to be defined. 
Monitoring is often weak. And many such laws are not really ‘risk-
based’ but control oriented. 

The idea that local or all officials respond to the strong wish of 
citizens to radically do something about air pollution long seemed 
alien  to  China.  No  wonder  this  is  ill-understood  in  EU  coun-
tries. Only in 2013 the Chinese government began to significantly 
toughen policy. The ‘Ten Tasks’ are often not that much different 
from intentions in Plans but this time the urgency, enforcement 
and  monitoring  are  more  serious,  with  hard  targets  and  ‘bans’ 
in  some  instances.  Criminal  (environmental)  cases  have  been 
recorded  far  more  than  before.  For  2020  a  15%  cut  in  SO2  and 
NOx is mandatory (and Table 2 suggests that was easily met for 
SO2,  but  not  fully  –  in  2019  -  for  NO2).  The  dual  benefits  with 
climate measures of course help a lot. However, the State Council 
went much too far, when announcing160 ‘remarkably improved air 
quality and much greater sense of happiness for the people..”. 

Only a few years later, there are many recent examples of con-
spicuous enforcement set by the government agencies, exemplified 
strikingly by the placing of thousands of cameras in agricultural 
areas  in  order  to  discipline  farmers  and  detect  illegal  disposals. 
Since a few years the Chinese government has also become intol-

160   In the Three Years Action Plan for Blue Sky Defense, June 2018.

EU/China Sustainable Development Cooperation: Towards Convergence?158

erant of ‘dirty’ electricity and ‘dirty’ steel, as inefficient coal-fired 
power  plants  and  furnaces  have  been  dismantled.  Moreover,  the 
tolerance of the Chinese people for extremely bad and damaging air 
and water quality has reduced as well. There are numerous reports 
of protests in local or provincial communities, even in Wuhan just 
before the corona crisis broke out. Nowadays the central govern-
ment appears to be more dedicated to pursue ‘a beautiful China’ 
as a reflection of Xi’s ‘ecological civilization’. Three wide-ranging, 
tougher and much more risk-based environmental laws manifest 
a radical change in addressing the worst pollution in China. First, 
the Air Pollution Prevention and Control Law of 2015, followed in 
2017 by the Water Pollution Prevention and Control Law. Second, 
in  August  2018  the  Soil  Pollution  Prevention  and  Control  Law 
was enacted, a potentially extremely costly but inevitable under-
taking. All three laws are an improvement over past practices, in 
particular  because  the  ‘polluter  pays’  principle  is  followed,  more 
careful surveys are compulsory, and strict environmental liability 
is incorporated. 

Greenhouse gases: China’s early implementation steps of 
Paris

With respect to climate change mitigation, it is useful to first take 
note of the policy intentions linked to the Paris Agreement, Chi-
na’s Nationally Determined Contribution (NDC):

a. 

 To peak its CO2 emission by 2030 or earlier

b. 

c. 

d. 

 To reduce the carbon intensity of GDP by 60% - 65% below 
2005 levels in 2030

 Increase the share of non-fossil fuel to 20% by 2030 (and 
15% by 2020)

 Increase its forest stock by 4.5 bn m3 in 2030 compared 
to 2005

Weinian Hu and Jacques Pelkmans159

Together  these  four  intentions  are  not  consistent  with  global 
warming  below  2  degrees  C,  let  alone  1.5  degrees.161  China  has 
finally put a relative cap on coal consumption (58% share in 2020 
energy  consumption),  yet  lifted  a  ban  on  new  coal-fired  power 
plants  in  2018,  leading  to  a  non-trivial  increase  in  CO2  in  both 
2018  and  2019.  All  targets  of  the  NDC  will  almost  certainly  be 
attained.  The  peak  in  CO2  will  be  reached  by  several  provinces 
claiming to attain their subtarget in a few years after 2020. How-
ever, as shown above, some provinces are ‘coal bases’, and have also 
begun to compensate the strict policies in Beijing and Shanghai by 
higher coal and steel output (e.g. Mongolia, Liaoning and Shanxi). 
So it is simply too early to tell. The fact that coal has been allowed 
to expand capacity 3 years in a row (even though the 3rd year was 
a COVID-19 year) is worsening the problem and casts doubt on 
promises  of  a  pre-2030  peak.  Moreover,  beyond  the  peak,  how 
fast  will  the  CO2  emissions  decrease  ?  In  Pelkmans  (2021,  sec-
tion 6.2.3), early ‘green pointers’ from the 14th Plan are discussed, 
showing that internal struggles (led by coal provinces) cause the 
leadership to be half-hearted. 

  The  carbon  intensity  reduction  is  largely  structurally  deter-
mined, via embodied technical progress and replacement of out-
moded  equipment  and  factories  but  equally  by  a  rapid  rise  of 
non-fossil energy production (which is firmly projected), the third 
target. China may well have another problem, namely, the other 
[non-CO2]  GHGs  such  as  methane,  N2O  and  hydrofluorocar-
bons.  Climate  Tracker  expects  that  by  2030  non-CO2  emissions 
will  make  up  nearly  25%  of  China’s  GHGs  (in  CO2  equivalent). 
This issue is also linked with the Kigali Amendment of the ozone 
protocols (such as Montreal).162 The question is therefore what and 
how much China will do how fast in order to reign in such GHGs. 
Now that China has used end-of-pipe technologies to reduce emis-
sions such as SO2 and NOx, the only effective remedy for further 

161  Similarly, the EU’s NDC is also insufficient. Whereas Carbon Tracker assesses China’s 

NDC as ‘highly insufficient’, the EU is seen as ‘insufficient’. 

162  See Table 1. Note that the Kigali amendment on HFCs has very long adaptation times 

(for China up to 2045).

EU/China Sustainable Development Cooperation: Towards Convergence?160

caps  is  to  tackle  the  coal  production  and  use.  What  is  different, 
however, is the pricing of coal. In February 2021 China’s ETS was 
formally initiated. It will take a few years before it is expected to 
be truly effective, as explained in Box 10, given teething problems 
and the fear for data falsification. Once these problems have been 
ironed out, all depends on how stringent and how swift the con-
straints on companies emissions will be tightened. 

Box 10: China’s ETS, an early assessment

On 1st February 2021 China officially initiated its national ETS 
for  the  electricity  sector,  some  2200  power  plants.  The  basic 
idea is the same as in the EU: with allowances for CO2 a com-
pany (now, only power plants; later, possibly other sectors as in 
the EU) the price for carbon should incentivise participants to 
become less pollutant via efficiency, new (‘greener’) technology, 
restructuring of production or substitution. This can only work 
when  carbon  prices  become  high  enough  reaching  perhaps  € 
20 or even € 30 or € 40 and that, in turn, necessitates a certain 
scarcity  of  allowances,  and  this  scarcity  ought  to  increase  over 
time. Once carbon prices are high, it is also possible that certain 
types of production – having no adequate alternative technology 
– must be terminated. In China the very large majority of power 
plants run on coal, and, of most fuels, coal is relatively pollutant. 
Once the China ETS works, coal will become expensive, even-
tually  be  phased  out  and  alternative  fuels  or  renewable  energy 
must be used. 

The  good  thing  about  introducing  a  China  ETS  is  that  the 
taboo  on  pricing  coal  out  of  the  market  is  gone.  Nevertheless, 
at  this  very  early  stage  the  ETS  will  not  do  much  to  curb  coal 
presence and coal power in China. As in the EU in the early years 
of  the  ETS  and,  again,  right  after  the  financial  crisis,  there  are 
strong  indications  that  the  quantity  of  allowances  is  too  large, 
hence the carbon price will be much too low, and not exercise 
any pressure or incentivise ‘green’ investment or a fuel switch. 

Weinian Hu and Jacques Pelkmans161

Authorities in China have confirmed that the switch from city-
based to a national system will inevitably have teething problems 
and they need time to iron them out. One deeply rooted practice 
in China (by regional officials) is underreporting on a massive 
scale if acting otherwise might hurt economic growth. During 
the pilots, second or third stage verifiers were appointed so as to 
be capable of detecting such underreporting. Moreover, a failure 
to report has a penalty of only 30.000 yuan, some €3500, which 
for power plants is peanuts. 

Moreover,  the  technique  of  the  ETS  differs  from  that  in 
the EU. In the EU a limit (cap) is set on the volume of carbon 
emissions and that limit can be adjusted downwards over time. 
Instead,  in  China  the  constraint  consists  of  a  ‘carbon  intensity 
limit’ for every unit of electricity a power plant generates [carbon 
intensity is defined as how much CO2 is generated per unit of 
GDP]. If a power plant remains below that constraint, the allow-
ances in surplus can be sold on the carbon market. As Figure 4 
shows, China still had a very problematic ‘carbon intensity’ com-
pared to the US and Japan in 2018, let alone to the EU. With a 
benchmark of 0.877tCO2/MWh, it appears that all power plants 
of  300MW  and  larger  can  easily  comply  and  will  see  no  need 
to  buy  new  allowances.  There  are  3  possible  escapes.  One  is  a 
5% offset if firms fund projects in renewable energy or forestry. 
Another is a ‘load factor correction’ in case power plants run at 
half of their capacity or less, allowing a softer benchmark. Run-
ning at low capacity is not so unusual in China, in some cases due 
to renewable energy coming to the network, although one won-
ders how the costs are covered. A third escape is a cap of 20% on 
how much companies can pay (in terms of extra allowances) for 
over-emitting. On the other hand, in a country without carbon 
taxes, uneven climate regulations and regional disparities there 
is a huge need to get used to this system and its pervasiveness. 
Experts expect the China ETS to begin to work more effectively 
in another 3 – 5 years.

EU/China Sustainable Development Cooperation: Towards Convergence?162

On forestation, we have already noted that China has success-
fully increased the area covered with forests to more than 22% of 
its land. This has a double motive: against desertification (the large 
Gobi  desert  tended  to  augment)  and  supporting  the  mitigation 
of climate change. The target of reforestation in 2020 in China is 
23.04%  of  the  land,  and  26%  by  2035.  The  target  to  be  made  in 
2030 will therefore not be a problem, not least because stopping 
the  Gobi  desert  from  incrementing  (and  with  it  the  occasional 
sand storms) is a powerful motive and widely supported. The scale 
of this 40-years reforestation project is truly amazing. There is crit-
icism  such  as  the  monoculture  generated  and  the  relatively  low 
absorption capacity of CO2 of these new forests. 

Can ‘responsible business’ in China contribute? 

There are many indications in China that it is not just ‘the state’ 
long  having  taken  a  weak  stance  on  sustainable  development 
whilst paying lipservice since the late 1990s, but equally that Chi-
nese business (including SOEs) exploited the lack of credibility of 
enforcement in order to avoid the costs of following the rules and 
intent of environmental laws. This is less true for foreign-owned 
companies  in  China  used  to  stricter  regimes  at  home.  With  the 
old SOEs in a non-competitive environment having died out, prof-
it-maximization and/or shareholder value seemed to be the only 
guidance of business leaders. The idea of ‘responsible business’ or 
a voluntary take-up of ‘corporate social responsibility’ (CSR) was 
long alien to China. 

This is not the place to write the (short) history of CSR in China 
but  the  numerous  small  spontaneous  protests  from  workers  or 
the  regional  population  after  accidents  revealing  a  severe  disre-
gard of the rules or in anticipation of major infrastructural pro-
jects imposed on the locals (e.g. the extreme example of the Three 
Gorges dam is just one amongst many) without any voice for the 
locals naturally drew the attention of green NGOs. With criticism 
getting more widespread, president Hu Jintao and the government 

Weinian Hu and Jacques Pelkmans163

launched the ‘scientific development concept’ in 2003 (a better term 
is  ‘societal  development’  or  indeed  sustainable  development).163 
The  promotion  of  voluntary  CSR  followed  soon  and  laws  were 
enacted  with  guidance  as  well.  None  of  this  was  bottom-up  and 
business showed no real commitment. It is held that this changed 
somewhat after the earthquakes in Sichuan in 2008 when business 
in China rushed in to help with equipment or money. However, in 
her  work  on  China’s  extractive  industries  (mining,  fisheries  and 
forestry)  –  easily  amongst  the  worst  offenders  in  terms  of  envi-
ronment – Tan-Mullins (2014) finds a lacklustre performance at 
best, and possibly much less in their FDI or sourcing abroad in e.g. 
Africa. For one, raising the issues of ‘transparency’ and ‘account-
ability’ is highly sensitive as questions of corruption and bribery 
are  purposefully  neglected.  This  is  despite  the  large  majority  of 
extractive  firms  in  e.g.  mining  being  SOEs.  Best  practice  global 
standards such as the EITI164 are not adopted in China, probably 
for this reason.165 

More generally, empirical work on CSR in China is still in its 
infancy.  One  inference  is  clear:  it  is  not  widespread  in  business 
and  SOEs  are  overrepresented.  The  latter  might  be  attributed  to 
the tighter government hand in the governance of SOEs.166 Oliver 
Rui of the China Europe International Business School has com-
posed  a  CSR  index  for  Chinese  listed  companies.167  Of  the  3052 
A-share companies listed in 2017 in Shenzhen and Shanghai, only 
one  quarter  disclosed  CSR  reports  but  many  were  not  detailed 

163   It is defined as people-oriented, comprehensive, coordinated and sustainable devel-
opment  which  aims  to  protect  the  environmental  and  livelihood  security  of  China’s 
citizenry. 

164 The Extractive Industries Transparency Initiative, see www.eiti.org 

165  Although Tan-Mullins also warns that some adaptation of global standards to China 
might  be  wise  as  otherwise  such  standards  risk  to  be  discredited  as  the  outcome  of 
Western hegemony in the CSR debate. 

166 The board of every SOE has a mandatory seat for a representative of the CCP. 

167  See 

https://www.ceibs.edu/new-papers-columns/growing-csr-china-first-corpo-

rate-social-responsibility-index-chinese-listed March 2018

EU/China Sustainable Development Cooperation: Towards Convergence?164

and lacked data.168 Therefore, now the CSR Index only comprises 
the  performance  of  the  top-50.  Since  2009  there  is  an  interna-
tional conference on CSR reporting in China and the Golden Bee 
report169 has a detailed analysis of the status after 10 annual con-
ferences.  Data  confirms  more  or  less  the  picture  from  professor 
Rui: nowadays there are some 2000 CSR reports a year and 399 are 
rated ‘good’.170 Firms listed on the HK stock exchange (with stricter 
requirements) score some 25% better than those listed in Shanghai 
or Shenzhen. So far, CSR is voluntary but in 2021 the regime will 
become stricter which should be helpful: ESG level disclosure will 
become  mandatory  for  some  3000  firms  listed  (and  a  few  bond 
issuers). 

Empirical  work  by  Li,  Khalili  &  Cheng  (2019)  is  helpful  for 
acquiring  an  idea  whether  CSR  can  contribute  to  improve  envi-
ronmental  performance  of  business.  Much  of  CSR  reporting  in 
China is about business projects resulting in environmental and/
or social improvements. Of 31 100 projects by these companies, 
some 23 500 focus on environmental responsibility (esp. air, water, 
energy,  and  solid  or  hazardous  waste);  the  upward  trend  of  the 
number of projects over the ten years is rather sharp. This would 
seem to suggest that Chinese business begins to assume environ-
mental responsibility itself, even though in some areas these pro-
jects are a consequence of new laws or enforcement. A small group 
of companies, though mostly large ones, may well become a hand-
maiden  of  China’s  sustainable  development.  Another  interesting 
empirical  finding  is  that  a  company  will  gain  a  higher  revenue 
when it engages in CSR with many projects which should facilitate 
the  further  acceptance  of  a  serious  CSR  approach  amongst  Chi-
nese companies. That in turn can contribute to the achievement of 

168 The author notes that many firms do not go beyond donations to charity, or attempts 
to conserve nature ; international CSR standards also prescribe disclosure of company 
operation and management, product quality and innovation, responsibility to employ-
ees and diversity in staff. The basic idea is that seven stakeholders are well informed : 
customers,  employees,  environment,  communities,  shareholders,  suppliers  and  gov-
ernment. 

169  See  www.csr2.mofcom.gov.cn/article/ckts/sr/201712/20171202687223.shtml  18  Dec. 

2018 

170   Following the HongKong ESG Guide (ESG= Environmental, Social and Governance) 

Weinian Hu and Jacques Pelkmans165

sustainable development in a natural way driven by local initiative 
and respectable business practices. 

An EU FTA sustainable development ‘standard’ for EU/
China trade policy

The  sustainable  development  chapter  of  recent  EU  FTAs  can  be 
regarded  as  an  inventory  of  trade-related  sustainable  develop-
ment specifications for environment and climate. It represents EU 
preferences with respect to NTPOs (in environment and climate 
policies) in bilateral trade and investment relations. The FTA with 
Japan is amongst the most ambitious ‘deep’ FTAs concluded by the 
EU and indeed in the world. One might call it the “EU trade-re-
lated  sustainable  development  standard  in  environment  and  cli-
mate”.  This  subsection  uses  this  inventory  or  “EU  standard”  for 
a  proxy  assessment  of  the  trade-related  NTPOs  in  environment 
and climate on which the EU and China would seem to agree. The 
inventory is much more about aims, strategic perspectives, policy 
intentions and commitments and not, or at best very selectively, 
about  indicators.  Nevertheless,  it  is  a  measurable  and  verifiable 
method to understand whether and to what extent policy conver-
gence in (trade-related) environment and climate between China 
and the EU can be observed. 

The EU and China do not have a FTA and are also not nego-
tiating  one.  Table  3  summarizes  the  green  pillar  of  the  sustain-
able development chapter in the EPA between the EU and Japan, 
except  the  consultation  and  dispute  settlement  part  (as  there  is 
no FTA between China and the EU). The 4th column proxies our 
assessment on whether an EU/China FTA could well include these 
objectives or activities too. References or quotations from Chinese 
leaders  or  institutions  underpinning  or  exemplifying  confirma-
tions in the fourth column of Table 3 are collected in Annex II of 
Pelkmans (2021).

EU/China Sustainable Development Cooperation: Towards Convergence?166

Table 3: China’s convergence with the EU “standard” on sustainable 
development171

no

subject

Items of substance (short) Reflected in EU/China  

1

Context 
&  
objec-
tives

•  Trade contributing to 

•   yes, reference in Annex II

cooperation

•  yes, see the survey in Table 1

•  yes, reference in Annex II

sustainable development

•  Considering specific 

MEAs, etc.

•  Economic/social devel-
opment and environ-
mental protection

2

Right to 
regulate

•  Right to regulate

•  implied by regular caveats

•  International standards

•  frequently, yes, 

•  Strive to ensure high 

•  very similar, see Annex II

3

On 
MEAs

levels of environmental 
protection

•  3 non-regression clauses; 
non-discrimination; non 
arbitrariness

•  Effectively implement 

MEAs

•  Trade & environment, 
mutually supportive

•  Trade-related environ-

mental matters, exchange 
views/info

•  Re-affirm UNFCCC + 

•  unclear; but intensive coop-

eration suggests: yes

•  Yes, MEAs often re-affirmed; 
EU and China are conver-
gent in terms of (12) MEAs, 
see Table 1

•  yes, see Annex II

•  For decades, has been done 
and intensified between EU 
and China

Paris

•  Strongly and repeatedly

•  Cooperate so that trade 
is positive for transition 
to low-GHG emissions

•  yes, see Annex II

171   On environment and climate policies only.

Weinian Hu and Jacques Pelkmans167

4

Trade 
and 
invest-
ment 
favouring 
sustain-
able devel-
opment 

5

Biological 
diversity

•  Facilitate/promote trade 
& investment in environ-
mental goods & services 

•  EGA was a plurilateral 

attempt, with the EU and 
China, now stuck

•  Idem, in goods and ser-
vices suitable to combat 
climate change

•  Promote trade under 
labelling schemes and 
private initiatives

•  Re-affirm CBD and 

CITES

•  EGA attempt can be widened 

to include this 

•  partial confirmation, see 

Annex II

•  not literally but clearly 
implied, see Annex II

•  Including labelling 

•  via multilateral routes

schemes and combatting 
illegal trade

•  idem

•  Details on implemen-

tation

•  Consult on e.g. wildlife, 

ecosystems, etc.

6

Sustain-
able for-
estry

•  Trade and investment 
serving sustainable 
forestry

7

Sustainable 
fishing

•  And timber trade/timber 

products

•  Contribute to combat 

illegal logging

•  Trade & investment 
serving sustainable 
fishing/ aquaculture

•  Comply with UN & FAO 
conventions and imple-
ment port measures

•  Encourage sustainable 

fisheries in RFMOs (and 
credible controls)

•  Combat IUU

•  all 3 items follow directly 
from the 2009 China-EU 
BCM (Bilateral Coordina-
tion Mechanism) on Forest 
Law and Governance and its 
active follow-up

•  China has gradually shifted 
closer to EU positions, both 
multilaterally (UN and FAO) 
and bilaterally

•  in 2018 all aspects (also 

IUU) included in the Blue 
Partnership for the Oceans 
(with China)

EU/China Sustainable Development Cooperation: Towards Convergence?168

8

9

Scientific 
informa-
tion

•  Parties take account of 
scientific information + 
precautionary principle

•  no general issue, so far, but 
‘open science’ agreed for 
Oceans

•  precautionary principle or 
approach im- or explicit in 
MEAs

Transpar-
ency and 
evalua-
tion

•  Pursuit of sustainable 
development in trans-
parent way

•  transparency can sit uneasily 

with China’s way of gov-
erning, although improving

•  Sustainability impact 

•  China has environmental 

assessment

•  Cooperation over a wide 
spectrum of sustainable 
development issues

impact assessments but often 
local. Rigour & independ-
ence of authors unknown

•  Yes, the EU/China Dia-

logues and other bilateral 
programmes, projects and 
partnerships testify about 
sustainable development 
cooperation since (say) 2003

10 Coop-

erate on 
sustain-
able 
develop-
ment 

The context and objectives (item 1) taken from the FTA with 
Japan would seem to present no problem for China as the first and 
third sub-items are clearly implied in declarations or summaries 
of meetings or press releases. On the MEAs, as is shown in detail 
in Table 1, China and the EU are convergent for no less than 12 
MEAs as well as Protocols or later Annexes . 

The  right-to-regulate  (item  2)  is  an  obvious  entitlement  for 
any  State.  The  commitment  to  apply  international  standards  or 
agreements is typically followed by China case by case, but after 
decades of international as well as bilateral cooperation China is 
firmly woven into webs of international agreements and standards. 
Striving to ensure high levels of environmental protection is not so 
easy to assess. In recent speeches of the Chinese leadership, pow-
erful language is employed suggesting full support of high levels 
of protection. But that is probably best interpreted as aims for the 
longer  run,  except  for  e.g.  renewables,  electric  vehicles  and  bat-

Weinian Hu and Jacques Pelkmans 
169

teries. Thus ‘striving’ is indeed the appropriate wording. The three 
non-regression clauses have the purpose of not undermining the 
high levels of protection. They consist of: (a) ‘not encourage trade 
or  investment  by  relaxing  or  lowering  the  level  of  protection’  in 
environmental and climate laws ; (b) ‘not waive or otherwise der-
ogate from those laws and regulations’; (c) not ‘fail to effectively 
enforce’. It is here where a (deep) FTA might well be different than 
more transactional cooperation because China might not wish to 
be so constrained in addressing the domestic consequences of sus-
tainable development policies (even when it might agree with the 
idea). However, in the draft CAI non-regression clauses have been 
included. Furthermore, the ban on arbitrary or unjustifiable dis-
crimination  or  disguised  restriction  might  be  difficult  for  China 
to formally commit to, again even when it might agree with the 
idea itself. 

If there is one very broad and important area of environmental 
and climate policy where the EU and China agree fully, it is the 
commitments to MEAs and their later amendments or extensions 
(item 3). In fact, a large part of environmental/climate aspects of 
sustainable  development  is  covered  by  MEAs  and  it  would  be  a 
major mistake to focus on such EU/China cooperation as a pre-
dominantly  bilateral  question.  It  is  more  the  other  way  around: 
much  of  EU/China  bilateral  cooperation  and  wider  trade  policy 
with respect to environment and climate is about bilateral accen-
tuation, re-affirmation and practical implementation of the MEAs 
as  well  as  the  working-together  in  the  multilateral  environment 
to accomplish common objectives or targets172. There is no doubt 
that the two partners support all 4 sub-items in item 3 explicitly or 
implicitly. 

Partners  in  deep  FTAs  typically  consider  such  FTAs  as  yet 
another  force  to  stimulate  trade  and  investment  favouring  sus-
tainable development (item 4). However, moving from principled 

172 There is only one exception to China’s willingness to join MEAs: the UN Watercourses 
Convention  (on  transboundary  water  cooperation).  Here  China  assumes  a  bilateral 
approach. In the EU this is little known because the EU has no common boundary with 
China. See Pelkmans (2021, section 6.2.3). 

EU/China Sustainable Development Cooperation: Towards Convergence?170

agreement  of  2  countries  to  the  pluri-lateral  (for  example,  the 
EGA) or multilateral negotiation environment is not a small step. 
Thus, on the 3 sub-items of this domain there is unlikely to be dis-
cord between the EU and China at the general level but these aims 
are not nearly concrete and practical enough for an EGA173 to be 
accomplished. 

China  and  the  EU  agree  on  the  main  initiatives  of  biological 
diversity  as  well  as  on  the  MEAs  like  CBD  and  CITES  (item  5). 
Indeed, China is the host of the biodiversity COP conference in 
Kunming  in  the  autumn  of  2021.  But  China  is  also  a  source  of 
demand for dubious or forbidden products, usually based on fake 
medical  or  physical  convictions.  Combatting  illegal  trade  thus 
implies  tough  customs  and  knowledge  of  informal  trade  net-
works. Analogous to fair trade and some other cases, an effective 
implementation  of  CITES,  for  instance,  requires  investments  in 
and cooperation on wildlife in some countries and in the knowl-
edge and conservation of eco-systems. Both CBD and CITES are 
demanding in implementation which leaves considerable scope to 
disagree on implementation whilst agreeing on the objectives.

Sustainable forestry

Sustainable forestry (item 6) has long been a subject of deep coop-
eration (e.g. Indonesia as a frontrunner with the EU) before the 
subject  began  to  enter  FTA  texts.  China  firmly  agrees  with  the 
three  sub-items. The  topic  is  important  for  reasons  of  trade  and 
complex  to  organize  domestically  in  participating  countries  and 
internationally.  In  2009  China  and  the  EU  established  a  BCM 
(Bilateral  Coordination  Mechanism)  on  FLEG  which  stands  for 
Forest Law Enforcement and Governance 174. The EU participates 
with  the  European  Commission  and  interested  Member  States. 
The overall objective is to contribute to the reduction of illegal log-

173 The exact list of environmental goods or goods relevant for facilitating the mitigation 
of climate change [ see de Melo and Solleder, 2019] is critical for the practical meaning 
of this type of commitment. This is complex.

174  See www.euflegt.efi.int/documents/10180/23033/2009+EU+China+BCM+Agreement 

Weinian Hu and Jacques Pelkmans171

ging and associated trade globally in order to promote sustainable 
development  –  environmentally,  socially  and  economically  (Art. 
2.1). FLEG is inspired by the FLEGT initiative of the EU that has 
been concluded with several ASEAN countries and some African 
ones as well. The BCM focuses precisely on China’s relations with 
and imports from such countries, besides China’s exports to ‘regu-
lated’ countries. It is well-known that local efforts to organize sus-
tainable forestry (e.g. in East Malaysia and Indonesia, etc.) remain 
ineffective if the demand side (often China) is not addressed firmly 
as well.

The  origin  of  China’s  interest  is  found  in  the  1998  and  later 
restrictions for its own forests with respect to harvesting. In turn 
this  has  triggered  a  gradual  but  steady  rise  in  imported  forest 
products. China is a huge importer of timber and related products 
(pulp & paper, plywood) with US$ 51 bn in 2017 and it used to be a 
formidable exporter as well but has now lost almost one third of its 
2007 foreign sales.175 Although there is worldwide concern about 
illegal logging and a quest for better governance of trade and cer-
tification, the EU FLEGT initiative has been a leading example in 
this respect. In 2019 there were 15 FLEGT VPA (Voluntary Part-
nership  Agreement)  countries  which  have  minimum  regulation 
and certification requirements as a condition for exporting to the 
EU. This has acted as a standard for quite a few countries and stim-
ulated  China  to  act  in  a  similar  fashion.  However,  the  legal  and 
administrative  detail  and  verification  are  demanding  before  ful-
ly-fledged and reliable licences can become compulsory. Between 
2007 and 2017 Chinese timber imports from FLEGT VPA coun-
tries increased by 136% in in US dollar terms and is thereby the 
second biggest importer from VPA countries behind the US, but 
far ahead of the EU, the import share of which halved in a decade 
to 16% in 2017. On the export side, some 52% of Chinese exports 
of  timber  products  were  bound  for  regulated  markets  i.e.  only 
demonstratably legal timber is allowed to come in. Exports to the 

175   This is usually attributed to increasing demand from a rising Chinese middle class. 
China’s exports in 2007 were equal to its imports. Source : Briefing, Analysis of China’s 
trade with the EU and VPA countries 2007 – 2017, see EU FLEGT Facility (2019b)

EU/China Sustainable Development Cooperation: Towards Convergence?172

EU increased by more than 50% in value but remain stagnant by 
volume, a sign that consumers have shifted to higher priced goods 
such as furniture.

A stubborn problem remains that, in the complex flows from 
countries that export to China first, and subsequently for the pro-
cessing inside China, before exporting to third countries, guaran-
teed tracking is extremely difficult. There is no mandated robust 
chain of custody systems and there are no Chinese import regu-
lations (yet) ensuring that all imports are verified as legal. Clearly, 
this  is  partly  what  the  annual  BCM  meetings  with  China  are 
about.  During  the  9th  meeting  in  March  2018  a  Work  Plan  was 
adopted  with  a  host  of  options  to  address  this  issue,  e.g.  import 
management measures, the development of the CTLVS (Chinese 
Timber  Legality  Verification  System),  a  new  monitoring  system 
with guidelines and more incentives for the private sector to adopt 
responsible  purchasing  of  forestry  products.  The  original  BCM 
agreement also mentions (Art. 3.2) codes of conduct for European 
or Chinese businesses. Meanwhile, in 2020 China has amended its 
forest  law  prohibiting  the  purchase,  transport  and  processing  of 
illegal wood.

China,  the  EU  and  Indonesia  (a  big  exporter  to  China)  have 
developed a trialogue with respect to FLEGT and the VPAs.176 This 
is  important  as  Indonesia  is  still  the  only  ASEAN  country  with 
a fully developed licensing system (since 2016 - EU legal timber 
imports of €2 bn in 2018) and since China is by far its biggest client. 
In  the  meantime,  ASEAN  ministers  have  endorsed  an  ASEAN 
Code of Conduct on timber imports in 2019. There are also initi-
atives on Vietnam – China and China -Myanmar trade in timber, 
all stimulated by the FLEGT approach. Since a number of the VPA 
countries  is  in  Africa,  and  China  is  once  again  a  major  client,  a 
China-Africa-EU trialogue is being set up to help these countries 
and to level the playing field in the interest of the environment.

176   See for this and other initiatives, EU FLEGT Facility, Annual Report 2018, see www.
euflegt.efi.int . In 2020 the Chinese Academy of Forestry recommended the Chinese 
recognition of Indonesian V-Legal documents, the study underlying this recommen-
dation was co-funded by EU FLEGT. 

Weinian Hu and Jacques Pelkmans173

Sustainable fisheries

Sustainable  fisheries  (item  7  )  is  perhaps  even  more  demanding 
than forestry. In fisheries there is a complex web of regional and 
international  organisations  as  well  as  private  certifiers.  In  2020 
China agrees with most if not all of the four subsitems as formu-
lated.  But  in  the  past  its  record  in  IUU  has  been  problematic,  if 
not worse, and its reputation for the arrangements for fishing in 
African waters is subject to much improvement. 

For 2015 the FAO (2018b) estimates China’s world share of pro-
duction being as high as 37.7% (79.3 mn ton). This is much higher 
than China’s share in the world population or world GDP. There 
is  little  doubt  that  ‘growth  at  all  costs’  was  practiced  for  several 
decades, just like in industry, pushed by unemployment in coastal 
communities,  and  stimulated  by  subsidies.  The  next  three  econ-
omies on the FAO list (Indonesia, India and the EU, together in 
population  nearly  double  that  of  China)  only  generate  18.4%  of 
world fisheries output, half of that of China.177 It is therefore of the 
greatest importance that the EU and China assume leadership in 
order  to  make  world fisheries sustainable  and – in  the process - 
level the playing field. 

However,  fisheries  is  a  very  complex  policy  area,  not  only 
because of the sovereign waters issue (EEZs, exclusive economic 
zones)  but  also  because  Asian  and  European  fishing  boats  have 
become more dependent on Distant-Water-Fleets (DWF), which 
in turn often require subsidies in order to be profitably operated. 
There are complications flowing from modern fishing technology 
(e.g.  bottom  trawlers  destroying  bio-diversity),  lack  of  transpar-
ency  of  bilateral  agreements  (especially  when  these  are  coupled 
with loans and grants as China routinely does, and, in so doing, 
creating dependency) to allow DWFs in one’s EEZs, depletion of 
stocks in certain areas, and unreliable data. Although reporting to 

177   If one focuses only on catches (not aquaculture), the joint share of the three followers 
is just over 90% of the Chinese catches. It is aquaculture which creates the biggest gap. 

EU/China Sustainable Development Cooperation: Towards Convergence?174

the FAO is compulsory, a 2012 report for the EP178 calculated that 
between 2000 and 2011 inclusive, China had massively underre-
ported its DWF catches: rather than the reported annual average 
of 368K tonnes, the better estimate turned out to be around 4600K 
tonnes, some 12 times this reported volume. Over 60% of this huge 
amount is caught in African waters, often under murky or confi-
dential contracts with loans attached. Inspections there are weak 
or simply absent. When in Europe, with strict rules, certification 
and quotas commonly enforced as well as the arrangements under 
the EU common fisheries policy and RFMOs, the governance of 
sustainable fisheries can already be controversial, it is not hard to 
appreciate that this sustainability is much more difficult to achieve 
in other parts of the world, including China.

EU-China  cooperation  in  fisheries  dates  back  to  2010  when 
the partners signed a MoU for a High-Level Dialogue on an inte-
grated approach to Ocean Affairs, and to the High Level Dialogue 
on Fisheries. The timing seems not to be a coincidence. The EU 
enacted a tough Control Regulation 1224/2009 with a system of 
green, yellow and red cards. China exports a lot of fish to the EU 
and had every interest to obtain and maintain a green card. A red 
card would imply penalties or even an import ban. Besides, there 
is a High-Level Dialogue on Law of the Sea and Polar Affairs and, 
since 2016, an EU-China WG on IUU. In the EU/China Summit 
(July  2018),  cooperation  was  reinforced  through  the  ‘Blue  Part-
nership for the Oceans’179 which includes sustainable fisheries. The 
objectives  of  this  Partnership  include  ‘to  ensure  effective  gover-
nance for the conservation and sustainable use of the oceans’, ‘…
strengthening…ocean  governance  mechanisms  and  structures, 
including  in  ...  fisheries’  that  ‘keep  oceans  clean,  healthy,  pro-

178  See www.europarl.europa.eu/meetdoes/2009-2014/documents/pech/dv/chi/china.pdf, 
The role of China in world fisheries. Note that China Tuna Industry Group revealed 
formally (in a IPO !) in September 2014 that China had been taking advantage of lax 
enforcement to exceed catch quotas for bigeye and yellowfin tuna in the Pacific. Inter-
esting enough, this was seen by competitors in China as an incentive to go for private 
certification  with  respect  to  sustainability  with  e.g.  Friends-of-the-Sea  and  Marine 
Stewardship Council regarded as credible all over the world. 

179  See  https://ec.europa.eu/fisheries/eu-and-china-sign-landmark-partnership-oceans_
en of 16 July 2018, The Declaration on the Blue Partnership (with details) is attached. 

Weinian Hu and Jacques Pelkmans175

ductive and safe’, and, finally, enhancing technical cooperation in 
many ways and forms. The ‘effective …fighting [of] IUU fishing 
activities’ e.g., by tracking suspected vessels and strengthen effec-
tive systems of control, inspection and enforcement is surely the 
right way to proceed. The Declaration on the Partnership also pro-
motes ‘open science and open data’. 

Although there are serious sustainability problems in fisheries 
worldwide, there is also a lot of activity on formal and informal 
commitments  between  neighbouring  countries,  in  regions,  in 
catchment  areas  and  multilaterally,  and  both  public  and  private. 
EU-China fisheries cooperation must be understood against sev-
eral  UN-inspired  treaties  like  UNCLOS  and  UNFSA,180  EU  par-
ticipation  in  6  ‘tuna  RFMOs’  (Regional  Fisheries  Management 
Organisations) and 11 non-tuna RFMOs, giving the EU a unique 
position to lead on world governance in fisheries. RFMOs can set 
catch  limits,  impose  technical  measures  and  control  obligations. 
For the EU’s own fleet, the EU has concluded 18 SFPAs (Sustain-
able  Fisheries  Partnership  Agreements)  for  fishing  in  EEZs  of 
partner countries, but with a regulated and guaranteed environ-
ment  that  does  not  differ  in  governance  between  countries  as  it 
is derived from strict EU laws applicable in the EU itself. The EU 
would ideally want China to conclude such SFPAs based on high [ 
read: EU] standards which do not depend on negotiation strength, 
agreements which are public and not linked to loans or aid as such. 
The relevant EU regulation is Reg. 2017/2403 of 12 Dec 2017 on 
the sustainable management of external fishing fleets. 

The problem of fisheries subsidies is very weakly tackled within 
the  context  of  ‘precise  reporting’  (against  IUU  fishing)  under 
Article  25.3  in  the  WTO  Agreement  on  Subsidies  and  Counter-
vailing Measures and what are the prohibited subsidies (and sub-
sequently  what  should  be  the  exceptions)  contributing  to  IUU 
fishing,  fishing  or  fishing-related  activities  regarding  overfished 
stock, and overcapacity and overfishing (e.g., subsidies for building 

180  UNCLOS is UN Convention on the law of the seas, and UNFSA is the UN Fish Stocks 

Agreement.

EU/China Sustainable Development Cooperation: Towards Convergence?176

or upgrading vessels, fuel subsidies, price support for fish caught). 
The  subject  has  been  under  negotiation  since  2001.  Clearly,  the 
EU  and  China  can  be  useful  here,  not  least  because  China  and 
the EU are the world’s biggest fishery subsidizers (the 3rd largest 
is the United States),181 but China does not have a strict state aids 
tradition  as  the  EU  has  had  for  decades.  Moreover,  the  Chinese 
fleet  is  so  ‘oversized’  (i.e.,  kept  large,  without  cutting  in  earnest) 
that subsidy disciplines can only mean considerable cuts in vessels 
and production (especially DWFs) for years. This is bound to be 
resisted and alternative employment might have to be sought. 

The subsidy question is complex because not all fisheries subsi-
dies are automatically distortive, nor do they always keep the fleet 
size.  The  issue  of  ‘special  and  differential  treatment’  that  WTO 
developing members may be entitled to adds more complications 
to the negotiations, and China speaks for itself and for other WTO 
developing  members,182  for  example,  concerning  their  ‘right  for 
development’.183 For example, China itself has let it be known that 
its  capacity  constraints  as  a  developing  country  and  the  absence 
thus far of a comprehensive statistical system make it difficult to 
notify  relevant  measures  and  implement  disciplines  of  overca-
pacity,  overfishing  or  overfished  stocks,  since  basic  supporting 
data is missing.184 This issue may be tackled by the country itself 
and within the framework of the bilateral cooperation on sustain-
able fisheries, since data transparency is covered by the scope. As 
Bayramoglu,  Copeland,  Fugazza  &  Jacques  (2019)  argue,  and  as 
the EU has practiced for a while, it is the combination of subsidy 
controls  and  various  quota  that  is  optimal  for  conservation  and 
consistent with incentives for negotiation. In any event, following 
the mandate of the Buenos Aires 11th WTO ministerial in January 

181  See  World  Trade  Organization  Fisheries  Subsidies  Negotiations,  Congressional  Re-

search Service, September 16, 2021.

182  See China’s proposal on WTO reform published in May 2019. Among others, it pleads 
for safeguarding the development interests of developing members, particularly in the 
areas of agriculture, trade remedy rules, fisheries subsidies, e-commerce and new is-
sues, such as investment facilitation.

183  For detailed discussions, see Hu (2019a). 

184  See Zhang X., Xu Q. & Wang J (2019).

Weinian Hu and Jacques Pelkmans177

2017,  the  chair  of  the  fisheries  subsidies  negotiations  submitted 
in  November  2021  a  draft  agreement  of  consolidated  text,  with 
the different positions held by members starting from the scope 
of  the  agreement,  and  the  definitions,  like  ‘fishing  related  activ-
ities’.  But  ‘nothing  is  agreed  until  everything  is  agreed’.185  So  the 
negotiations will continue. Presently, the disagreement among the 
members  focuses  on  the  special  and  differential  treatment  (e.g., 
the grace period for implementation) and exceptions for certain 
subsidies, for example, whether fuel subsidies should be included 
in the agreement. Some developing country members argue that 
the sustainability conditionality, which is a focus of the agreement, 
would  disproportionately  benefit  developed  economies  who  are 
already large subsidizers, such as the EU and the United States.186 

The  EU  and  China  have  a  great  opportunity  to  assume  gen-
uine leadership. Although its ambition may be limited due to its 
insistence on being a WTO developing member on fisheries sub-
sidies negotiations, China has every incentive given its enormous 
economic,  social  and  environmental  stake  and  the  EU  pretends 
already  for  years  to  be  in  the  lead  when  it  comes  to  global  fish-
eries governance. The EU has indeed a unique position not only 
as a frontrunner in responsible fisheries rules coupled to controls 
and given its membership of partnership and RFMOs all over the 
world, but above all because its leverage is powerful, being the big-
gest fish importer in the world – it is credible when setting stan-
dards. Therefore, the EU-China fisheries cooperation can be deci-
sive bilaterally but also globally.

185  See  Agreement  on  Fisheries  Subsidies,  Draft  Text,  24  November  2021,  WT/
MIN(21)/W/5/Add.1,  available  at:  https://docs.wto.org/dol2fe/Pages/SS/directdoc.as-
px?filename=q:/WT/MIN21/W5A1.pdf&Open=True.

186  See Article 1.5, Agreement on Fisheries Subsidies, Draft Text, 24 November 2021, WT/
MIN(21)/W/5/Add.1, also World Trade Organization Fisheries Subsidies Negotiations, 
Congressional Research Service, September 16, 2021.

EU/China Sustainable Development Cooperation: Towards Convergence?178

Science- and evidence-based approaches to sustainable 
development

Item  8  is  about  objective,  science-based  and  evidence-based 
approaches  of  sustainable  development.  Also 
international 
standards should guide national policies. And the precautionary 
approach may be justified if scientific knowledge is insufficient in 
the  presence  of  very  serious,  possibly  irreversible  damage.  Over 
time China has clearly moved into this direction for environment 
and climate issues. Science plays a great role in China’s domestic 
debates as well. However, whether China would be ready to sub-
scribe in general to this set of principles is not certain – as before, 
it might wish to do so in specific agreements and MEAs. In any 
event, some MEAs incorporate the precautionary ‘approach’ and 
this is fully accepted by China. 

The notion of transparency (item 9) has become an elementary 
component of EU FTAs187 after the 2006 Global Europe strategy 
began.  Compared  to  several  decades  ago,  China  has  become 
much  more  transparent,  with  far  greater  openness  about  laws 
and  decrees  relevant  for  trade  and  investment    and  much  more 
consultation  about  draft  laws  and  e.g.  technical  standards.  The 
lingering  problem  is  that  this  openness  does  not  apply  univer-
sally  for  China’s  actions.  These  exceptions  create  suspicion  and/
or  are  associated  with  laws  or  practices  that  tend  to  undermine 
the  reputation  of  China  in  the  international  community.  Exam-
ples include standard setting in the case of cybersecurity, the late 
and much too vague reporting on subsidies in the WTO and the 
dramatic underreporting of DWF fish catches to the FAO a decade 
ago.  Item  9  incorporates  the  use  of  sustainability  impact  assess-
ment, a practice that – if proper evidence-based assessment and 
functional logic is employed – can be very helpful as an input in 
domestic  decision-making  on  sustainable  development  issues.  It 
also helps outsiders to be better informed – it is possible that out-
siders, including foreign partners, may help constructively, some-

187  It is also prominent in US FTAs.

Weinian Hu and Jacques Pelkmans179

thing that China has long promoted188 and practiced. However, it 
is not so clear what the current status is of (as China calls them) 
environmental impact assessments. A functional (i.e. non-political 
or  non-ideological)  impact  assessment  is  surely  in  the  enlighted 
Chinese interest as well. 

Item 10 is about bilateral cooperation in many aspects of sus-
tainable development, as far as climate and other environmental 
issues  are  concerned. This  is  where  China  and  the  EU,  ‘working 
together’, have been very active and both bilaterally between the 
two but just as often or even more frequently, together in the con-
text of MEAs and other multilateral activities. The present contri-
bution testifies to this.189 

Overall,  the  foregoing  demonstrates  that  China  broadly 
approximates  this  “EU  standard  for  trade-related  sustainable 
development in environment and trade”. There are definitely some 
weak points and one or two sub-items where it is difficult to come 
to a firm conclusion. Nevertheless, of the 30 sub-items, China is 
convergent in the large majority of instances, and possibly conver-
gent on some additional ones but this would have to be tested. Lest 
it  be  forgotten,  Table  3  is  based  on  roughly  the  highest  sustain-
able development standard in FTAs in the world. It underpins the 
convergence hypothesis mentioned in the very beginning of this 
study. This convergence is not complete – the crucial point is that 
it has already gone far, without having a FTA. 

However, in the last days of December 2020, China and the EU 
agreed  on  a  draft  investment  treaty  of  a  wider  scope,  called  the 
CAI: Compehensive Treaty on Investment.190 The CAI is not a FTA 
but overlaps to some degree because it includes market access pro-
visions and a section on sustainable development. This is the first 
time that China commits itself to legal provisions on sustainable 

188  Recall for instance the longstanding participation of EU experts in the CCICED advis-

ing on the preparation of the next Five Year Environmental Plan. 

189  See more generally on EU/China trade-related Dialogues, Hu & Pelkmans (2020).

190 The provisional text was published late January 2021: see www.trade.ec.europa.eu/do-

clib/2021/january/tradoc_159343.pdf . 

EU/China Sustainable Development Cooperation: Towards Convergence?180

development  in  a  bilateral.  Box  11  elaborates.  The  thrust  of  the 
CAI’s  provisions  on  sustainable  development  more  or  less  con-
firms what has been distilled from Table 3. 

But it also demonstrates rather painfully that, whilst in diplo-
matic parlance and legal language about aims and principles the 
two parties nowadays agree to a large extent, most actual indica-
tors  about  the  environment  and  GHGs  in  China  reflect  serious 
divergences,  with  trends  towards  convergence  being  slow  and 
uneven. In 2020 this is the “great green paradox” in environmental 
relations between China and the EU. This paradox can sow con-
fusion.  A  steady  pursuit  of  an  ambitious  green  agenda  between 
the two partners should ensure that this ‘great green paradox’ will 
soon melt away. 

Box 11: Sustainable development and ‘green’ commitments in the 
draft CAI

The sustainable development section in the draft CAI has four 
sub-sections.  The  first  sub-section  re-affirms  commitments  in 
many  international  documents  (from  the  1992  Rio  conference 
to the 2019 ILO Declaration on the future of work), promotes 
CSR and responsible business conduct and encourages respon-
sible business practices under a range of compacts including the 
OECD Guidelines for multinationals. It also encourages involve-
ment  of  non-state  stakeholders  in  public  discussions  with  the 
Parties  and  recognises  the  relevance  of  sustainability  impact 
assessments.  The  second  sub-section  is  central  for  verifying 
policy convergence. Following the right-to-regulate, each Party 
shall ‘strive to ensure that its laws and policies provide for and 
encourage high levels of environmental protection’ which con-
firms the high standards of the CAI but sows uncertainty with 
“striving to ensure”. 

Weinian Hu and Jacques Pelkmans 
181

Art. 2 incorporates the three routine non-regression clauses, 
probably for China explicit for the first time. Art. 3 confirms that 
multilateral dialogues (e.g. UNEP) should enhance the mutual 
supportiveness between investment and environmental policies 
“in a manner complementary to [the Parties’] efforts” in bilateral 
and multilateral settings (which can mean very little or a lot). 

Art. 4 is about MEAs which – between China and the EU – is 
hardly the problem; because of their size, the two Parties could 
indeed be truly ‘complementary’ to exchanges under MEAs. 

Art. 5 on green growth is rather light: ‘facilitate and encourage 
investment in environmental goods and services’ and exchange 
good practices about environmental impact assessments. Art. 6 
(about climate change) links up with the Paris Agreement and 
each Party “shall implement… its commitments with regard to 
its  NDCs”.  And  a  range  of  (green)  investment  types  should  be 
promoted, besides cooperation ‘on investment-related aspects of 
climate change’ in various fora. Sub-section 4 on a mechanism 
to “address differences” includes a Panel of Experts (in case con-
sultations do not work) in Art. 3, which is more or less identical 
to that in the Korea/EU FTA (with the finding on the ‘right of 
association’ in January 2021). 

It thus seems that China is on par with Korea in allowing a 
finding from an Expert Panel on such an agreement. However, 
when  reading  carefully  all  the  substance  above  in  this  Box,  at 
least on ‘green issues’ there seems to be preciously little on which 
one can imagine a serious legal issue of ‘breaching’ Section IV of 
the CAI. What worked in the Korea labour case, where a clear 
commitment was at stake, is most unlikely to work with China, 
unless there would be retrogression with tangible proof. In other 
words,  China  believes  in  cooperation,  preferably  truly  joint 
action and funding, and very much less in legal approaches.

EU/China Sustainable Development Cooperation: Towards Convergence?182

Bright spots in China’s green strategy

It is particularly here that one should pay attention – indeed, much 
more attention – to China’s own home-grown initiatives of going 
green. The focus on all traditional indicators is well justified but 
one  might  miss  out  on  multiple  and  daring  industrial  and  tech-
nological developments that China itself has gradually engineered 
and  vigorously  promoted.  Altogether,  these  initiatives  begin  to 
look like a genuine overall ‘green’ strategy that is geared to future 
industries,  clean  energy,  new  forms  of  transport  and  innovative 
technologies, possibly resulting in a broad support of ‘going green’ 
and a zero-carbon economy by 2050. Some basic facts have been 
mentioned before, especially the strength of the renewables sector 
in China, but without entering into the broader perspective of Chi-
na’s long-run strategies and their possible outcome. It is this sub-
ject where the EU can and should learn from China, best in coop-
erative efforts. In a way this is already happening as EU industry 
is selectively involved in new energy vehicles, battery storage tech-
nologies,  wind  turbines  and  solar  panels  (both  with  technology 
originating from Europe). In all these sectors, China has quickly 
mastered and developed the technologies involved and exploited 
scale in the huge Chinese market, resulting in drastic cost cuts. The 
strategy is reminiscent of the opening up of the Chinese economy 
after 1978: rather than pushing too much on the correction, trans-
formation or removal of the ‘old’ [at the time, the SOEs; here the 
‘old’ is everything coal-based], one can cherish and promote the 
‘new’ over a longer period of time [at the time, the ‘new’ were pri-
vate  firms;  here,  the  ‘new’  consists  of  all  the  green  technologies 
and sectors] until they arrive at a critical scale and can contribute 
in earnest to greening the economy, whilst also enjoying a strong 
business model. 

Ever since 2015 one reads occasionally about a supposed Chi-
nese  leadership  in  ‘greening’  the  world. This  would  of  course  be 
very good news, above all for Chinese citizens, workers and nature 
but  also  for  regional  and  global  motives.  This  stream  of  publi-

Weinian Hu and Jacques Pelkmans183

cations is not necessarily fake news or ‘framing’, but it is usually 
focussed merely on ‘clean energy’ (especially renewables) and its 
rapidly increasing application, in China, to the electricity sector, 
energy storage and bus-fast-rail-car transport. It matters therefore 
for the environment (e.g. air quality – thereby bound to generate 
wide  support  amongst  the  citizens  -  and  other  co-benefits)  but 
particularly for climate mitigation policies. However, many wor-
rying aspects of the state of the environment in China are not or at 
best marginally affected by these green industrial policies. 

Nevertheless,  it  is  easy  to  understand  the  rationales  behind 
this overall strategy. China considers energy security as a top pri-
ority and these strategies are an effective (though probably insuffi-
cient) response to the huge and seemingly ever increasing import 
dependency  created  by  China’s  erstwhile  industrial  and  [‘old’] 
energy  policies  and  other  unsatiable  resource-intensive  business 
models.  This  point  incorporates  the  second  rationale:  China’s 
new  economic  strategy  is  to  move  up  the  value-added  ladder  in 
global value chains, if only to ensure higher productivity as a basis 
for higher incomes, and to create strong (dominant ?) corporate 
players on the world market in a range of newer high-value-added 
industries. Even if China would wish to continue the old mass pro-
duction and export-reliant economic model, the annual decrease 
in  available  intra-Chinese  migrant  workers  (of  some  3  million  a 
year) would make this impossible today. The determination of a 
radical turn-around was embolded over time when it turned out 
that China could swiftly learn from companies and hi-tech from 
developed countries. All means were solicited, with huge subsidies 
and state-banks guarantees, purchases of hi-tech in the market,191 
joint  ventures  with  foreign  hi-tech  companies  under  Chinese 
control, a switch to a chain of new applied research institutes and 
SOEs going abroad and conducting targeted take-overs at above-
market prices. The Manufacturing China 2025 programme targets 
10 sectors including the sectors mentioned above. 

191  In addition, there is quite some literature on illegal copying or stealing of technology 

from companies

EU/China Sustainable Development Cooperation: Towards Convergence?184

In clean energy the results have been amazing and now reach 
critical  mass  for  making  an  impact  on  climate  policies  and  to  a 
modest  extent  environmental  policies.  According  to  UNEP  in 
Frankfurt  192  a  mind-boggling  US$758  billion  has  been  invested 
by  China  in  renewables  capacity  (without  hydro)  between  2010 
and spring 2019, followed by the US with ‘only’ US$ 356 bn. Some 
US$ 60 bn in national and provincial subsidies was spent on new 
energy vehicles between 2009 and 2016.193 No wonder China has 
now  the  largest  wind  and  solar  capacity  in  the  world  (210  GW 
wind and 200 GW solar).194  

 Finamore (2020, p. 7) adds that China is also the largest pro-
ducer and deployer of high-speed rail, subways, lithium batteries 
and electric vehicles. Costs and prices have come down dramat-
ically. In solar equipment the cost reductions have been so large 
that  the  biggest  anti-dumping  case  the  EU  ever  ruled  (on  solar 
panels from China, with € 22 bn bilateral trade) was terminated 
halfway through  the customary  5 years, because the duties were 
considered  as  hindering  the  green  transition.  Of  course,  soft 
budget constraints eventually harden even in China. In 2019 sub-
sidies  to  new  energy  vehicles  were  curtailed  and  terminated  for 
some renewables. 

While  the  EU’s  focus  on  fostering  ‘green  cooperation’  with 
China has been longstanding, the EU has recently become much 
more interested in China’s new industrial strategy, with consider-
able  attention  and  powerful  efforts  suggested  by  Manufacturing 
China 2025 in ten sectors, including environmentally relevant and 
climate-friendly  sectors.  Examples  mentioned  above  are  telling 
enough. However, the EU interest has shifted towards a far more 
critical perspective of this Chinese interventionism, to some extent 
as part of an overall re-appraisal of China’s interventionism. The 
core of the EU (and other countries’) criticism of China’s industrial 

192  See  www.unenvironment.org/resources/report/global-trends-renewable-energy-in-

vestment-2019 in September 2019 (Global trends report)

193   Kennedy & Qiu (2018)

194   REN21 (2019), Renewables 2019 Global Status report, Paris, www.Ren21.net/reports/

global-status-report 

Weinian Hu and Jacques Pelkmans185

and other interventionist policies is that the magnified distortions 
inside China and their impact outside undermine China’s market 
economy features and violate ever more its ‘competitive neutrality’. 
Another way of putting this is that China seems uninterested in a 
level-playing-field over a wide range of economic activities, with 
damaging effects for competition inside China (e.g. for competi-
tors from the EU, say, in ‘green’ industrial sectors) as well as dam-
aging  effects  outside  China  in  third  markets,  including  the  EU 
single market. In an unusually large, well-informed and detailed 
report from BusinessEurope (2020) these distortions “unleveling” 
the  playing  field  are  systematically  addressed  and  numerous  EU 
policy  actions  are  suggested,  besides  repeated  calls  upon  China 
to  return  to  a  level-playing-field  based  approach.  In  a  coopera-
tive  EU-China  ‘green’  perspective,  it  would  be  narrow-minded, 
if not worse, to focus solely on successful cooperation as agreed 
between the two partners, and neglecting to try to incorporate a 
truly  cooperative  approach  with  respect  to  China’s  ‘new’  indus-
trial – here, ‘green’- policies. So far China has ignored such calls. A 
clear illustration of how complex and damaging the profound Chi-
nese interventionism is is found in a recent example of combined 
anti-dumping  and  anti-subsidy  duties  on  EU  imports  of  optical 
fibre from China.195 Optical fibres fall under Manufacturing China 
2025. The anti-dumping duties range from 19.7% to 44%; in addi-
tion, the countervailing duties (after adjustment) amount to 5.1% 
to  10.3%.  Chinese  producers  of  optical  fibres  benefitted  from 
not one but “a number of government subsidies, including funds 
aimed at supporting R&D and innovation”. In addition they bene-
fitted from preferential tax rates (for hi-tech industry) and enjoyed 
access to attractive loans from the China Development Bank Fund. 

All this can be interpreted as an encouragement to reform and 
drastically  widen  the  cooperative  approach  between  the  EU  and 
China in ‘green’ technology in order to overcome and/or pre-empt 
distortive green industrial policies in China. 

195   See Commission Implementing Regulation EU 2021/2011 of 17 Nov. 2021 imposing 
definitive anti-dumping duties on imports of optical fibre cables originating in the Peo-
ple’s Republic of China, OJ EU L 410/51 of 18 Nov. 2021. And Commission Implement-
ing Regulation (EU 2022/72 of 18 Jan. 2022 imposing definitive countervailing duties 
on imports of optical fibres [etc/], OJ EU L 12/34 of 19 Jan. 2022. 

EU/China Sustainable Development Cooperation: Towards Convergence?186

Green pointers from the 14th Five Years Plan

The Outline of China’s 14th Five Years Plan has become available 
only in March 2021.196 The full details in specific sectoral Plans and 
regional ones are expected much later. There are strong indications 
that the outcome in the Plan – especially with respect to climate 
issues - has been the result of fierce internal debates which have 
tied the hands of the central government to some extent.197 When 
it comes to climate-related issues, the debate turns around the two 
targets in the Plan: a CO2 intensity target of – 18% by end-2025 
and an energy intensity target of – 13.5%. And about what is not 
in there: neither a cap on CO2 emissions nor a cap on coal output. 
China’s updated version of its NDC under the Paris commitments 
was only submitted on 28th October 2021, just before the Glasgow 
COP-26 began.198 It would seem that the two targets in the Plan 
do  not  stop  coal  from  increasing  its  output  nor  CO2  emissions 
from growing. Of course the latter is still consistent with the first 
NDC from China, namely that the country would peak CO2 emis-
sion by 2030. Unsurprising, neither the coal and the coal-related 
industries  nor  a  lot  of  provinces  keen  to  push  economic  growth 
with the help of coal are enthusiastic about throttling CO2 emis-
sions and/or coal and have raised alarm about the consequences 
of  such  reforms.  But  this  is  not  new  –  apparently  Paris  has  not 
yet  been  taken  seriously  by  some  and  this  is  exactly  the  fear  of 
many observers outside China. It is said that the State Council has 

196 The  text  of  52  pp.  can  be  retrieved  from  https://www.fujian.gov.cn/english/

news/202108/t20210809_5665713.htm 

197   With respect to climate, in particular coal, the following is based on a very detailed 
account  (including  interviews  with  leading  Chinese  experts  and  top  officials)  of  the 
key elements of the Plan and the background discussions as well as explanations. See 
CarbonBrief (2021), What does China’s 14th ‘five year plan’ mean for climate change? 
https://www.carbonbrief.org/qa-what-does-chinas-14th-five-year-plan-mean-for-cli-
mate-change of 12 March 2021. However, climate and environment have been com-
bined in the Outline (in chapters 37 – 39 but the Outline alone provides very little detail 
on climate issues (items IV. and V. in ch. 38). The source with detailed reporting and 
targets for 2025 and 2030 is the updated NDC (see following note). 

198  See 

www4.unfccc.int/sites/ndcstaging/PublishedDocuments/China%20First/Chi-
na’s%20Achievements,%20New%20Goals%20and%20New%20Measures%20for%20
Nationally%20Determined%20Contributions.pdf.  

Weinian Hu and Jacques Pelkmans187

learned its lessons from too much top-down governance, leading 
at times to extreme and severe measures (like engineered black-
outs) in order to make the target, and is now favouring bottom-up 
approaches. However, provinces and their leaders would have to 
be  assessed  on  the  primacy  of  ‘green’  targets  above  growth  tar-
gets for this to work, otherwise loopholes and inconsistencies are 
bound to arise everywhere. 

The  14th  Plan  did  not  include  a  Five  Year  economic  growth 
target for the first time ever. It is also emphasized that this Plan is 
about  making  living  more  agreeable  in  China  and  that  relies  on 
other  determinants  such  as  a  ‘beautiful  China’  that  ought  to  be 
achieved  by  2035.  The  share  of  coal  in  primary  energy  by  end-
2025 is expected to be around 50% (down from 57% in 2020), yet 
even this share would imply an extra coal output of some 100-200 
GW.  And  it  might  eventually  imply  a  ‘high-carbon-lock-in’  for 
decades to come, an automatic resistance against or at least a huge 
cost  factor  for  going  ‘more  green’.  But  there  are  defenders,  too. 
Prof. Ji Zou is quoted about a study199 showing that a 18% - 20% 
reduction  of  CO2  intensity  by  late  2025  puts  China  on  a  trajec-
tory that is consistent with (only) a 1.5°C rise globally, assuming 
that China fulfils the promise by President Xi that China would 
be carbon-neutral by 2060. Finally, many Chinese observers hold 
that China has been overarchieving frequently when firm targets 
are set – targets in the Chinese tradition have to be ‘safe’ for the 
responsible leaders – and China will do this again. Most observers 
also expect a coal emission target to be announced later when this 
is tactically possible. 

What  China  submitted  to  COP-26,  in  its  ‘updated  NDC’,  in 
terms  of  self-imposed  targets  is  somewhat  more  ambitious  than 
in 2015: 

a. 

 CO2 emissions peak before 2030 (not new)

b.  Achieve carbon neutrality before 2060 (new, compared to 
the NDC of 2015, but announced by Xi Jinping before)

199   See https://www.efchina.org/Reports-zh/report-lceg-20201210-zh 

EU/China Sustainable Development Cooperation: Towards Convergence?188

c.  Lower CO2 emissions per unit of GDP by over 65% from 

the 2005 level (in its first NDC, it was 60% - 65%)

d.  To increase the share of non-fossil fuels in primary energy 

consumption to 25% (was 20% )

e.  To increase the forest stock volume by 6 bn cubic meters 

from the 2005 level ( is up)

f.  Bring total installed wind & solar capacity to over 1.2 bn 

KW by 2030 (no NDC target before).

However, as shown in CarbonBrief (2021), the three simulation 
studies of the NDCs submitted to the Glasgow COP-26, including 
UNEP, all lead to a global warming of 2.3 – 2.4°C, and this assumes 
perfect implementation which is rarely the case. Also China is not 
ambitious enough. 

On  environmental  (non-climate)  the  14th  Plan  Outline  pro-
vides some detail. In a pre-announcement from the State Coun-
cil,200  it  is  emphasized  that  circular  development  is  top  priority 
as  well  as  ‘an  overall  green  transformation  of  the  economy  and 
society’. By 2035 the ‘ecological environment’ will be fundamen-
tally  improved  and  the  ‘goal  to  build  a  beautiful  China  will  be 
basically achieved.’ Some hard targets are specified but mostly the 
language reads like a long list of political promises, a typical style 
of Chinese Five Years Plans.

Summarizing,  the  ‘eco-security  system’  will  be  improved, 
touching many of the – often severe - problems mentioned above. 
Promises are made about red lines for ecological protection, resto-
rations of eco-systems (e.g the Qinghai-Tibet plateau, the north-
east forest belts, the sand control belts), improving the governance 
of the Yangtze river, the Yellow river and other rivers, whilst pro-
tecting ecological corridors.201 Various forms of transfers and pay-
ments are foreseen. On pollution, several hard targets are included:

200  See 

english.www.gov.cn/policies/latestreleases/202102/22/content_WS6033af-

98c6d0719374af946b.html  

201    Interestingly,  ‘weather  modification  initiatives  based  on  science’  are  announced  as 

well. 

Weinian Hu and Jacques Pelkmans189

i.  Reduction of PM2.5 (particulate matter) by 10% at prefec-

tural level

ii. 

‘effectively curb’ the increase in O3 [so, no reduction]

iii.  A series of loose promises (e.g. improve air quality in Bei-

jing-Tianjin-Hebei region)

iv.  Reduction of NOx and VOC by more than 10%

v.  Reducing COD and ammonia nitrogen emissions by 8%

vi.  Eliminate substandard Grade V [useless water], including 
urban  ‘black  and  odorous  waters’  which  would  be  major 
progress for citizens

vii.  Relocate and transform heavily polluting enterprises in key 

river areas 

viii. Promote the control and restoration of contaminated land 

for farming and construction

ix.  Attack plastic pollution

x.  Undertake  initiatives  on  sewage  systems  [‘complete  cov-

erage’] 

xi.  Separate  different  forms  of  waste  and  foster  centralised 

treatment facilities, also for medical waste

xii.  Water policy will be more stringent so as the reduce water 
consumption per unit of GDP; pricing mechanisms for e.g. 
water and sewage treatment are foreseen 

xiii. Add a  range  of other initiatives  such as energy efficiency 
of data centers, ‘green mining’ and going, in earnest, for a 
‘circular economy’, including a re-manufacturing industry, 

xiv. Finally, not  unlike  the EU’s general  idea  (though turning 
out to be very hard in actual practice), a shift in long-dis-
tance  freight  transportation  ‘from  highways  to  railways 
and waterways’.

EU/China Sustainable Development Cooperation: Towards Convergence?190

Whilst  it  is  not  always  easy  to  analyse  the  Plans  in  the  past, 
as  shown  in  Pelkmans  (2021,  section  5.1),  the  nature  of  this 
approach as well as some of the targets make for a very different 
Chinese  environmental  regime  than  one,  let  alone,  two  decades 
ago. Almost all the themes brought up in the Outline have been 
discussed in our assessment before,202 and indeed criticised. Given 
this contrast, the Outline might be regarded as a U-turn given the 
nature of the approach as well as many of its details. At the same 
time, the hard pollution targets are not ambitious, although in the 
right direction. It is likely that more ambitious targets here would 
be seen as too costly for industry. 

Answering the second research question in the green pillar

The second research question is whether there is a process of con-
vergence  in  environmental  and  climate-related  policies  between 
the EU and China over the 25 years since 1995. The policy interest 
in  China  in  moving  away  from  the  erstwhile  damaging  or  very 
damaging policies or the negligence practiced by the central and 
provincial  governments  was  there,  much  before  any  indicators 
could signal that. The various Plans from 2000 onwards initially 
show superficial interest in water and air pollution (next to none in 
soil) but targets were overshot (that is, missed) in some problem-
atic cases and the rate of improvement of other ones (coming from 
bad  scores)  was  slow  at  best.  There  was  too  little  investment  in 
solid data gathering and enforcement was weak or worse. In areas 
such  as  soil  pollution  and  waste  management  matters  initially 
were literally close to disastrous. The predominance of economic 
growth was engrained in the system of governance. At times some 
such bad practices occurred in the EU, too, but the major differ-
ence is the voice of the people and the press. That voice sooner or 
later stems the otherwise perhaps unstoppable continuation of del-
eterious practices (as some benefit from the avoidance of paying 
for negative externalities). Although it is known that small scale 
protests erupted regularly in China, they were too often smothered 

202   See Pelkmans (2021) for greater detail.

Weinian Hu and Jacques Pelkmans191

and  hardly  ever  reached  the  national  press  or  TV,  except  when 
major accidents happened. In other words, a powerful signalling 
function was lacking. 

One  consequence  was  that  many  SMEs,  farmers  or  individ-
uals  also  started  to  (mis)behave,  whether  with  many  thousands 
of illegal sewerage outlets to the Yangtze river or Bohai lake, mil-
lions of illegal drillings for water, or illegal dumping of waste by 
farmers anywhere, knowing to be undetected. For the population, 
the  upshot  was  the  appearance  of  black-and-odorous  waters,  air 
pollution  that  was  unbearable  and  extremely  unhealthy  and  a 
more general ambiance of a lack of trust in the government about 
its messages about soil, air and water pollution. In these days, cli-
mate  change  seemed  to  be  a  subject  for  specialists  and  -  in  any 
event – the blame should be on those having caused CO2 pollu-
tion since more than 2 centuries ago, not China. But in the area of 
policy there was at first little interest because the people did not 
notice  CO2  pollution  themselves  (in  contrast  to  soot  ,  very  fine 
particulates and some other gases). Of course with such a miser-
able starting point, there was bound to be a longing on the part of 
China to improve but the implicit condition was that it should not 
be  costly  and  could  never  undermine  the  determined  very  high 
growth path. 

Chinese  policy-makers  have  clearly  enjoyed  the  cooperation 
with  the  EU,  for  decades,  without  at  first  feeling  much  pressure 
to  act  swiftly  and  show  results.  Nevertheless,  both  for  domestic 
reasons  (and  with  very  high  growth,  the  problems  were  quickly 
mounting) and due to the insistent nudging by the EU, gradually a 
slow process of convergence in many policies for environment and 
climate was set into motion. These convergent policy moves were 
initially quicker and closely linked to various EU activities in envi-
ronment, than in climate questions. As far as the latter was con-
cerned, Beijing long stuck to its position (under Kyoto) that the old 
industrial countries had done most of the (CO2) polluting, cumu-
latively, and China and other developing countries’ development 
could not be constrained by emission reduction programmes. In 

EU/China Sustainable Development Cooperation: Towards Convergence?192

this respect the EU and China found a common interest, nonethe-
less, in the CDM (see Box 12) where the two dominated the world 
market on the 

Box 12: China and the EU: joint dominance of worldwide CDM

The  Clean  Development  Mechanism  (CDM)  is  one  of  the  two 
‘flexibilities’ of the Kyoto Protocol – the other is Joint Implemen-
tation. CDM is a market mechanism helping developing coun-
tries, including China at the time, to finance climate mitigation 
measures in companies, based on explicit and carefully organ-
ized  requests  from  developed  (i.e.  Annex  1)  countries  which 
have a problem honouring their CO2 mitigation commitments. 
This  would  kill  two  birds:  developing  countries  reduce  CO2 
and obtain technologies to do so, which they would otherwise 
have great difficulty accomplishing without harming economic 
growth,  whilst  developed  countries  can  honour  their  climate 
commitments,  though  not  entirely  at  home  (but  still  equally 
useful to fight climate change as this is a global problem). The 
EU/China Partnership on Climate Change aimed to encourage 
EU and Chinese companies to engage in CDM project cooper-
ation. 

Once  in  2005  China  took  off  with  CDM,  it  soon  became  a 
great success, at least in numbers of projects and credits ensured. 
Even  more  so  bilaterally  between  the  EU  and  China.  By  April 
2012  China  had  approved  3935  projects.  In  all  the  years  since 
2007  to  2012  China  ensured  roughly  50%  of  the  world  CDM 
market in terms of projects, whilst the EU (due to the ETS and 
its carbon market) exercised roughly half of the world demand 
for CERs and the EU-China commercial interaction was intense. 
In  China  the  bulk  of  CDM  projects  were  executed  by  SOEs 
(state-owned enterprises), especially those of larger size. On the 
demand  side,  multinational  companies  were  critical  but,  since 
China did not allow full ownership of companies in the relevant 
sectors, the companies heavily emphasized exports of equipment 
to China rather than the genuine transfer of the technology.

Weinian Hu and Jacques Pelkmans193

The  CO2  reduction  has  clearly  been  non-trivial  and  a  host 
of other benefits203 have been identified such as innovative tech-
nologies and financial transfers to developing countries, finding 
untapped  mitigation  opportunities,  selective  contributions  to 
technology transfer and the creation of knowledge, institutions 
and  infrastructure  that  can  facilitate  further  action  on  climate 
change. In addition, some projects provided significant co-ben-
efits as e.g. identified by Rive and Aunan (2010) for SO2, PM 2.5 
and NOx (one-third of the monetized CO2 benefits). However, 
the  drawbacks  became  ever  more  apparent.  especially  the  elu-
siveness of additionality. The sheer scale can be appreciated by 
the CO2 equivalent of all CDM projects in the world in 2010: all 
projects other than industrial gases204 reduced some 1.2 million 
ton.  However,  the  ever-increasing  claims  from  the  producers 
of industrial gases (technically honoured by the CDM system) 
undermined the credibility of CDM. As a result, the EU termi-
nated CDM for such projects in April 2013. 
Note: a more detailed explanation can be found in Pelkmans (2021, pp. 77 – 79). 

demand  and  supply  side  for  some  8  years.  After  2012  China 
began to make the U-turn, hesitantly, to negotiate CO2 reduction 
commitments at the world level: the 2015 Paris Agreement. Even 
after  Paris  its  NDC  promises  merely  to  improve  ratios  and  –  so 
far – avoids a true coal cap and / or a CO2 emission cap. In the 
14th Plan the two caps are once again avoided although there are 
other forms of tightening. In environment China seems finally to 
become much more brave in air and water pollution. The Plan of 
an attack on soil pollution following from the 2018 law is similar 
in spirit but its costs are staggering and thus it remains to be seen. 
At long last, under the banner of a “beautiful China’, to be accom-
plished by 2035, there is clearly more drive behind these various 
fights against pollution. 

203   Quoted from a study commissioned by DG Clima of the European Commission on 

‘additionality’ by Cames et al (2016), p. 17

204  Biomass, geothermal, hydro, solar, tidal, wind, cement, and transport.

EU/China Sustainable Development Cooperation: Towards Convergence?194

What  is  in  a  separate  category  is  the  green  quasi-industrial 
strategy  that  China  has  set  in  shortly  after  2005.  It  consists  of 
e-mobility with e-cars, e-buses and e-scooters, the enormous and 
rapid boost of renewables and the aggressive and very long term 
forestation strategy. 

4.4 China’s Social Protection in 2020

In the two and a half decades since China initiated the wholesale 
reform of social protection, the social predicament of Chinese cit-
izens  –  be  they  workers,  pregnant  workers,  farmers,  pensioners 
or  unemployed  –  has  considerably  improved.  In  the  following 
the  overall  situation  will  be  briefly  sketched  and  several  deeper 
problems  will  be  set  out.  Nevertheless,  we  shall  avoid  to  pro-
vide a treatise on social protection in China because the pursuit 
of  the  social  pillar  of  sustainable  development  with  EU  trading 
partners is not and cannot be on detail. Of course, these ought to 
be nationally decided. The core issue we are interested in in this 
section  is  whether  China  has  been  willing  and  capable  to  build 
up a fully-fledged system of social protection in which important 
social risks of citizens are covered via insurance mechanisms, the 
national and regional budgets and pooled saving schemes (with or 
without subsidies). And under universal coverage. Unlike China 
in the late 1990s, the broad answer for China in 2020 is affirma-
tive. After first setting out the basis of the 2020 system by simply 
summing up what are the social obligations when a firm attracts a 
new worker, we shall discuss two major drawbacks (on inequality 
and income distribution, and one on migrant workers) and briefly 
touch upon the fight against poverty. We shall not discuss ageing. 
Ageing  in  China  started  from  a  low  level  but  now  accelerates 
because of the (meanwhile abolished) one-child policy and many 
millions of couples being reticent to have more children. However, 
at the moment the pressure on dependency rates is still bearable 
and lower than in many OECD countries. 

Consider  a  company  that  hires  a  new  worker.  What  are  the 
social  payments  to  be  made  by  the  employer  and  what  by  the 

Weinian Hu and Jacques Pelkmans195

employee? This gives us a simple but quite satisfactory answer to 
the query what social protection exists in 2020 in China. The basic 
facts are presented in Table 4.

Table 4: Contributions from the private sector to social protection in 
China

Social insurance/protection

employer

employee

 SHANGHAI

Pension insurance

Medical insurance

Unemployment insurance

Maternity insurance

20 %

9.5%

0.5%

1%

Industrial injury insurance

0.16%

Housing Providence Fund

7 %

GUANGZHOU

Pension insurance

Medical insurance

Unemployment insurance

Maternity insurance

Industrial injury insurance

14 %

7 %

0.6 %

0.9 %

0.2 %

8%

2%

0.5%

- - -

- - -

7 %

8 %

2 %

0.2 %

- - -

- - -

Housing Providence Fund

5 - 12%

5 – 12%

Source: Antoine Boquen, March 2021, www.nhglobalpartners.com/china-social-
security-system-explained 

As Table 4 shows, there are 5 types of social insurance and one 
other  element  of  social  protection:  compulsory  housing  savings 
(with the help of the employer). This certainly covers a large part 
of the landscape of social protection and is a radical improvement 
over  the  mid-1990s.  The  Table  gives  the  examples  of  two  large 
cities, because large cities or regions may set different rates of con-
tribution. Thus, in Shanghai the employer pays an addition205 over 
the gross wage of the employee of in total 38.2%, with the worker 
17.5%.  In  Guangzhou  the  employer  pays  27.7%  and  the  worker 
15.2%, both a little lower. Altogether these contributions are con-

205   Assuming for Guangzhou the 5% housing contribution.

EU/China Sustainable Development Cooperation: Towards Convergence?196

siderable,  taking  into  account  how  young  social  protection  is  in 
China  and  that  China  is  not  yet  at  the  average  income  levels  of 
OECD countries though close to the lowest. Altogether these con-
tributions are considerable, taking into account how young social 
protection  is  in  China  and  that  China  is  not  yet  at  the  average 
income levels of OECD countries though close tot the lowest. 

It  is  perhaps  more  insightful  to  give  an  example  in  renminbi 
for  a  typical  worker  in  Shanghai.  The  gross  salary  costs  for  the 
employer are RMB 16,099. The employer has to contribute RMB 
840 to the Housing Fund (for this worker) as well as RMB 3,250 
for  the  5  social  insurances  specified  in  Table  4.  This  leaves  as  a 
gross salary for the typical worker RMB 12,000. Before the worker 
receives  the  monthly  pay-slip,  there  will  be  three  deductions,  as 
contributions  to  social  insurance  plus  a  tax:  RMB  840  for  the 
housing find, RMB 1,260 for the 5 social insurances and RMB 147 
for the individual income tax, leaving a net salary of RMB 9,573 
that will be pocketed by the worker. 

Social  protection  is  not  solely  paid  for  by  the  private  sector, 
also  by  the  public  sector  in  often  complicated  ways.  There  are 
contributions by the state and/or lower-level governments for the 
so-called ‘basic pension’ (not in Table 4) and for certain types of 
shortages  of  medical  funds.  In  addition,  there  is  what  in  China 
is  called  ‘social  assistance’  (welfare),  including  the  ‘dibao’  (sub-
sistence  minimum).  Complexity  further  increases  because  some 
entitlements are different for different people. First, Table 4 shows 
that contributions can differ between regions, so can social allow-
ances. The sharpest and indeed most stubborn disparity is between 
urban and rural workers or persons more generally. This has deep 
roots in history because farming communities were long expected 
to practice solidarity. With the great mobility and modernisation 
in  today’s  China,  this  disparity  appears  without  foundation  and 
–  together  with  the  ‘hukou’,  nowadays  equally  impractical  and 
unfair - causes several irrational and painful disparities. Second, 
domestic migrants are severely disadvantaged compared to other 
urban workers, let alone the traditionally privileged civil servants 

Weinian Hu and Jacques Pelkmans197

and the army personnel. However, as so often in China, there seem 
to be two realities because the formal laws and arrangements for 
social  protection  have  been  significantly  improved  and  begin  to 
approach  universal  coverage  as  well.  The  migrants  problem  for 
social protection is briefly set out in Box 13. 

Box 13: Problems of social protection for (outbound) rural migrant 
workers

Beginning  in  the  late  1980s/early  1990s  ‘outbound  migrants’ 
–  those  migrating  from  their  township,  county  or  province  to 
other (usually Eastern) provinces and hence liable to be unable 
(esp. when moving between provinces) to rely on their (rural) 
hukou – came in masses to the industrial and service centres of 
the country. A total of some 150 million ‘outbound’ migrants in 
2005  has  been  mentioned  before.  By  the  end  of  2017  this  had 
swollen  to  172  million,  of  which  77  millions  interprovincial. 
Since most Chinese provinces are big, even a part of intra-pro-
vincial  migrants  lived  and  worked  at  a  considerable  distance 
from  their  rural  origin.  After  a  period  of  hesitation  and  very 
limited but targeted social protection after the 1990s, eventually 
a  degree  of  harmonisation  of  social  protection  between  urban 
and rural (but working in urban areas) was implemented around 
2013/4. The central government insisted that social cohesion and 
inclusion is a key value of socialism with Chinese characteristics 
and hence created urban/rural instruments to make this happen. 

Unfortunately, for the most part this is a paper reality. Without 
additional or more radical measures, it might turn into a factual 
reality only after many years if not a generation. There are sev-
eral reasons for this initial failure. First, many rural workers are 
so-called informal workers and do not sign labour contracts with 
their employers. In 2016 this was no less than 65%! This has sev-
eral reasons, including low education and the sense of freedom 
to  switch  employers  after  the  annual  Spring  Festival  (around 
Chinese New Year) which indeed happens in large volumes. This 
switching also means that, in fact, many migrants only work 10 
months a year. 

EU/China Sustainable Development Cooperation: Towards Convergence?198

Of course, such job hopping only makes sense when jobs are 
unskilled,  that  is,  when  there  is  no  human-capital  loss  for  the 
worker  when  switching.  As  the  education  level  in  rural  areas 
leaves  a  lot  to  be  desired  and  this  may  well  have  a  hysteresis 
effect – like a longer-run education handicap – in the county of 
origin but also for outbound migrants. Given that in and around 
big cities, the better schools are usually not open for children of 
migrants, there is a risk that this handicap becomes an intergen-
erational trap. 

Second, many migrants tend not to be well-informed and – as 
low-income earners, and who might also send remittances back 
home – have a strong preference for secure short-term income 
instead  of  shaving  off  a  significant  share  for  social  protection 
(see Table 4) for a later purpose. Third, transferring social ben-
efits when an outbound migrant, and when switching jobs fre-
quently, is a great problem in China. Such social benefits are on 
‘individual accounts’ but – unlike what one might expect – these 
accounts are not nationwide. This is caused by the fact that social 
protection administration and the funds are under national laws 
but locally managed. Most of the systems were not yet online in 
2018 or – if they were – hopelessly incompatible. With over 30 
000 townships and thousands of counties, and limited adminis-
trative capacities, the practical drawbacks of this fragmentation 
are immense. It is time-consuming and most irritating to transfer 
entitlements successfully, leading many migrants to just give up 
and prefer take-home pay. More often than not, when migrants 
are switching employer, and no arrangements have been made, 
they  may  find  that  their  entitlements  (e.g.  for  pensions  which 
require a minimum build-up of 15 years; for unemployment it is 
5 years for full benefit) are simply zero-ed! In 2017 a significant 
improvement was introduced for payments related to maternity 
leave  and  medical  care,  that  is,  a  direct  settlement  for  medical 
expenses  incurred  outside  the  pooling  region  which  enables  a 
migrant to obtain an instant refund. 

Weinian Hu and Jacques Pelkmans199

In addition to all this, the technical and financial capabilities of 
the local administrations also present a serious problem for e.g. 
pension funds. Scholars have found that invested capital avail-
able  may  be  as  much  as  30%  lower  than  expected  due  to  mis-
taken investments, quite apart from cases of embezzlement facil-
itated by lax supervision. 

Therefore, the gradual improvements in social protection for 
the outbound migrants enacted nationally are based on the phi-
losophy of contracted labour (which is typically happening for 
higher skills workers but much less for migrants) and the existing 
fragmented  systems  of  local  administration  and  related  rigidi-
ties. So, once again, there are two realities in China. The implica-
tion is that many migrants – the older ones now returning home 
for their old age (60 years for men, 50 for women) – cannot enjoy 
their full pension income (which is low anyway) or receive no 
pension  income  at  all.  And  may  well  suffer  from  other  prac-
tical  shortcomings  of  this  system.  The  principal  incentive  why 
migrants  moved  in  large  numbers  is  and  has  always  been  the 
steady strong rise in real wages for decades, far above what they 
could earn locally, not or hardly because of the security of social 
protection.
Source: Zhang Yinghua (2019)

Third,  although  there  is  better  social  protection  than  before, 
in  several  respects  it  is  of  minor  significance  for  the  social  pre-
dicament  of  less  privileged,  mainly  the  rural  citizens.  In  other 
words,  in  term  of  the  (re)distribution  of  income  the  system  is 
weak, even in Chinese eyes (let alone, in European eyes). China 
used to have wide-spread poverty and a major income gap. In the 
‘war  on  poverty’  the  central  government  promised  to  eradicate 
poverty by 2020. And they did, as Figure 10 clearly shows. How-
ever,  there  are  serious  problems  with  this  official  claim  because 
China is an upper-middle-income country for which the poverty 
line, according to the World Bank, should be much higher: instead 
of US$ 2.25 a day (which is roughly the 2300 yuan, corrected for 

EU/China Sustainable Development Cooperation: Towards Convergence?200

increased  purchasing  power  between  2011  and  2020)  but  more 
like  US$  5.50  a  day.  But  with  US$  5.50  a  day,  the  2018  poverty 
rate in China was not 1.7% (Figure 10) but 17%,206 an enormous 
difference. 

Figure 10: Poverty eradication in China (%), based on Yuan 2300 p.y. 
(2010 pr.)

Source: Statista (2021)  see https://www.statista.com/statistics/1086836/china-poverty-

ratio/ 

Most of this rather extreme poverty is found in rural areas.207 
Moreover,  the  methods  of  arriving  at  eradication  typically  were 
in campaign-style. More than 100.000 poor villages were targeted 
and visited for assessment, quick build-ups or easy infrastructural 
deficiencies were constructed and millions of households had to 
sign  forms  testifying  that  all  in  the  household  had  received  the 
money. Here some ‘adulteration’ took place because frequently 4 
or 5 members had to share the money, thereby again falling below 
the poverty line. Martin Raiser (World Bank) is quoted saying that, 
for all the praise about successful eradication, “we are less sure it 

206   China Power Team (2020), 

207   There is data on rural poverty (at $ 1.90 at 2010 prices, and adjusted) but data on urban 

poverty is not published. 

Weinian Hu and Jacques Pelkmans201

is  sustainable  or  cost  effective.”208  For  the  Party  leadership,  what 
matters is presumably the socio-political stability in the country, 
in the run-up to the 100th birthday celebration of the CCP in the 
summer of 2021. And a victory over poverty is likely to help. The 
lingering doubts over lingering poverty are also fueled by a speech 
of  PM Li Keqiang in  May 2020  holding that there “are over  600 
million people whose monthly income is barely 1000 yuan (some 
US$  140),  not  enough  to  rent  a  room  in  Chinese  cities.209  Since 
that amount is less than US$ 5 a day, and it does not even enable 
renting  a  room,  let  alone  to  eat  and  ‘live’,  how  can  poverty  have 
been eradicated? And 600 million people amounts to some 42% of 
the population! 

But there is also a painful income disparity between rich and 
poor.  Although  the  attack  on  poverty  is  helpful  to  some  extent, 
the ‘attack on inequality” has never been launched despite China’s 
history as an egalitarian country in the second half of the 20th cen-
tury. Once the market oriented reforms were in full swing (say, as 
off the late 1980s), inequality in China began to sharply increase. A 
striking illustration of inequality as affected by social security has 
been given by Li Shi (2016) on the basis of the Gini-coefficient of 
inequality and the corrections of the coefficient due to social secu-
rity measures. In 2015 the Gini coefficient was 0.47 (which indi-
cates fairly sharp inequality), a little down from its peak in 2008. 
First, there is the decline from Gini based on market incomes only 
(0.52) to Gini of disposable incomes (0.44). This decline is hardly 
due  to  taxation  (hence,  incomparable  with  the  EU  ;  taxation  in 
China occurs mainly via indirect taxes) but to public transfers and 
private  transfers  (see  also  Table  4).  When  comparing  urban  and 
rural China (2013), Shi (op. cit.) finds that public transfers reduce 
the Gini by 21% in urban areas whereas this effect is only 6% in 
rural areas; in contrast, private transfers (in practice, remittances 

208   Gao Feng, China claims it has eliminated poverty, but is it true?, VOA News on China, 
3 March 2021, https://www.voanews.com/east-asia-pacific/voa-news-china. Note that 
nominal income in rural areas is often profoundly affected by diseases (with incom-
plete coverage) and natural disasters, harder to fight than in cities.

209   Idem, Gao Feng. Recall the World Bank recently estimated that some 373 million live 

below $ 5.50 a day in China. 

EU/China Sustainable Development Cooperation: Towards Convergence?202

mostly) in rural areas reduce the Gini by no less than 12% in sharp 
contrast with urban areas (only 2%). A second marked difference 
is that in rural areas the retired pension barely reduces the Gini, 
but in urban areas the reduction is 19%. Here one observes a clear 
proof  of  the  low  take-up  of  pension  arrangements  by  migrant 
workers,  as  discussed  above.  In  other  words,  social  security  has 
now reached rural China but it does very little to mitigate income 
disparities with urban citizens. Shi (op. cit.) also presents a com-
parison  of  Gini  of  22  European  countries  with  China  and  the 
impact  of  social  security.  The  average  decline  of  Gini  is  around 
30%  in  Europe  compared  to  a  decline  of  8%  in  China.  The  dif-
ference  is  telling.  Moreover,  what  is  not  included  is  taxation  of 
income, barely an issue in China (see Table 4). In Europe, income 
tax is a major equalizer as well. In other words, when including the 
impact of income taxation on the Gini, it would undoubtedly be 
significantly lower in Europe and not in China. 

Human Development – China’s social predicament

In Box 9 we provided a snapshot of China’s HDI status and devel-
opments in the early 1990s. In those days China still was a relatively 
poor though rapidly growing developing country. In the present 
chapter  the  idea  is  to  present  the  HDI  of  the  latest  year  (2018) 
and  the  trends  between  1995  and  2018.  For  both,  trends  in  the 
three components of the HDI (per capita income, a public health 
indicator,  and  an  education  indicator)  will  be  analysed  too.  The 
three components of the HDI are not independent: other things 
equal and over a longer period, both health and education are crit-
ical  determinants  of  per  capita  incomes  and  their  trend  growth. 
Altogether,  this  generates  a  richer  and  more  valuable  picture  of 
the social predicament of Chinese citizens and/or workers. Ideally, 
this predicament would consist of enjoying (i) core labour rights, 
(ii)  appropriate  social  protection,  (iii)  typical  OECD-levels  HDI 
and trends. Although public health and education are arche-typ-
ical domestic policies, hardly ever the subject of (bilateral) treaty 
commitments linked to trade and investment, for the social pre-

Weinian Hu and Jacques Pelkmans203

dicament of citizens and workers the two factors are indispensable, 
and not just social protection and enjoying labour rights.. 

How China has improved on Human Development: 1995 – 
2018

China  has  greatly  improved  on  human  development  in  these  23 
years. Not only did it move up steadily from 0.617 in 1995 to 0.731 
in  2018,  it  also  surpassed  the  world  HDI  in  2008  or  2009,  see 
Figure 11. China moved up in the HDI ranking worldwide but not 
spectacularly  because  other  developing  countries  also  markedly 
improved their HDI. This is especially the case for the 5 BRICS: 
India and Russia and to a lesser extent Brazil (and South Africa 
only modestly) have improved their HDI considerably, as shown 
in Table 5. It is remarkable that, whereas most OECD countries are 
in the very top and fairly stable, the United States, which was 2nd 
in 1990, had fallen to 15th place in 2019. 

Figure 11: Trend of Human Development Indices in China: 1995-
2018

EU/China Sustainable Development Cooperation: Towards Convergence?204

Table 5: HDI trends of the BRICS compared: 1995 - 2018

Brazil

0.651

0.684

0.726

0.761

1995

2000

2010

2018

Russia

0.701

0.721

0.780

0.824

India

0.463

0.497

0.581

0.647

China

South Africa

0.548

0.593

0.701

0.758

0.652

0.629

0.662

0.705

Figure 12 depicts the HDI trend since 1995 for China, with its 
three components. Life expectancy has always dominated, and still 
did in 2018 (Figure 13), although the distance with education and 
income has shrunk appreciably. One can again compare this with 
other countries, of course, but it is more sensible to realise that the 
social predicament of Chinese citizens has improved a great deal, 
which is what matters first of all. Figure 12 shows that the health 
index  has  consistently  remained  firmly  above  the  world  levels, 
even though both increased steadily since 1995. At the same time, 
despite  China’s  strong  health  trend  performance,  it  nevertheless 
takes no higher place than 59th. However, in health it is the best of 
the BRICS in 1995 and still in 2018 (narrowly above Brazil). 

Unsurprisingly, the fastest rise is in per capita incomes given 
China’s growth machine: from a p.c. income of roughly one quarter 
of the world level in 1995, it rose to 8 times as much, ending slightly 
above  the  2018  world  level.  Amongst  the  BRICS  ony  Russia  has 
a (much) higher p.c. income, but that is partly the result of Rus-
sia’s  massive  natural  resources.  In  education  two  sub-indicators 
are  used:  the  actual  number  of  schooling  years  (of  cohorts  now 
having left school) and the expected years of schooling (of newly 
arriving pupils). In the actual number of years of schooling, China 
climbed from a poor 5.7 years in 1995 to 7.9 years in 2018, whereas 
the expected years of schooling shot up from 9.1 years in 1995 to 
no less than 13.9 years in 2018. China’s actual years of schooling 
stayed  below  the  world  average,  in  1995  and  still  in  2018.  This 
can  be  considered  a  weakness.  On  the  other  hand,  although  the 
expected years of schooling in 1995 were behind the world (by half 
a year), in 2018 China was ahead of the world by 1.2 years, a firm 
catch-up. 

Weinian Hu and Jacques PelkmansFigure 12: Trend in HDI components in China: health, education 
and income 1995-2018

205

Figure 13: China’s health (life expectancy at birth) index: 1995-2018

It is striking from the surveyed trends how long it takes, even 
when  underlying  economic  growth  is  so  powerful  as  it  was  in 
China, before one begins to approach HDI levels of OECD or EU 
countries. It would go too far to discuss this in detail for 27 coun-

EU/China Sustainable Development Cooperation: Towards Convergence?206

tries plus China and for the HDI and its components. In 1995 Chi-
na’s HDI (0.548) was significantly below the lowest four (future) 
EU countries, i.e. those below 0.700: Bulgaria, Croatia, Latvia and 
Romania. By 2018 when China had climbed to 0.758, the gap with 
the lowest four (between 0.816 and 0.845) had narrowed appreci-
ably. It is thus conceivable that China might catch up in Human 
Development  with  the  lowest  performing  EU  countries  in  6  –  8 
years from today (if trends remain unchanged). It should never-
theless be pointed out that China is still far from the top four EU 
performers in HDI which all score above 0.930. Zooming in on the 
components, China has already surpassed (narrowly) the 4 lowest 
performers in the EU on health,210 but did not come even close to 
the lowest performer in the EU  on years of schooling (7.9 years 
for China, against 9.2 for Portugal, with other EU much higher), 
getting close to the lowest three in the EU for expected years of 
schooling (13.9 for China as against 14.2 – 14.5 211) and beginning 
to near the lowest three performers in terms of p.c. income.212 

These  trends  are  illustrative  for  a  China  which  is  no  longer 
merely ‘growing at all costs’. China cherishes a far richer develop-
ment concept and this is not to be described as mere propaganda 
or paper work. The 18th Party Congress in 2012 called for the ‘con-
struction of a harmonious society’, with an emphasis on education 
whilst improving people’s health. The ambition further increased 
in  2015  with  the  vision  of  ‘innovative,  coordinated,  green,  open 
and  shared  ‘development,  a  vision  that  centers  the  concept  of 
human development.213 In 2016 the ‘Healthy China 2030 Plan’ was 
launched.  The  HDI  shows  unmistakenly  that  the  social  predic-
ament  of  Chinese  citizens  has  enormously  improved  since  1995 
and this trend continues in a climate of lower (though still impres-
sive) economic growth rates. These trends should help to solidify a 
foundation for secular EU /China cooperation in social aspects of 
sustainable development. 

210  Bulgaria, Latvia, Lithuania and Romania.

211  For Luxembourg, Slovakia and Romania.

212  For China in 2018 in 2011 US $ (PPP) 16127 ; for Bulgaria, Croatia and Romania be-

tween 19646 – 23906. 

213  See China’s HD report 2020, p. 37 for both citations. 

Weinian Hu and Jacques Pelkmans207

The urban/rural divide in China’s Human Development

It has long been held that the income gap between rural and urban 
citizens in China was so large that one could speak of a deep divide. 
Whilst the North-East, East and South East of the country were 
growing fast, becoming even affluent, this would not or much less 
be the case for rural areas. But also rural health and educational 
opportunities were widely regarded as inferior to those of urban 
citizens. 

With  new  systematic  and  long-term  data  available,  this  issue 
can  now  be  discussed  with  better  factual  evidence.214  At  a  very 
aggregate level Figure 14 shows 40 years of the ratio of p.c. incomes 
of urban and rural resident. It shows considerable fluctuations but 
the 2017 ratio is almost identical to the 1978 ratio, that is, urban 
p.c. income is some 2.6 times the rural p.c. income, on aggregate. 
It  is  not  the  purpose  of  this  paper  to  assess  this  measurement 
of  the  divide.  The  ratio  does  not  seem  to  be  extreme  compared 
to  other  countries  but  it  is  certainly  possible  to  find  quite  a  few 
countries where the ratio is smaller, partly by policy design. How-
ever, it depends how rural and urban are delineated, whether it is 
pre- or post-tax, and whether ex-post compensatory measures for 
rural reduce the differences. It might also be the case – indeed, it 
is  likely  -  that  the  effective  purchasing  power  of  (say)  100  yuan 
differs  between  rural  and  urban.  In  any  event,  since  the  rather 
high overall inequality in 2007-2009, the Chinese government has 
made significant efforts to address the divide in a number of ways. 
This seems to have helped.

214   All of the following (unless indicated) is from China’s HD report 2020

EU/China Sustainable Development Cooperation: Towards Convergence?208

Figure 14: China’s ratio of urban over rural p.c. incomes: 1978 - 2017

Source: China Human Development Report 2020, p. 37

One reason is that the fight against poverty in China – impor-
tant  for  decades  –  has  become  quite  successful  precisely  in  the 
country-side. “From 2013 to 2017, China’s rural poor population 
decreased by 13 million a year..” (op. cit., p. 38) and the poverty inci-
dence fell from 10.2% in 2012 to 3.1% at the end of 2017. Average 
incomes  have  increased  spectacularly:  the  p.c.  income  index  of 
the HDI for the four super-regions grew between 1982 and 2017 
with 127% (Eastern), 171% (Central, from a very low level), 181% 
(Western,  idem)  and  97%  (North-East,  with  a  lot  of  old  heavy 
industry). In terms of 2011 US $ (PPP), in absolute terms, the gap 
in  2017  between  the  coastal  /  Eastern  region  ($  21,221)  and  the 
other three ($ 11,424 – $ 12,772) remains considerable, however. 

In  the  following,  the  discussion  will  be  conducted  with  HDI 
data only. The HDI for the four super-regions were at first char-
acterized by a major gap between the North-East region and the 
Eastern  region,  on  the  one  hand,  and  the  Western  and  Central 
regions,  on  the  other  hand.  But  in  2017  these  contrasts  had  all 
but disappeared, put differently, the coefficient of variation215 fell 
from 10.6% in 1982 to only 3.5% in 2017. Another clear indication 
that there is no major urban/rural divide in HDI terms anymore is 
given in Figure 15 which depicts the HDI of most Chinese prov-
inces in 2017. 

215   A dispersion measure, defined as the ratio of the standard deviation to the mean. 

Weinian Hu and Jacques Pelkmans209

Apart  from  Tibet  as  an  outlier,  provincial  HDIs  are  between 
0.67 and 0.88, but without the three leading cities, the HDIs are 
really  rather  close.  It  follows  that  inter-provincial  HDI  dispari-
ties  are  moderate  for  the  most  part.  Nevertheless,  there  is  some 
concern  that  –  even  when  HDI  levels  are  satisfactory  for  China 
or for a province - inequalities are disturbing. Inequalities occur 
only in some provinces and not necessarily the tradionally ‘poor’ 
provinces. HDI are now known even at the level of prefecture-level 
cities (i.e. within provincies) and yields some unexpected results. 
Provinces like Shanxi, Fujian, Jiangxi and Shaanxi demonstrate a 
high level of HDI with small internal disparities whereas Xinjiang, 
Hunan, Hubei and Guangdong show great disparities, unexpect-
edly. Indeed, the most developed province in China - Guangdong 
–  has  very  high  disparities  at  cities’  level.  Finally,  HDI  levels  for 
women are more than 90% of the HDI for men, so gender dispar-
ities are generally small. 

Figure 15: Level of provincial HDIs in China: 2017, 31 provinces

EU/China Sustainable Development Cooperation: Towards Convergence?210

China’s rural human capital gap and long-term economic 
growth 

Unfortunately,  there  may  well  be  a  ‘human  capital  gap’  between 
the rural and urban areas in China. Its magnitude cannot be prop-
erly read from official HDI statistics. As shown in Figure 12, the 
education element of the HDI is the weakest of the three. It is split 
into two sub-components: the actual and the expected number of 
years of schooling. As shown, the actual number of schooling was 
still very poor in 1995 (less than 6 years) but it rose to 7.9 years 
in  2018,  lower  than  the  world  average.  The  expected  number  of 
school years was 9.1 in 1995 and rose to 13.9 yrs in 2018, passing 
the world average in the meantime. These HDIs are weaker than 
the  components  for  health  and  per  capita  income  in  China,  but 
they are also conveying a false picture, as revealed by painstaking 
empirical  work  by  a  group  of  (mainly  Chinese)  scholars  led  by 
Scott Rozelle.216 The misleading picture is the result of two aspects. 

First, and long known informally, a China-wide HDI for edu-
cation  is  almost  useless  unless  further  broken  down  into  rural 
and urban HDIs. There is a ‘human capital gap’ between the rural 
areas and the urban ones. For a meaningful approach, one needs to 
understand this ‘gap’ and how it is gradually closing over time. For 
2015 and for the age bracket of 25 yrs – 64 yrs, the gap is enormous: 
only 11.3% of workers from rural areas had attained at least high 
school education, in contrast with no less than 44% of urban indi-
viduals.  Providing  an  order-of-  magnitude  of  how  many  people 
are affected by this gap, the following data is telling: in 2014 871 
mn Chinese had a rural hukou, of which 659 mn are of working 
age. Of these some 31% have migrated to cities to work, some 227 
mn. Problems of obtaining good schooling (high schools) are con-
siderable  in  rural  areas  but  probably  even  bigger  in  urban  ones 
due  to  outright  discrimination  of  rural-hukou  children,  forcing 
them either to be ‘left behind’ at home with grandparents (in ages 
0-17 yrs, some 60 mn) or following education on low-rated private 

216    See  Li,  Loyalka,  Rozelle  &  Wu  (2017)  and  Khor,  Pang,  Liu,  Chang,  Mo  &  Rozelle 
(2016). More recent statistical confirmation and some policy recommendations are in 
Yu, Zhang, Wang, Dang, Abbey & Rozelle (2019).

Weinian Hu and Jacques Pelkmans211

migrants schools. There is a host of reasons why kids from rural 
areas  do  not  take  up  high  school  or  drop  out  in  large  numbers 
(explained in Li et al., 2017, pp. 6-8). 

The  second  reason  is  that  the  official  statistics  –  almost  cer-
tainly  also  underlying  the  official  HDI  indices  –  on  educational 
accomplishments are grossly inflated (since around 2003). In Khor 
et  al  (2016),  this  discovery  is  explained  by  the  mismatch  of  the 
2010  census  data  (direct  measurement,  highly  reliable)  and  the 
data  from  the  Ministry  of  education,  largely  based  on  data  sup-
plied by local and provincial officials, in turn influenced by arti-
ficial incentives and subsidies to present ‘better’ figures. For high 
school attendance, the exaggeration is some 50+% for 2010, which 
profoundly influences HDI data for education. Thus, HDI statistics 
on education as presented in this chapter cannot be relied upon 
as being as high as presented – sadly, China performs worse than 
official data tells us. However, the much more important inference 
is that this lower performance in Chinese human capital, at least 
in the country-side, has a major impact on the long-run economic 
growth of China for the (say) next two decades. 

Instead of attaining secular economic growth of some 5% - 7%, 
as  suggested  in  long-run  forecasts,  the  corrected  data  for  high 
school education (esp. in rural areas) as an important component 
of  human  capital  strongly  suggest  a  secular  economic  growth  of 
some 3% annually (Li et al., 2017) for the period 2015 – 2035. In 
addition,  it  throws  a  more  sombre  light  on  the  perspectives  of 
rural youngsters, but this with a proviso. Indeed, one of the factors 
discouraging going to or staying in high school is the increasing 
scarcity of low skilled workers, inducing swiftly rising real wages 
for them. Going to school therefore presents them with an oppor-
tunity  cost  that  –  together  with  other  factors  (like  high  tuition 
for rural high schools ; lower quality schools, making it difficult 
to  pass  the  country-wide  college  entry  examination)  –  might  be 
assessed as too high for many. With a secular growth rate of some 
3%, there is a risk that China’s fear of getting stuck in the middle 
income trap may still be hard to escape from. 

EU/China Sustainable Development Cooperation: Towards Convergence?212

4.5 25 years of EU/China cooperation in the green pillar 
of sustainable development 

The  last  25  years  of  EU/China  relations  have  witnessed  great 
activism in cooperation and other initiatives in environmental and 
climate issues. The short survey is focused on the multilateral and 
bilateral  approaches.  The  multilateral  approach  is  about  China’s 
and the EU’s energetic participation in UN-related and other mul-
tilateral organisations or initiatives. Even when the EU and China 
were not deliberately working together directly in these fora, there 
is presumably a common orientation, but more often than not also 
similar concrete obligations and detailed specifications of commit-
ments. The bilateral approach began some 25 years ago in the first-
ever Commission policy paper on EU/China relations.217 A huge 
tail of subsequent policy papers, strategy documents, declarations 
and reports followed ever since, quite apart from a long list of pro-
jects. The short survey will stick to the essentials. 

Multilateral policy convergence between the EU and China

China  and  the  EU  are  both  signatories  of  a  range  of  important 
Multilateral Environmental Agreements (MEAs). Indeed, much of 
bilateral commitments on environment and climate in sustainable 
development chapters of EU FTAs, in fact hinges critically on mul-
tilateral treaties and active cooperation. Even when China and the 
EU have no FTA, there is a lot of overlap in codified preferences 
of the two partners in the multilateral arena. Table 1 provides an 
overview  of  no  less  than  12  MEAs  at  stake  in  order  to  compare 
the multilateral environmental ‘acquis’, as it were, between China 
and  the  EU  in  2020.  In  fact,  there  is  much  more:  in  addition  to 
the 12 MEAs, there are in total 11 ‘amendments’ (some of which 
of great importance), 3 extra Protocols and 4 supplementary con-
ventions or treaties, all signed and mostly ratified by China. For 
all the MEAs in Table 1 there is full formal convergence between 

217   A long term policy for China Europe relations, COM (1995) 279. There is no web link 
of this paper. However, it can be found in a reference volume edited by Francis Snyder 
(ed., 2009, pp. 340 - 369).

Weinian Hu and Jacques Pelkmans213

the EU and China, in other words, in terms of strategic aims and 
the ensuing implementation and enforcement (where relevant) of 
these treaties, China and the EU are in full agreement. The detailed 
obligations might differ sometimes – as a function of the level of 
development  and  other  factors  –  but  the  strategic  convergence 
over a broad spectrum of environmental policy areas is very clear. 

One  can  argue  that  the  formal  convergence  of  a  broad  spec-
trum of treaties and their respective amendments is not so special 
as the majority of these agreements is ratified by an overwhelming 
majority  of  UN  countries.  What  China  does  in  this  respect  is 
apparently driven largely, if not entirely, by the importance of the 
substance of these agreements and by multilateral processes which 
can only be influenced to a limited degree by EU strategies, and 
even less by sustainable development aspects of EU trade policy 
(which  is  relatively  recent).  EU’s  activism  in  a  number  of  treaty 
discussions,  both  during  negotiations  and  after  ratification,  will 
also focus on ensuring China’s commitments where possible, but a 
detailed study of how diplomacy fared in each and every case is far 
beyond the scope of the present contribution. 

Curiously,  it  is  exceedingly  rare  to  find  a  specification  about 
MEAs  as  rich  as  Table  1.218  The  Table  is  helpful  when  assessing 
the multilateral environmental preferences of China and the EU. 
If and insofar as any future FTA with China would seek to specify 
references to MEAs as one element of a sustainable development 
chapter,  Table  1  makes  immediately  clear  that  such  an  overall 
framework  for  a  common  multilateral  basis  is  readily  available. 
Without  a  FTA,  as  nowadays,  it  is  nevertheless  comforting  that 
China’s and EU’s positions and international commitments overlap 
so much that the term ‘convergence’ seems fully justified. However, 
some of these treaties have pathways of several decades and stretch 
over numerous items (or ‘substances’ or other elements) that some 
actual differences may remain relevant, at least for a while.

When looking at the same MEAs for the EU and China, it is 
easy  to  forget  that  China  still  enjoyed  developing  country  status 

218   The exception is probably the 27 Conventions underlying GSP+ (on ‘green’ and’labour’ 

and ‘governance’). 

EU/China Sustainable Development Cooperation: Towards Convergence?214

in the 1990s and the early 2000s. Thus, although both the EU and 
China may have ratified the same treaty, the factual obligations at 
a certain moment in time might differ significantly. One example 
is offered by the Kyoto Protocol. China became a leading user of 
the CDM, the Clean Development Mechanism of the Kyoto Proto-
col,219 resulting in efficient technology being installed in China paid 
by EU companies or EU countries stuck with a too high emission 
level at a certain point in time (see the detailed Box 5 in Pelkmans, 
2021  for  an  elaborate  analysis  of  the  joint  dominance  of  China 
and the EU in CDM). Recently, the EU and China have worked 
closely together in the run-up of the Paris Agreement on climate, 
which is significant and relevant for decades ahead. Testing how 
‘deep’  these  Paris  commitments  really  are  was  attempted  in  the 
COPs  of  Katowice  and  in  Madrid. The  provisional  conclusion  is 
that  –  when  it  comes  to  details  of  implementation  and  speed  of 
adjustment – China is more prudent or possibly less credible than 
the EU, for now. Yet there are still many years to go. But also the 
EU  faces  very  major  challenges  in  climate  strategy  and  the  new 
Green Deal shows how ambitious it is to be consistent with the full 
implications of a net-zero-carbon European economy and society 
(by 2050). 

Table  6  aims  to  complement  this  evidence  on  ‘policy  con-
vergence’  by  comparing  China’s  engagement  with  multilateral 
trade-and-investment  relevant  commitments  with  what  benefi-
ciary countries of the EU GSP+ are obliged to adhere to. Today’s 
EU  GSP+  requires  ratification  of  27  Conventions  in  four  areas: 
environmental/climate  protection,  good  governance,  human 
rights and labour rights. After 2023 the revised GSP+ requirements 
imply that another 4 Conventions, one Protocol and an Agreement 
will be added, whereas one Protocol is dropped (because it will be 
replaced). Hence, the total list of commitments will amount to 32. 
Table 6 verifies for all these 32 items what China has ratified and 
also compares these with what Table 1 comprises (MEAs only) and 
what  EPA,  ch.  16  either  specifies  or  implies  via  less  specific  but 

219   One of the ‘flexibilities’ of the Protocol. 

Weinian Hu and Jacques Pelkmans215

nonetheless relevant pledges. The obvious reason behind this com-
parison  is  that  China  is  far  more  successful  and  developed  than 
typical GSP+ countries, and is, moreover, the EU ’s biggest or sec-
ond-biggest trading partner. It would be very difficult indeed for 
the EU to explain and justify why China – after 25 years of intense 
bilateral cooperation in sustainable development – would turn out 
not to be as ambitious as the nine GSP+ countries and not show at 
least a similar degree of ‘convergence’ in ratifying these multilat-
eral commitments. 

Table 6: China’s multilateral convergence: Ratification of GSP+ & 
Other Conventions

Required GSP+ Conventions Ratification 

by China

In Table 
1 (MEAs 
only)

EPA, ch. 16 ; 
reference or 
implied

Convention on international 
trade in endangered species of 
wild fauna and flora [CITES, 
1973]

Montreal Protocol on sub-
stances that deplete the ozone 
layer [1987]

Yes, 

Yes 

Yes, Art. 
16.6

Yes 

Yes 

No ; also the 
(relevant) 
term ‘public 
health’ is 
absent in 
Ch. 16

No ; idem, 
on ‘public 
health’

Yes, Art. 
16.6

Yes, Art. 
16.4

Basel Convention on the con-
trol of transboundary move-
ments of hazardous wastes 
and their disposal [1989]

Convention on Biological 
Diversity [1992] 

UN Framework Convention 
on Climate Change [1992]

Yes

Yes

Yes

Yes

Yes

Yes

1.

EC

2.

EC

3. 

EC

4. 

EC

5.

EC

EU/China Sustainable Development Cooperation: Towards Convergence?216

6.

EC

7. 

EC

8.

EC

9. 

GG

10.

GG

11. 

GG

12.

GG

13. 
HR

14.

HR

15.

HR

Yes, implied 
in Art. 16.6 
sub 1  by 
“and its 
protocols”

No, possibly 
implied by 
phrases in 
Art.16.5

Yes, implied 
in Art. 16.4 
sub 4 where 
the Paris 
Agreement is 
specified

Cartagena Protocol on 
Biosafety [2000]

Yes 

Yes

Stockholm Convention on 
persistent organic pollutants 
[2001]

Kyoto Protocol to the UN 
Framework Convention on 
Climate Change, today super-
seded by the Paris [Climate] 
Agreement

UN Single Convention on 
narcotic drugs, as amended 
in 1975

UN Convention on psycho-
tropic Substances [1971]

UN Convention against illicit 
traffic in narcotic drugs and 
psychotropic substances 
[1988]

UN Convention against cor-
ruption [2003]

Convention on the prevention 
and punishment of the crime 
of genocide [1951]

Yes

Yes

Yes 

Yes

Yes, 1985 *

n.a.

n.a.

Yes, 1985 *

n.a.

n.a.

Yes, 1988 *

n.a.

n.a.

Yes, 2006

n.a.

n.a.

n.a. 

n.a.

Yes but no 
ratification; 
binding 
on all UN 
countries

International Convention on 
the elimination of all forms of 
racial discrimination [1969]

International Covenant on 
Civil and Political Rights 
[1976]

Yes, 1981

n.a.

n.a.

Signature 
only, 1998

n.a.

n.a.

Weinian Hu and Jacques Pelkmans217

16.

HR

17. 

HR

18.

HR

19.

HR 

20.

LR

21.

LR

22.

LR

23.

LR

24. 

LR

25.

LR 

26.

LR

27.

HR

International Covenant on 
Economic, Social and Cultural 
Rights [1976]

Yes, signed 
1997; 2001 
ratified 

n.a.

n.a.

Convention on the elimina-
tion of all forms of discrimi-
nation against women [1979]

Convention against torture 
and other cruel, inhuman or 
degrading treatment or pun-
ishment [1987]

Convention on the rights of 
the child [1990]

Freedom of association and 
protection of the right to 
organise [1948 ; ILO nr. 87; 
ILO ‘core’]

Right to organise and collec-
tive bargaining Convention 
[1949; ILO nr. 98 ; ILO ‘core’]

Forced Labour Convention 
[1930 ; ILO nr. 29 ; ILO ‘core’ 
and its 2014 Protocol]

Abolition of Forced Labour 
Convention [1957; ILO nr. 
105; ILO ‘core’]

Minimum Age Convention 
[1973; ILO nr. 138 ; ILO ‘core’]

Worst Forms of Child Labour 
Convention [1999; ILO nr. 
182; ILO ‘core’]

Equal Remuneration Conven-
tion [1951; ILO nr. 100 ; ILO 
‘core’] 

Discrimination (Employment 
and Occupation) Convention 
[1958; ILO nr. 111; ILO ‘core’]

Yes, 1980

n.a.

n.a.

Yes, 1988

n.a.

n.a.

Yes, 1992

n.a.

n.a.

No

n.a.

Implied in 
Art. 16.1 sub 
1 and spe-
cific in Art. 
16.3 sub 2

No

No

No

n.a.

idem

n.a.

idem

n.a.

idem

Yes, 1999

n.a.

Yes, 2002

n.a.

Yes, 1990

n.a.

Yes, 2006

n.a.

Implied in 
Art. 16.3, 
sub 2 and 3

Specified 
in Art. 16.3 
sub 2

Implied in 
Art. 16.2

Implied in 
Art. 16.2 
sub 2

EU/China Sustainable Development Cooperation: Towards Convergence?218

28.

HR 

29.

HR 

30.

LR

31.

LR

32.

GG

Optional Protocol to the 
Convention on the rights of 
the child on the involvement 
of children in armed conflict 
[2000]

Convention on the rights 
of persons with disabilities 
[2007]

Yes, 2008

n.a.

n.a.

Yes, 2008

n.a.

n.a.

Convention on Labour 
Inspection [1947; ILO nr. 81 ]

No

n.a.

n.a.

Convention on Tripartite 
Consultations [1976; ILO nr. 
144]

UN Convention against 
Transnational Organised 
Crime [2000]

Yes, 1990

n.a.

Implied by 
Art. 16.3

Yes, 2003

n.a. 

n.a.

Notes: EC = environmental /climate ; GG = good governance; HR = 
human rights ; LR = labour rights ; n.a. = not applicable ; * means: with 
some substantive reservations.

China  has  ratified  26  of  the  32  Conventions  and  Protocols 
required for GSP+. In addition, in one case [item 15] it has only 
signed, not ratified. In five cases it has simply neither ratified nor 
signed  at  all.  This  is  a  fairly  high  score  but  not  good  enough.  It 
means  that  the  9  GSP+  countries220  do  better  and  none  of  these 
countries  comes  near  to  the  GDP  per  capita  of  China.  Indeed, 
the problem is not the level of development. It is a direct conse-
quence of the extreme controls the Chinese government and the 
monopolist Party (CCP) wish to maintain and hence a measure of 
authoritarian governance. This is immediately clear once one con-
siders the nature of the 5 Conventions not signed or ratified. The 
items 20 and 21 constitute the most fundamental Conventions for 
workers to ensure that they can organise themselves the way they 
deem fit, with all non-violent methods available, in order to pro-

220  Armenia,  Bolivia,  Cape  Verde,  Kyrgyzstan,  Mongolia,  Pakistan,  the  Philippines,  Sri 
Lanka and Uzbekistan. Four countries are regarded as ‘prospective GSP+ countries’ : 
Bangla Desh, Lao PDR, Nepal and Tajikistan. 

Weinian Hu and Jacques Pelkmans219

mote their cause, protect their rights and improve their standard 
of living. The items 22 and 23 (both on forced labour) reflect harsh 
forms of punishment. Penal law in China would have to be trans-
formed before one can expect their ratification. In the longer run, 
stimulated by the CAI negotiations, this transformation might be 
possible and a more dignified system might be installed. And item 
30, on labour inspections represents yet another system of control, 
and therefore an instrument of those in power rather than a judi-
cial  and  administrative  tool  to  protect  workers  and  verify  inde-
pendently how they are treated. 

Finally,  item  15  is  a  human  rights  Covenant.  Whereas  China 
has  much  improved  in  economic  rights,  and  partially  in  social 
rights, the EU-China Dialogues on Human Rights show that civil 
and political rights leave much to be desired. The CCP as well as 
the  government  prefer  to  retain  enough  discretion  and  freedom 
to contain the spreading of defiant ideas and to intervene in ways 
(and often without transparency) that shield their power and pre-
empt protest, let alone uprising. Ratifying the Civil and Political 
Rights  Covenant  would  therefore  be  impossible,  or  amount  to  a 
non-violent revolution. 

With  respect  to  MEAs,  the  overlap  with  Table  1  is  complete. 
Indeed,  several  items  in  Table  1  are  not  even  included  in  Table 
6  (e.g.  London  Convention  on  marine  pollution  ;  the  Ramsar 
Convention on (international) wetlands ; Vienna Convention on 
nuclear  safety  ;  UN  Convention  on  combatting  desertification, 
where China is also a ‘partner’ as is the EU; the Rotterdam Con-
vention on prior consent of shipping hazardous waste). 

The conclusion is that China has realised a far-reaching degree 
of policy convergence when it comes to multilateral commitments. 
However,  although  performing  well  in  environment  and  better 
and better in climate issues, the country would not stand the test 
of GSP+ , a test that 13 other countries – all less developed – would 
pass or have already passed. 

EU/China Sustainable Development Cooperation: Towards Convergence?220

Bilateral dialogues and cooperation on sustainable 
development, the early days

Already in 1994, when a general EU/China perspective had yet to 
be formulated, the EU and China began an energy Dialogue. Also 
before  the  1995  Commission  paper  (see  footnote  217)  Member 
States had already begun funding projects inspired by sustainable 
development  in  China,  usually  from  a  development  perspective. 
There seems to be little systematic knowledge about this episode. 
The 1995 COM paper mentions the emergence of a working group 
(what  later  would  become  a  policy  Dialogue)  in  the  following 
quote:  “The  environmental  challenge  faced  by  a  rapidly  devel-
oping China has been recognized by the Chinese government in 
its  ‘Agenda21’  follow-up  programme  of  the  [1992]  Rio  summit  , 
with its accompanying list of specific projects leading to sustain-
able development. The problems faced by China in the environ-
mental field are partly systemic – a low awareness of the long-term 
consequences of inaction , partly technological, and partly becasue 
China does not believe that it can afford the costs of high environ-
mental standards. Of critical importance is the need to integrate 
environmental  considerations  into  other  areas  of  policy,  such  as 
economic planning. A new working group has been set up to dis-
cuss how the EU can best help Chinese efforts. We need to identify 
a coherent European contribution in a field where there is multi-
plicity of signals from the Chinese side.” (op. cit., pp. 352/3) The 
quote shows clearly that the EU intention is borne from develop-
ment considerations, with China as a recipient. There is no sugges-
tion yet of a genuine common interest or an EU-specific interest.

  It  would  still  be  another  2  years  before  the  European  Com-
mission would publish an ASEM-related paper on environment,221 
laying  the  basis  for  a  proposal  to  enhance  the  working  group 
between  the  EU  and  China  to  a  Dialogue  on  ‘environment  and 
sustainable development’ in the newly framed EU/China partner-

221   COM(1997)490 of 13 October 1997, Europe Asia cooperation in the field of environ-

ment

Weinian Hu and Jacques Pelkmans221

ship of 1998.222 For China the Commission proposes to help China 
to “integrate environmental priorities – such as the prevention of 
industrial pollution and greenhouse gas emissions, and the con-
servation of biological diversity – further into national economic 
policy  processes  and  into  development  schemes  at  regional  and 
local levels. Where desirable, and in line with the Chinese objec-
tive of reducing poverty alleviation, projects should be integrated 
together.”  A  similar  Commission  line  is  followed  for  energy, 
helped  by  the  existing  energy  dialogue.  The  Commission  had 
also  produced  a  Communication  on  a  Europe-Asia  cooperation 
strategy for energy (again, an ASEM type paper). It says that the 
EU  should  help  China  to  develop  efficient  and  clean  industries 
and also establish a presence in its potentially lucrative market for 
green technology. Top priorities include energy efficiency, devel-
oping clean coal technologies, alternative energy sources, notably 
natural gas. The EU should seek to develop synergies with interna-
tional financing institutions. The Commission advocates that the 
EIB  (especially  for  energy)  comes  in  to  strengthen  funding  and 
expertise. The first conference on EU/China Energy cooperation 
was held in 1997 and a second one was to follow in 1998. 

The  2000  Commission  implementation  report223  of  the  new 
EU/China Partnership is interesting on all the latest of the nearing 
WTO  membership  of  China,  but  disappointing  about  environ-
mental issues. There is talk about a 2 yrs programme (of SEPA?) 
since 1998 called Programme on Economic Planning and Environ-
mental Protection, supported by the EU in a number of concrete 
ways, but little detail. The Commission paper explicitly refers to 
the 10th Five Year Plan of China (2001-2005), with a novel policy 
of  sustainable  development,  in  which  a  great  emphasis  seems  to 
have been laid on the development of an environmental industry 
sector, where the EU sees opportunities. 

222   In COM(1998)181 of 25 March 1998, Building a comprehensive partnership with Chi-

na, in : Snyder (2009) op. cit., pp. 370-388.

223   See COM (2000)552 of 8 September 2000, in Snyder, op. cit., pp. 388-403.

EU/China Sustainable Development Cooperation: Towards Convergence?222

The next implementation report [COM (2001) 265 of 15 May 
2001]224 reflects deepening and widening of cooperation in envi-
ronment.  The  bilateral  environmental  WG  is  reviewed  and  an 
advocacy is made for a ‘substantial and separate policy dialogue on 
environmental issues of mutual interest’ with SEPA. Also to pro-
mote common interests in the framework of MEAs. Assist China 
in  a  range  of  areas:  sustainable  forest  management,  sustainable 
land-use,  land  planning  and  management,  water  resource  man-
agement,  sustainable  energy  production  &  marketing,  air  pollu-
tion and measures to combat climate change. Moreover, to develop 
cooperation projects on a range of aspects: 7 in total, very broad 
altogether.  Specifically  on  energy,  apart  from  the  4th  EU/China 
Energy cooperation conference, a new policy dialogue is proposed 
and  a  project  on  how  to  assist  (knowledge  transfer  to)  China  in 
reducing the environmental impact of its energy production and 
consumption. 

Two  years  later  the  Commission225  publishes  ‘A  maturing 
partnership  –  shared  interests  and  challenges  in  EU/China  rela-
tions’  in  which  a  ’strategic  partnership’  was  proposed.  This  pro-
posal  was  made  in  the  knowledge  that  China  was  to  publish  its 
own  EU  strategy  paper  in  October.  The  EU  strategy  paper  calls 
for ‘strengthening existing policy dialogues on environment and 
energy,  and  complement  them  by  implementing  planned  coop-
eration projects on environmental capacity-building and sustain-
able development. Through the Commission’s participation in the 
China  Council  for  International  Cooperation  on  Environment 
and Development [CCICED], [it can] help identify priorities for 
future  cooperation  in  this  area’.  A  telling  quote  for  the  purpose 
of the present eBook, a little further, reads that ‘with the current 
shift … away from traditional development projects towards sec-
toral interventions which are increasingly aligned with EU policies, 
a  greater  degree  of  involvement  of  line  ministries  is  required’ 
[emphasis added]. During the early days of bilateral cooperation 
on sustainable development, this is a rare admission that the bilat-

224   See in Snyder, op. cit., pp. 403-420.

225   See COM (2003) 533 of 10 September 2003, in Snyder, op. cit., pp. 459-489.

Weinian Hu and Jacques Pelkmans223

eral approach of the EU is shifting from a development perspective 
towards greater policy or strategic alignment. 

In the Chinese 2003 EU strategy paper226 there is a strong sec-
tion on environment, quoted here in full: “China-EU communi-
cation  and  cooperation  in  environmental  protection  should  be 
stimulated and a mechanism of dialogue between the Chinese and 
EU environmental ministers launched. Framework documents on 
environmental cooperation should be formulated and discussions 
held  on  the  establishment  of  information  network  on  environ-
mental cooperation. Bilateral cooperation should be strengthened 
on such issues as environmental legislation and management, cli-
mate  change,  bio-diversity  protection,  bio-safety  management, 
and trade and environment.” The shorter section on energy coop-
eration  is  linked  and  reads  as  follows:  “China-EU  cooperation 
will be expanded in such fields as energy structure, clean energy, 
renewable energy, and energy efficiency and saving. Exchanges on 
energy development policies will be promoted. Efforts will be made 
to ensure a successful, EU-China energy conference. The energy 
WG  mechanism  will  be  strengthened.  Training  on  energy  tech-
nology and cooperation in demonstration projects will be boosted 
to promote application and transfer of technology”. Shortly after 
these two strategy papers from both sides, the EU/China summit 
of  2003  relabeled  the  strategic  partnership  into  a  ‘strategic  and 
comprehensive partnership’. PM Wen Jiabao confirmed these hey-
days  in  the  relationship  when  calling,  in  a  series  of  speeches  in 
2004,  for  ‘vigorously  developing’  this  EU  /China  comprehensive 
strategic partnership.227 

In short, the EU and China were clearly and actively engaged 
in bilateral efforts of an often practical nature to create or bolster 
capacity  in  energy  and  environment,  besides  almost  permanent 
diplomatic efforts of the two partners to approximate their posi-
tions  on  a  range  of  sustainable  development  related  issues.  The 

226   China’s EU policy paper, October 2003, in Snyder, 2009, op. cit., pp. 490 – 498. 

227   See Snyder, 2009, op. cit. for his speeches in Brussels, Helsinki, Hanoi and The Hague, 

starting from p. 499.

EU/China Sustainable Development Cooperation: Towards Convergence?224

approach also changed from an ad-hoc or patchwork one into a 
more solid and long-run bilateral relationship – the strategic and 
comprehensive partnership – which is considered as essential by 
both, even when in some episodes political irritations arose or the 
summit would be cancelled. In such troubled episodes, the prac-
tical cooperation on sustainable development remained untouched 
or even intensified. 

Bilateral cooperation on sustainable development: 2003 – 
2019

Although drawing a line between the ‘early days’ and EU-China 
SD-related cooperation after mid-2003 is always somewhat arbi-
trary, the solemn agreement on the political binding of a “strategic 
and comprehensive partnership” between China and the EU is a 
sound  reason  to  do  so.  This  partnership  has  withstood  tensions 
of  ‘high  politics’  and  embarrassment  during  the  economic  and 
financial crisis of 2009/10. It also has proven to be serious in terms 
of  permanent  activity,  debates,  cooperation  and  technical  pro-
grammes. Of course, the present paper cannot and should not go 
into the numerous details of this relationship, but an attempt will 
be  made  to  help  the  reader  in  appreciating  the  nature,  diversity 
and intensity of the sustainable development elements of the part-
nership. The critical question remains whether an active and lively 
partnership does indeed bring about or at least stimulates greater 
convergence  in  sustainable development  between China and the 
EU. Conveying what the EU/China partnership in sustainable-de-
velopment-related 228 policies has generated, will be done with the 
help of Table 7 and Table 8. Table 7 simply lists the activities and 
other  highlights  in  the  green  pillar  over  the  last  17  years  or  so, 
without  ensuring  that  it  is  exhaustive.229  Table  8  provides  some 
details of one – indeed major – activity: the 2016-2020 EU-China 

228   For present purposes, only the environment & climate aspects , not the social elements.

229 The Table lists 7 energy, 9 environment/climate, and 2 sectoral initiatives. It is not – and 
cannot be – exhaustive because some initiatives led to bilateral projects which in turn 
developed sub-projects via delegated management (with several dozens of activities). 

Weinian Hu and Jacques Pelkmans225

Roadmap on energy cooperation which overlaps partly with envi-
ronment and climate. 

Table 7: EU-China cooperation on energy/environment/climate: 
2003 – 2019

(1st) year

Official title

Recent 
activity

Annotations

Now part of 
summit

(probably split 
later)

(later submerged 
in 2016 Roadmap)

Very wide 
spectrum of acti-
vities, incl. energy, 
environment & 
climate

A wide and 
ambitious agenda 
on energy supply, 
energy demand 
and cross-cutting 
(see Table 4)

Plus annex, 
interim report

Energy

1994

EU-China Energy Dialogue

2017

2005

2012

2013

2013

2016

2019

Environ-
ment & 
climate

2003

MoU EU-China Dialogue 
on energy and transport 
strategies

EU-China Joint Statement 
for enhanced Cooperation on 
electricity markets

EU-China Joint declaration 
on Energy Security

EU-China 2020 Strategic 
Agenda for Cooperation

For 6 
years

EU-China Roadmap on 
energy cooperation 

2019

Joint Statement on the imple-
mentation of the EU-China 
cooperation on Energy

9 April

EU-China ministerial 
Dialogue on environmental 
policy

6th Dia-
logue, in 
2016

EU/China Sustainable Development Cooperation: Towards Convergence?226

2005

EU-China Joint Statement 
on climate change (including 
climate partnership)

Perma-
nent see 
below

Established

a. China-EU Action Plan on 

Clean Coal

b. China-EU Action Plan 

on industrial cooperation 
on energy efficiency and 
renewable energy

EU-China CDM Facilitation 
project

Joint Statement on Dialogue 
and cooperation on climate 
change; 

EU-China Environmental 
Governance programme 
2011-2015

EU-China Environmental 
Sustainability Programme

EU-China Joint Statement on 
climate change

Joint leaders Statement on 
climate change and clean 
energy

MoU to enhance cooperation 
on emissions trading

July

2006

2010

2011

2012

2015

2018

2018

Under the EU/
China climate 
partnership

Under the EU/
China climate par-
tnership of 2005 
(and even establi-
shed a Climate 
Change hotline)

Supports the 
attainment of tar-
gets in the China 
12th five -year 
Development Plan 
2010-2015

Preparing the COP 
of Paris (Dec 2015)

Detailed technical 
support in testing 
phase of Chinese 
ETS

Weinian Hu and Jacques Pelkmans227

Forestry & 
water

2009

BCM (Bilateral Cooperation 
mechanism) on Forests and 
against illegal logging

2010

China-EU water Platform 
(high level Dialogue)

BCM 
Workplan 
in 2018 
(8th )

Nov. 2019, 
7th 

Table 7 shows clearly that the EU and China have been active 
and  recently  even  very  active  on  sustainable  development  issues 
and  technical  cooperation  over  more  than  one  and  a  half  dec-
ades.230  This  was  found  at  all  levels  from  the  EU-China  summit 
to  technical  WGs  and  direct  cooperation  in  China  with  officials 
and business where desirable (e.g. for CDM and later for emission 
trading). The cooperation has been linked to the five year plans of 
China231 and to cooperation under international treaties. One can 
therefore  maintain  that  the  partners  have  undertaken,  and  on  a 
permanent basis, an intense mode of cooperation with a view to 
pursue convergence in sustainable development related strategies, 
as much as possible. By way of illustration, Box 14 elaborates on 
the 2005 Climate Partnership which began quite ambitiously and 
has retained its activity level ever since.

230    It  should  be  realized  that  it  is  not  exhaustive.  One  major  example  is  the  EU-China 
Trade Project II from 2010 to 2016 which aimed to support the Chinese government 
trade reform and sustainable development agenda. Focussing mainly on customs and 
regulatory issues (including technical standards as well as SPS), it also dealt with sus-
tainable development under ‘cross-cutting issues’. One amongst several of the 400 ac-
tivities in this massive project is the EU China Low Carbon Economy platform ; also 
Green  Smart  Cities  was  dealt  with.  See  www.euctp.org/index.php/en/project-back-
ground.html and its newsletters. 

231   As noted, for the 12th plan explicitly. EU experts are also members of the CCICED, 
an advisory body appointed by the Chinese government. A recent report (2019) by the 
CCICED specifies the recommendations for the 14th Plan (2020-2025) : www.iisd.org/
sites/default/files/publications/cciced/agm/cciced-progress-report-2019-en.pdf 

EU/China Sustainable Development Cooperation: Towards Convergence?228

Box 14: The EU/China Partnership on Climate Change, 2005

The 2005 EU/China Partnership on Climate Change is a short 
but rich document, with a number of off-springs which highlight 
its scope and ambition. As noted previously, it was preceded by 
various joint activities on climate and environment in the period 
1998-2003  (about  which  little  has  been  published)  emerging 
from the general ‘strategic partnership’ started in 1998. In 2003 
the ministerial Dialogue on environmental policy was initiated 
and  prepared  the  ground  for  this  pathbreaking  Climate  Part-
nership. Textually, it consists of two documents. The Joint Dec-
laration  on  Climate  Change  (of  2  September  2005)  is  annexed 
to a background Memo232 explaining the partnership and back-
ground. It confirms two China-EU Actions Plans, one on Clean 
Coal  and  one  on  Energy  Efficiency  and  Renewables  Energies 
which had already been agreed in March 2005. More specifically, 
one concrete cooperation goal is to develop and demonstrate, in 
China and the EU, advanced ‘zero-emissions’ coal technology on 
the basis of carbon capture and storage by 2020 (technical pro-
ject that proved more difficult than expected). 

Other  examples  of  specific  technical  cooperation  concern 
about methane recovery, hydrogen and power transmission. The 
Partnership also reinforces EU-China cooperation on the Clean 
Development Mechanism (CDM), one of the ‘flexibilities’ of the 
Kyoto  Protocol.  It  foresees  a  Dialogue  on  the  further  develop-
ment of CDM post-2012 (the third stage of the ETS). 

232    MEMO/05/209  of  2  Sept  2005,  www.ec.europa.eu/clima/sites/files/international/co-

operation/clima/docs/joint_deckaraion_ch_eu_en.pdf 

Weinian Hu and Jacques Pelkmans229

 Finally, five research streams were set up e.g. on vulnerabili-
ties to climate change, on economic impacts of climate change in 
China, on awareness and on adaptation. Subsequently, the Cli-
mate Partnership was intensified with a range of new activities. It 
was reconfirmed with a Joint Statement on Dialogue and Coop-
eration on Climate Change in April 2010 and yet another Joint 
Declaration on Climate Change in June 2015 ‘… building on a 
decade of successful cooperation’ helping to prepare the ground 
for the Paris Agreement and agreeing on a host of ongoing and 
new activities.

As noted, a very concrete and market-based off-spring of the 
Climate Partnership is the promotion and facilitation of business 
projects in China under CDM. Whereas the rules and registration 
for CDM projects had been set up by the UNFCCC after Kyoto, 
China  and  EU  investors  have  quickly  dominated  this  form  of 
making ‘green’ finance available. 

How frantic EU/China cooperation in environment really was 
seems  (too)  little  known  and  is  apparently  misjudged  based  on 
very partial information 233. Therefore, it is interesting to ‘zoom in’ 
on yet another major example of recent EU-China (energy) coop-
eration, so as to appreciate the intensity of such cooperation. Table 
8 summarizes the EU/China Roadmap on energy cooperation of 
2016 234, for this purpose. By means of this Roadmap “China and 
the  EU  have  a  mutual  interest  and  role  to  promote  low-carbon 
development,  protect  the  environment,  address  climate  change 
and encourage energy development”. The Roadmap distinguishes 
energy supply, energy demand and cross-cutting issues. Our sum-
mary has simplified the Roadmap somewhat. 

233   For a sceptical view, see Farnell & Crookes (2016) but their environmental cases are 
only few and merely in a relatively short period and based on opinions of Commission 
officials, without specifics. Since reporting is weak and uneven, it is hard to assess. 

234  https://ec.europa.eu/energy/sites/ener/files/documents/FINAL_EU_CHINA_ENER-

GY_ROADMAP_EN.pdf 

EU/China Sustainable Development Cooperation: Towards Convergence?230

Table  8: Summary of EU/China Roadmap on energy cooperation 
2016-2020

Energy supply

Energy demand

Cross-cutting

renewables

Management methods to 
keep the energy system in 
balance

Energy regulation and pricing, 
build a cooperation platform on 
energy regulation

Trade & investment, 
reducing costs

Calculation methods for 
the appropriate energy 
mix

Coordination in regulatory poli-
cies, both by harmonising regula-
tory grid policies and transparent 
regulation of oil and gas pipeline 
infrastructure

Share experiences on the reform 
of energy pricing and support 
policies; for e.g. renewable energy 
and natural gas markets

Energy and the environment 
(more) market mechanisms for 
environmental protection (market 
for green goods, and inciting 
cleaner production)

Include energy efficiency in envi-
ronmental guidelines

Improve trade & investment con-
ditions in energy

Engage in international energy 
institutions: support China’s 
involvement; cooperate in the 
framework of the Energy Charter 
Treaty

Electrical energy demand 
side management policies 
; grid structure design ; 
cross-border & regional 
power power transmis-
sion grid systems and 
(more) renewable energy

Energy efficiency in 3 
applications: appliances, 
work towards harmoni-
sation of energy labels 
of appliances/buildings, 
energy conservation 
standards for consumer 
goods, incl. mutual reco-
gnition of schemes

Other cooperation on 
energy efficiency: increase 
business cooperation in 
eco-design and circular 
economy; market-o-
riented energy perfor-
mance system 

Develop distributed 
generation and 
CHP (combined 
heat & power)

 Expand the bio-gas 
sector

Power grids distri-
buted networks and 
smart grids

Fossil fuels, joint 
platform for supply 
disruption

Efficient electricity 
generation from 
clean coal and gas

Not applicable

Not applicable

Not applicable

Not applicable

Nuclear safety

Not applicable

Not applicable

Weinian Hu and Jacques Pelkmans231

The Roadmap is quite broad and – in some areas - goes far e.g. 
‘harmonising grid policies’ and cooperation in the framework of 
‘the Energy Charter Treaty’, besides ambitious intentions in energy 
efficiency with respect to appliances and mutual recognition. Also 
the  improvement  of  trade  and  investment  conditions  in  energy 
might be seen as a move in the right direction. 

Two decades of EU/China cooperation in the social pillar 
of sustainable development

The two principal EU/China Dialogues (one, started in 2005, on 
Employment and Social Policies, and the other initiated in 2009 on 
OSH) were accompanied by the three successive big projects (the 
one on Social Security [2006-2011] about which little seems pub-
lished; the one on OSH in High Risk Sectors [2014-2019]; and the 
one on Social Protection Reform [2014 – 2019], which has been 
succeeded by a triangular collaboration between the EU, ILO and 
China.235 The  striking  omission  is  work  or  cooperation  on  inter-
national labour standards with China, although OSH constitutes a 
borderline case in this respect. 

The EU/China Dialogue on Employment and Social 
Policies

After  some  preliminary  discussions  between  the  EU  and  China 
ever since 1995, an ‘employment-oriented’ MoU was signed on 5 
September 2005 in Beijing. It established a High Level Dialogue on 
employment, social security and pension schemes, as it was spec-
ified at the time. Commissioner Spidla immediately broadened it 
on the spot calling it ‘… the first step to an exchange of experience 
regarding labour issues, corporate social responsibility and social 
dialogue”. The Dialogue and the projects in its wake clearly aim for 
mutual learning and capacity building. Spidla added that he looked 

235   EU & ILO, 2019 – 2022, Improving China’s institutional capacity towards universal so-
cial protection, see https://www.ilo.org/beijing/what-we-do/projects/WCMS_713539/
lang--en/index.htm

EU/China Sustainable Development Cooperation: Towards Convergence?232

forward to explain the European social security system, presum-
ably in the knowledge that the preparation of the first major EU/
China  project  on  social  security  (beginning  in  2006)  was  com-
pleted. The explicit link with sustainable development followed in 
the EU-China summit of November 2007, noting that ‘our coop-
eration on employment and social affairs is an important element 
of the dialogue on sustainable development and decent work’. In 
turn,  this  led  to  a  strengthening  of  the  2005  Dialogue  in  a  new 
MoU in January 2008, stating that the work would also be more 
‘prospective’, i.e. on long-run challenges and, on the Chinese side, 
would be supported by the Chinese Academy of Social Sciences.236 

The set-up has been flexible and wide-ranging from the begin-
ning.  The  declared  link  with  sustainable  development  is  more 
intentional than analytical because social protection has not ini-
tially been regarded as part of the sustainable development con-
cept in FTAs that the EU concludes. It was mainly about interna-
tional labour standards. However, with the ever greater emphasis 
on ‘decent work’ (cf. the EU-China summit of November 2007), 
a potentially large overlap with social protection has been intro-
duced.  Indeed,  the  term  ‘decent  work’  has  crept  into  the  text  of 
more recent FTAs, which would seem to widen the social pillar of 
sustainable development enormously. 

The documentation in the public domain about the Dialogue is 
very limited (and old links no longer work). But a recent meeting 
under  the  Dialogue  demonstrated  the  wide  and  flexible  set-up 
once again. The success of the Dialogue is hard to measure but it 
did generate a number of other more specific common activities, 
such as a targeted High Level Dialogue on OSH, and three large 
projects directly with the Chinese government (see below). Also 
the recent and current triangular work between the EU, the ILO 
and China originates from the Dialogue. 

236   https://ec.europa.eu/commission/presscorner/detail/en/IP_08_30 

Weinian Hu and Jacques Pelkmans233

EU-China social security reform project 2006-2010

The jointly funded237 social security project aimed to support the 
transition to a sustainable social security system in China which 
‘guarantees accessible, adequate and affordable social security ben-
efits to all citizens’.238 One component was about supporting policy 
development, capacity building, exchange best practices and build 
up a Dialogue on social security between China and the EU. The 
second component is essentially about implementation via pilots 
in six provinces (Beijing, Gansu, Hunan, Jilin, Sichuan and Shan-
dong), as a stepping stone for a national roll-out. 

In order to clarify the applied nature of this project, some details 
are provided here. The second component is about activities in five 
specific areas: medical insurance, business processes in social secu-
rity  administration,  activities  in  old-age  insurance,  advances  in 
questions of work injury and social care for the elderly. In medical 
insurance  technical  assistance  focused  on  development  of  diag-
nosis related groups, systems and coverage for outpatient care and 
e.g. an operational manual was developed in Gansu. In business 
processes, some 26 of 39 business processes in social security have 
been  introduced  and  selected  IT  assessments  have  been  carried 
out in 4 provinces. With respect to the activities on old-age, work 
focussed on the implementation of the planned rural pension and 
on the needs surveys to this effect. In work injury, the introduc-
tion of standards and guidelines for work injury rehabilitation has 
been stimulated as well as the establishment of rehabilitation insti-
tutes. With respect to social care for the elderly, training for social 
care managers (in Hunan) was provided, with follow-ups in other 
provinces ; in Sichuan a unified basic package for the elderly was 
defined, the costs estimated and tested in 2 cities in the province. 
Where training was provided, a typical comment was that (lower) 
managers  were  never  given  any  training,  implying  that  instruc-
tions were just supposed to be top-down. 

237   Each partner for € 20 million.

238 The quote is from an updated fiche of ‘eucss’ about the project originating from the 
overall EuropeAid website (on 5 March 2010). [When accessing http://www.eucss.org.
cn one enters a bookselling site!]

EU/China Sustainable Development Cooperation: Towards Convergence?234

The project took place entirely in China and was managed from 
China, mostly by Chinese contractors. No matter how useful the 
project  –  which  was  clearly  pragmatic  and  hands-on  for  those 
working with social security – has been, there is no publicly avail-
able  report  or  any  useful  interim  report  or  other  publication. 
Indeed, in papers produced for the Social Protection Reform pro-
ject (2014-2019), there is strong disapproval and disappointment 
about this lack of transparency. 

Occupational Safety & Health: The Dialogue and the 
project for High-Risk sectors

The  Occupational  Safety  &  Health  Dialogue  started  in  2009.  Its 
purpose is to help improve working conditions, reduce work-re-
lated  accidents  and  illness  and  thereby  adhere  to  international 
standards  contributing  to  decent  work  for  all.  It  has  continued 
until 2020. Apart from some conferences, little has been brought to 
the public domain. But that is not the case for a far more hands-on 
and fairly large project on OSH in high-risk sectors, in particular 
chemistry  and  coalmines.  In  the  following  the  high-risk  sectors 
project will be presented and discussed in detail, so as to demon-
strate the utility of this EU /China endeavour. 

Whilst  two  ‘social’  Dialogues  are  being  held  annually  –  the 
Employment and Social Policies Dialogue, starting 2005, and the 
Occupational Health & Safety Dialogue, as off 2009 – the second 
one generated a direct off-spring, called the EU-China Project on 
Occupational Safety and Health in High-Risk Sectors (2012-2016). 
Before going into the specific Project, it is useful to understand the 
general background of OSH  239 in China. Although sporadic and 
ad-hoc interventions by the government already did occur during 
the pre-reform days in the 1960s -1980s 240, the first law (on safety 
of mining) was enacted in 1992 (with further provisions on coal 

239   In China there is a convention of splitting up OSH into OH [= occupational health] 
and OD [ = occupational diseases]. When reading the literature, these 2 terms may be 
encountered frequently. The ILO and the WHO employ OSH as indeed most of the 
world does. The US and the EU call their relevant Agencies OSHA. 

240    In  particular,  on  the  medical  side  via  a  health  inspection  system,  also  checking  on 

industrial hygiene

Weinian Hu and Jacques Pelkmans235

mines safety inspection in 2000), followed by a fire prevention law 
in 1998. So, one may conclude that OSH became more prominent 
with  increasing  prosperity  but  at  the  same  time  with  the  much 
greater importance of private business in China (i.e. without the 
overall social protection, long guaranteed by SOEs). However, OSH 
strategy was addressed in earnest only from 2000 onwards. In 2001 
the SAWS [State Administration of Work Safety] was established 
and soon elevated to ministerial level. In 2002 two more relevant 
laws followed.241 But it would remain an uphill struggle for a long 
time, although China was wise enough to initiate a much closer 
cooperation with the ILO ever since 2002. China had already rat-
ified 12 relevant ILO Conventions242 and requested technical sup-
port for a range of sectors.243 Also a bi-annual China/ILO Forum 
on Work safety was set up in an attempt to stimulate better imple-
mentation of OSH measures. That China was getting much more 
serious in OSH legislation and implementation was also demon-
strated by frantic legislative activity in Beijing. In seven years time, 
another eight regulatory initiatives were undertaken.244 The 11th 
Five years plan (2006-2010) gave OSH significant attention for the 
first  time,  with  a  number  of  initiatives  and  programmes.  It  was 

241   First, the Law on Occupational Diseases Prevention and Control was enacted. Second, 
the Law on Work Safety was promulgated as well. These two laws, together with the 
new SAWS, dramatically improved the legal and operational basis for improving OSH 
in China

242 These are : the 1981 OSH Convention [155], the 1988 one on safety and health in con-
struction  [167],  the  1990  one  on  chemicals,  the  1921  weekly  rest  (for  industry)  one 
[14], the 1951 one on equal remuneration [100], the 1958 one on Discrimination in 
employment and occupation [111], the 1964 Employment Convention [122], the 1973 
one on minimum age [138], the 1976 Convention on Tri-partite Consultation [144], 
the 1978 one on Labour Administration [150], the Vocational rehabilitation and em-
ployment (for disabled persons) [159] and the 1999 Convention on Worst Forms of 
Child Labour [182]. 

243   See for more detail, ILO (2010), Review of work safety and health inspection system in 
the  PRC,  August,  see  www.ilo.org/wcmsp5/groups/public/---ed_dialogue/---lab_ad-
min/documents/publication/wcms_240207.pdf 

244   Such as Regulations on the safety administration of dangerous chemicals (2002), regu-
lation on work-related injury insurances (2004), regulations on reporting, investigation 
and handling of work accidents (2007).    In addition, the 2004 law on administrative 
supervision, administrative regulations on work safety of construction projects (2004), 
administrative punishment measures for violation of work safety (2007), regulations of 
duties of internal bodies and staff in SAWS (2008) and ínterim’ rules on administration 
of occupational health in workplaces (2009). 

EU/China Sustainable Development Cooperation: Towards Convergence?236

during the 11th plan period that China and the EU decided to set 
up a regular OSH Dialogue, with the first meeting in 2009. It was 
quickly concluded that by far the worst problem of OSH in China 
was found in coal mining and, to some extent , in other high risk 
sectors.  From  this  inference,  the  special  EU-China  Project  on 
Occupational Health and Safety in High Risk sectors emerged.  

Purpose, structure and results of the Project

The overall objective of the EUCOSH project245 is to help China 
“achieve effective standards of work safety and health in high-risk 
sectors  comparable  to  those  in  the  EU,  including  a  zero-fatality 
rate.” Thus, the ambition was to aim high. The more specific pur-
pose was “to develop China’s capacity at all appropriate levels to 
design and enforce an effective OSH strategy based on the prin-
ciples of prevention and the direct involvement of workers in risk 
management”. The project was funded and implemented together 
with  the  ministry  (SAWS)  throughout.  Also  the  immediate  fol-
low-up is a direct extension of the project. 

The starting points of the project included:

i.  OSH laws and regulations are reasonably well developed ( 
around 2010) in China but they are overly prescriptive and 
complex

ii.  There is a lack of capacity to enforce regulations

iii.  Legal  responsibilities  for  OSH  are  imperfectly  assigned  , 

resulting in misaligned incentives

iv.  The notion of a ‘safety culture’ in enterprises is absent, with 
SAWS relying solely on legal mechanisms to enforce norms

The idea was to work directly and in detail with enterprises ; 
six enterprises were selected: 2 coal mines, 2 non-coal mines, and 

245 The  used  abbreviation  of  the  High  Risk  Sectors  project.  We  quote  from  the  official 
summary  dated  April  2016  when  the  project  was  terminated.  See  The  EU’s  support 
to work safety in China, a brief summary of the EUCOSH project 2012-2016, www.
sascharusch.de/resources/EUCOSH-Project-Summary-Report_small.pdf 

Weinian Hu and Jacques Pelkmans237

2  chemical  enterprises.  For  the  many  specific  details  we  refer  to 
Hu & Pelkmans (2021, section 9.3.1). That the interest from China 
was lively is also indicated by an EU-funded UK project on safety 
of coal mines in China undertaken just before EUCOSH.246 How-
ever, the overwhelming reason for sustained interest in best-prac-
tices on mining safety is the appalling record of China in (espe-
cially) coal mine safety which SAWS had been desperately trying 
to improve. 

Chinese OSH in coal mines: improvements after decades 
of serious neglect

There are three social sustainability issues in coalmining in China. 
Each one of them is very problematic and the three together show 
a very painful degree of failure. Two of these are plain OSH issues 
and the third one is a pure but severe social (or inequality) ques-
tion. There are reasons to believe that the situation has improved 
since the EUCOSH project was designed in 2011-2012, although 
not as much as would have been desirable. What is documented 
below refers to the situation around 2005 – 2010, that is, the basis 
for initiating the project. 

The  three  major  issues247  are:  (i)  the  extremely  high  fatality 
rate in Chinese coalmines, no matter what criteria are chosen to 
measure this ; (ii) the extremely high number of coalminers con-
tracting pneumoconiosis (or ‘black lungs’ disease); and (iii) when 
not counting the (low risk) non-mining administrative staff and 
management,  almost  all  miners  are  migrants  from  poor  areas. 
Because their wages are much lower than average industrial wages, 
and their workweeks very long, the migrant workers are not only 
de facto discriminated, but simply bad off on several counts such 
as being subjected to high and multiple risks, whilst receiving low 
hourly wages, with no labour union to stand up for them. 

246   See Wu, Feickert & Li (2009).

247   It should not be forgotten that coal is also a leading cause of serious pollution in China. 

See Pelkmans (2020).

EU/China Sustainable Development Cooperation: Towards Convergence?238

The  fatality  risks  in  China’s  coalmines  have  come  down  con-
siderably,  but  from  incredibly  high  levels.  Based  on  the  China 
Coal Industry Yearbook (various  years), a  crude estimate is  that 
the total number of deaths between 1949 and 2005 is more than 
250.000! Since there are known instances of suppressing the facts 
about large incidents in the past and since reporting (both by local 
officials and by mine management) is incomplete, the fatality rate 
has been higher than official figures in the past. The life of a mine-
worker seemed next to irrelevant (up to the year 2000 or so). Offi-
cial fatality statistics provide the number of deaths per 1 million 
ton of coal produced. In 1949 this rate was 22.5 . In Figure 16 it can 
be observed that this had come down to 5.07 in 2000 and declined 
further to 0.75, a significant further fall. This rate – achieved after 
decades of attempts to accomplish low-risk coalmining – is how-
ever still a large multiple of e.g. the US248 rate in the same period, 
namely  hoovering  between  0.02  and  0.05  –  in  other  words,  the 
(official) Chinese rate is some 15 – 25 times the US rate.249

Figure 16: Fatality rate of China’s coal mines: deaths per million tons 
(2000-2010)

Source: Chu et al., 2016

248   A large coal producer, unlike the EU (of today)

249   See the extensive surveys by Tu Jianjun (2007) and by Chu, Jain, Muradian & Zhang 
(2016). It should be noted that China has far more deep coalmines than the US and 
that risks may also increase because many Chinese mines are in areas with high gas and 
high groundwater pressure. 

Weinian Hu and Jacques Pelkmans239

A comparison with India shows that China is uniquely weak in 
coal mine safety: already in 2000 the Indian fatality rate was 0.43 
and this fell to 0.114 in 2010, about one-sixth of China (Chu et al., 
2016). Some 80% of all fatalities in coal mining worldwide takes 
place  in  China,  grossly  disproportionate  given  China’s  share  in 
global GDP, indeed even given China’s share of world coal output 
(which grew to some 50% in 2018). It should also not be forgotten 
that Chinese coal production has increased – in the same period – 
at a rate of some 10% a year, so the absolute number of deaths tends 
to decrease at a slower rate than the fatality rate. In the period 2001 
– 2012 (cf. Chu et al., op. cit) there were 30 848 accidents reported 
with a total of 51 232 fatalities. In other words, coal mining has 
remained a very risky activity, be it only less so than before. That 
said, there is no denying that the number of (officially reported) 
casualties has fallen quite a lot: from 6995 in 2002 to 1384 in 2012. 
A large share of this reduction has been accomplished by closing 
thousands of illegal (small) mines which often had safety levels far 
below Chinese standards and without almost any OSH policy and 
rules. 

More difficult has been the effective lowering of OSH risks in 
the numerous TVE mines. The Township and Village Enterprises 
were discussed previously as early specialists in textiles & clothing, 
consumer electronics and handtools. In fact, TVEs in mining were 
the very first enterprises allowed when the 1978 reforms were ini-
tiated (and in small numbers even before that date because they 
could  easily  attract  peasants).  Although  at  first  not  truly  private 
companies - their origins were the village communities – by the 
early 1990s they were turning into profit-seeking enterprises, and 
later became private corporations. It turned out that they assumed 
extreme  measures  to  maintain  high  profitability,  including 
exposing their miners to high risks (so, avoiding costly OSH meas-
ures and equipment), forcing miners to make long working weeks 
(routinely more or much more than 50 hours underground) at rel-
atively low wages, avoiding injury or death liability or any other 
insurance (and paying very low compensation to families in case 
of  casualties)  whilst  exercising  repressive  action  in  the  mines  in 

EU/China Sustainable Development Cooperation: Towards Convergence?240

case of protests or wild-cat strikes. Only in most of the SOE mines 
was the OSH situation better, or rather less bad. The situation in 
China’s mines has long been miserable and this is not explained by 
China’s (then still) developing status. 

Why Chinese OSH efforts in coalmining only slowly gain 
effectiveness 

There are nine reasons why OSH in China’s coal mines is so dif-
ficult  to  accomplish  effectively.250  Together,  these  reasons  clarify 
that a sound and ambitious EU project EUCOSH and High Level 
Dialogues on OSH can contribute but are nevertheless bound to 
remain  relatively  ineffective  without  solving  deep-rooted  fault-
lines in China itself. We specify four of them here:

1.  China has a relatively high share of underground coalmining, 
with (far) lower productivity than surface mining and higher 
risks

2.  As noted, China has many coal mines in areas with high gas 
pressures  and  high  groundwater  pressures.  These  are  more 
likely to cause gas explosions, flooding and roof collapse. 

3.  Because  of  the  very  low  productivity,  no  less  than  5  million 
workers are needed to meet the (around 2005) growing demand 
for coal. This leads to overcrowded mines, hence high fatality 
rates when accidents happen. 

4.  The entry of TVEs has given a tremendous boost to coal output 
but amounted to a disaster for safety. By 1995 TVEs had a coal 
output share in China of 46%, after which a gradual decline set 
in – in 1991 there were no less than 100.000 (often small) TVE 
mines. TVEs were notorious for their unwillingness to invest in 
OSH. Their strong preference was to operate far above capacity 
which  implies  operating  beyond  safety  thresholds.  Workers 
suffered from chronic fatigues, safety rules were systematically 
violated and vital mining equipment often failed. As a result, 
around 2005 one-third of coal output is still produced by TVEs 

250   The following draws heavily on the survey by Tu Jianjun (2007). 

Weinian Hu and Jacques Pelkmans241

but some 70% of fatalities originate from TVEs as well.251 

All in all, technical assistance by or via the EU in OSH would 
seem to have been pragmatic and competent. The cooperation with 
SWAS and other officials has been close and results have been fed 
into Five Years Plans. These are certainly commendable achieve-
ments. But, especially (but not only) on OSH, such projects and 
the absorbed learning in China can only be truly effective if there 
are no or only minor obstacles or structures in the way of getting 
improved  social  outcomes.  In  OSH  in  coalmining,  for  example, 
this has proven to be quite difficult, even though risks have been 
falling fairly strongly over recent decades. 

On the EU/China Social Protection Reform Project 2014 – 
2019

The project252 is based on 7 identified “Main Problems & Needs”, 
summarized  in  Annex  1  of  the  Aide-Memoire  of  March  2018. 
These 7 areas cover almost anything that is relevant for discussing 
China’s social protection issues. What is striking is the frankness 
of  the  explanation  of  the  problems.  No  vague  or  propagandistic 
language at all. In just a single page, with tiny font, a clear overview 
is provided of the ‘challenges’ in China’s Social Protection in or just 
before 2014. And the Aide-Memoires claim that they have worked 
effectively on all areas, and with a lot of openness. 

The seven areas are: 

1.  Major  disparities  between  rural  and  urban  areas  (between 
and within regions); it is mainly about how to ensure that the 
‘rural-to-urban  migration  on  a  massive  scale’  and  existing 

251   The  other  5  reasons  are  explained  in  some  detail  in  Hu  &  Pelkmans  (2021,  section 
9.3.2). They refer to the migrants being unskilled, paid a very low wage and not given 
adequate PPEs; corruption in the mine sector (officials possessing shares of mines they 
had to inspect); a shortage of inspectors; the illegal opening of mines; and an estimated 
underinvestment in OSH in coal mines in 2006 of no less than $ 8.8 bn! It should also 
be noted that the EU approach emphasizes that coalminers themselves should have a 
permanent say in safety levels and technical implementation, a most radical feature for 
managers accustomed to top-down instructions only. 

252   See the link for the project https://www.euchinasprp.eu/en ; there is a risk that the link 

no longer works

EU/China Sustainable Development Cooperation: Towards Convergence?242

practices  (and  rules)  does  not  perpetuate  the  ‘segmented 
urban  population’  which  has  meanwhile  emerged,  and  rural 
migrants obtain equivalent social security

2.  Steady growth of an ageing society; ‘will significantly raise the 
needs for elderly support and social care, and challenge the sus-
tainability of pension fund and public finance’

3.  Separate  social  insurance  schemes,  applied  to  different  social 
groups;  those  for  workers  in  public  institutions  (then,  8  mn 
civil servants + 30 mn other like teachers and the army) - they 
are separated from general contribution schemes and rely on 
state  finance.  Not  only  are  urban  and  rural  residents  distin-
guished but also the self-employed and ‘irregular’ workers; the 
text plainly says how it is: for the latter two participation is vol-
untary  ‘and  expensive’  –  even  where  participation  is  manda-
tory, ‘there is widespread non-compliance’. Also, ‘social insur-
ance should be portable in order to retain workers when they 
change jobs or place’. 

4.  Inappropriate supervision and management of social security 
funds;  there  are  5  funds  (  pension,  health,  unemployment, 
working injury and maternity) – by the end of 2011 the rapid 
increase led to a total of Yuan 2.7 trillion. But… an estimated 
33% (!!) of those funds have been lost in the decade up to 2011. 
Reasons  include  inflation  and  ‘unduly  restrained  investment 
options’, as well as extreme fragmentation of fund management 
over more than 2000 decentralised units (too small for ‘sustain-
ability’),  plus  the  lack  of  appropriate  centralised  supervision 
leading to misuse or embezzlement. 

5.  Weak  and  partial  legal  framework  in  social  assistance  sys-
tems; such weaknesses undermine the effective functioning of 
‘welfare’  spending. There  are  no  unified  standards  for  benefit 
calculations, and ‘central government intentions may be mis-
managed  or  locally  ignored’.  Subsequently,  a  range  of  powers 
of local authorities to include or exclude is specified – showing 
that the modes of decentralisation are fraught with difficulties, 
prompting  mistakes  or  far  worse  –  local  governments  ‘hold 

Weinian Hu and Jacques Pelkmans243

power  over  social  insurance  capital  and  have  the  power  to 
divert  these  funds  to  uses  of  their  own’  (!);  ‘the  outcome  is  a 
system with limited and unequal implementation and vast and 
complex inequalities of provision across localities’. 

6.  Unbalanced,  multi-layer  social  protection  system;  pri-
vate-public partnerships and the role of NGOs are minimal; the 
‘administration  of  the  social  protection  system  is  inadequate 
and  needs  to  be  unified’.  ‘Social  assistance  has  low  efficiency‘ 
and  ‘welfare  services  are  minimal’.  Rural  migrants  are  often 
excluded. State-related employees ‘are a privileged group’. 

7.  Difficulty  and  complexity  to  the  services  delivery;  local  gov-
ernment  agencies  and  social  workers  often  suffer  from  (too) 
low capacity. The local social insurance bureau’s are inefficient. 
Mis-targeting and misallocation occurs frequently. Health care 
services operate on a fee-for-service basis. … ‘This complexity, 
along with that of government levels, contributes to the pattern 
of vastly differentiated provisions across the country’. 

In addition there are four cross-cutting aspects of social pro-
tection as well. These span: gender equality issues; issues related 
to disability (a forgotten domain in social protection in China);253 
good governance ; human rights issues. It was decided that disa-
bility [ not a risk identified today under social insurance in China] 
would  deserve  a  ‘Note  on  Disability  Insurance’  which  was  pub-
lished. Apart from the Note on Disability Insurance, much insight 
can be had from the two Aid-Memoires, one of March 2018 [with 
the  far  more  factual  Task  Force  report  of  May  2018]  and  one  of 
2019  (no  precise  date,  probably  June).  They  are  rich  and  full  of 
soft  and  hard  data.  No  less  than  24  Technical  Notes  have  been 
produced on many topics derived from the 7 main problems, in 
Component 1 and another 7 Notes under component 3, and the 

253    It  should  be  noted  that  the  ILO  and  China  have  jointly  worked  on  no  less  than  5 
projects  on  disability  issues  in  China  (from  rights  and  opportunitied,  all  the  way  to 
employability)  between  2008  and  2017  inclusive.  The  ILO  notes  than  China  counts 
some  85  million  disabled  people.  Over  60  laws  and  regulations  exist  but  apparently 
they lack implementation mechanisms, and not fully addressing the needs of disabled 
communities. 

EU/China Sustainable Development Cooperation: Towards Convergence?244

cross-cutting areas.254 

The  2019  Aid  Memoire  comprises  a  most  relevant  (what  is 
called) ‘logical framework’. It comprises an overall objective [‘fur-
thering social equity and inclusiveness of economic development 
throughout Chinese society’] and 3 ‘specific objectives’: (a) greater 
effectiveness of China’s social security system… thru strengthening 
institutional  capacity;  (b)  core  implementation  issues,  such  as 
‘appropriate legal and regulatory frameworks, and, enhanced and 
sustainable financial management of the social security system’; (c) 
idem, including enforcement of ‘social assistance’. For this eBook 
the many technicalities would go much too far (see Table 9 in Hu 
&  Pelkmans,  2021),  but  a  summary  of  the  more  important  ones 
can be provided here. 

First, specialised partnerships with NDRC on social protection 
reforms were developed. This will enter the 13th Plan (2016 – 2020) 
and would be proposed for the 14 th Plan (2021 – 2025). One of the 
proposals concern national policy evaluation techniques, in MoUs 
with EU partners. Second, the EU will help with a comprehensive 
model for a multi-tier design of the pension system. Harmonisa-
tion and integration of the various basic social protection systems 
will be addressed, and with it portability, a serious issue in China. 
Third,  the  sustainability  of  a  Long  Term  Care  Insurance  scheme 
will  be  analysed  in  detail.  Fourth,  a  multi-pillar  pension  system 
(e.g. with actuarial model analysis) will be developed. Fifth, man-
agement of social insurance funds and investment techniques will 
be targeted. Sixth, the enforcement of the Social Assistance Law 
will be addressed, including the unification of benefits standards 
in social assistance. Finally, improved care for poor rural people 
and disabled people will be pursued. All this goes to demonstrate 
the high aims and practicalities of this prominent project. 

254   See fn. 6 of the Task Force report 2018 for the 24+ 7 Technical Notes as well as foot-
notes 3 and 4 with links to other publications. The problem is that there is no longer 
public access to the Aide-Memoires, or indeed anything from the website. The 2019 
Aide-Memoire frequently refers to the website: https://www.euchinasprp.eu/en/hori-
zontal-en/project-memorabilia-en. 

Weinian Hu and Jacques Pelkmans245

Answering the second research question in the social pillar

The second research question is about the process of convergence 
in policies, laws and entitlements with respect to labour standards 
and social protection between China and the EU over the period 
2000 – 2020. 

China  steadily  built  on  the  social  protection  system  and,  as 
off  2014,  accomplished  a  ‘national’  system  by  finally  combining 
some  forms  of  social  security  for  both  rural  and  urban  citizens. 
Nonetheless, as so often in China, there remain two realities. By 
sticking to the hukou registration, even if with greater flexibilities, 
and  by  maintaining  a  highly  fragmented  administration  at  local 
or  regional  level,  often  with  limited  capabilities,  undeveloped  or 
incompatible  IT  systems  and  insufficient  pooling,  the  practical 
problems of transferring entitlements between provinces are huge. 
As  a  result,  the  system  malfunctions  in  many  ways.  In  addition, 
numerous  outbound  migrants  have  remained  informal  workers 
(some  65%!),  although  the  system  of  social  protection  is  built 
strictly on contracted workers. The upshot is that precisely those 
workers mostly in need of social protection obtain the least. 

That further reforms are badly needed follows from an assess-
ment of the main tenets of social protection in China today. The 
picture has once again two sides. It is undeniable that China has 
done  much  to  improve  social  protection,  both  by  stricter  and 
more ambitious laws for companies (and workers where relevant) 
financing five forms of ssocial security as well as contributing to 
the Housing Fund, and by spending more from the general budget. 
At  the  same  time,  zooming  in  on  details  as  well  as  on  what  the 
effective results for rural people or migrants from rural areas but 
working  in  urban  areas  are,  we  show  that  there  are  still  consid-
erable discrepancies between the overall intentions and the basic 
social facts on the ground. In terms of redistribution affected by 
social security – a desirable policy given rather sharp inequality in 
China – it is striking that these effects are small or very small except 
for pensions in urban areas. In rural areas, the redistributive effects 

EU/China Sustainable Development Cooperation: Towards Convergence?246

of social protection are minimal, even though there they might be 
more  desirable.  China’s  ‘war  on  poverty’  was  formally  ended  by 
the  leadership  in  2020,  yet  there  are  serious  concerns  about  lin-
gering  poverty,  both  in  terms  of  disposable  incomes  being  very 
low and the size of the groups suffering. Again, two realities. The 
analysis is complemented by a review of Human Development in 
2018, because poverty traps comprise more than mere disposable 
income.  China  has  greatly  improved  the  HDI  but  the  education 
pillar remains relatively weak. Recent academic work has shown 
that large parts of rural areas suffer from an educational gap with 
urban areas, such that simulations show that over 2 decades the 
secular economic growth rate of China risks to fall to around 3% 
(due to low human capital in rural areas). 

4.6 Answering the third research question for the green 
and social pillars

The  RESPECT  project  attempts  to  answer  the  question  whether 
EU trade policy in the wider sense can influence and be effective 
in  promoting  NTPOs  with  trading  partners.  The  present  report 
focuses  on  ‘sustainable  development’,  an  important  NTPO,  as 
defined  by  the  European  Commission:  the  fight  against  climate 
change and the protection of the environment, on the one hand, 
and  the  respect  for  ILO  core  labour  Conventions  and  adequate 
social protection on the other hand. The trade relationship studied 
is that between China and the EU. We shall now attempt to answer 
the third research question both for the green and for the social 
pillar.

The third research question for the green pillar

The basic idea of the research is that one can observe a decades-long, 
complicated  if  not  tortuous  process  of  convergence  between  the 
EU and China in sustainable development (in climate and environ-
ment), guided and supported by intense and multi-variate bilateral 
exchanges,  Dialogues,  consultation,  practical  projects,  stimula-

Weinian Hu and Jacques Pelkmans247

tion of green investments in China (via CDM), programmes and 
direct local collaboration in the implementation of policy inside 
China. However, this progress in the convergence process is highly 
uneven over (say) the last 25 years, studied in this work, both in 
different time periods as well as between different issues of sustain-
able development, and hence hard to appreciate fully. This chapter 
tries to render this process intelligible. The text shows clearly that 
the EU has been active, if not very active, ever since the first Com-
mission  paper  on  EU/China  relations  in  1995,  in  assisting  the 
development  of  China  ,  when  still  a  developing  country,  and  in 
promoting in many ways the direction and intensity of sustainable 
development policy making directly or indirectly relevant to trade 
and investment. The process of convergence has been influenced 
by the EU, no doubt, but there have been many other actors as well 
as international agencies that have been helpful in this respect. It is 
therefore impossible to verify the degree of effectiveness of the EU 
promotion of sustainable development in EU/China trade policy 
in the wider sense with any rigour. Nevertheless, the report points 
to an abundance of EU-China activities, Dialogues, programmes, 
funding (by the EU and later, jointly), projects, common declara-
tions/statements and regular support from the EU-China Summit 
level  over  two  decades.  These  common  activities  have  widened 
considerably in scope and have deepened as well in a number of 
instances. In several specific policy or expertise issues, the EU has 
actually supported China directly be it via local collaboration (e.g. 
emission  trading)  or  China  has  adopted  EU  regulatory  require-
ments (e.g. car emission requirements). 

In  the  above,  we  have  zoomed  in  on  25  years  of  ever  closer 
EU/China cooperation – both bilaterally and in multilateral set-
tings – on sustainable development. Provided is a summary of the 
early  period  between  1994/5  and  2003  when  China  and  the  EU 
concluded the Strategic and Comprehensive Partnership and, sub-
sequently,  a  concise  survey  of  bilateral  sustainable  development 
cooperation with a total of 19 Dialogues, multi-year programmes 
(including several projects with hard targets and very many activ-
ities), joint statements and common agenda’s or roadmaps. Little 

EU/China Sustainable Development Cooperation: Towards Convergence?248

discussed in the public debate is the near-complete convergence 
between China and the EU in terms of MEAs: a survey of no less 
than 12 MEAs (and amendments, annexes, etc) demonstrates this 
near-congruence.  With  respect  to  emission  trading,  the  EU  and 
China  concluded  a  MoU  in  2018  to  enable  personal  and  tech-
nical  support  inside  China,  following  the  EU’s  experience  with 
the  ETS.  A  separate  detailed  table  is  dedicated  to  the  ambitious 
EU/China  Roadmap  on  energy  cooperation  2016-2020,  even 
including  selected  forms  of  harmonisation.  As  an  illustration  of 
the  importance  of  market-driven  incentives  in  the  cooperation, 
Pelkmans  (2021,  Box  10)  describes  how  the  CDM  of  the  Kyoto 
Protocol has worked between the EU and China, with both having 
assumed  roughly  50%  of  the  global  CDM  market  respectively 
on the demand and supply side, a great but relatively short-lived 
success. And there would seem to be little doubt that the EU and 
China  will  continue  to  cooperate  closely  in  the  green  pillar,255  if 
only  because  of  the  ‘great  green  paradox’  in  this  policy  domain 
in  China:  convincing  improvements  in  China’s  green  indicators 
only follow with very considerable lags the U-turns in a sustain-
able  direction  in  policies  and  strategies.  Nudging  China  to  keep 
on going ‘green’ steadily will still be important for the EU for this 
reason alone. Box 15 shows in yet another fashion how complex 
it is to fully appreciate China’s predicament on environment and 
climate. Given the considerable improvements in ‘greening’ China, 
the ‘great green paradox’ still plays a far too important role. 

255   One prominent example is the newly established High Level Environment and Cli-
mate  Dialogue  between  China  and  the  EU,  initiated  in  September  2020,  with  a  rich 
follow-up meeting in September 2021. A new green cooperation agenda was agreed 
with no less than 12 cooperation areas. 

Weinian Hu and Jacques Pelkmans249

Box 15: Where China stands in environment and climate, the EPI 
rankings 2020

The EPI (Environmental Performance Index) generated by Yale’s 
Environment  Institute  and  the  WEF  is  an  authoritative  guide 
on  overall  and  some  specific  record(s)  of  180  countries.  It  has 
its own peculiarities and choices – inevitably – but its coverage 
of  a  number  of  areas  which  matter  is  unparalleled.  It  should 
be  helpful  as  yet  another  measure  to  appreciate  where  China 
stands in 2020 terms of environment and climate. Besides, the 
question might be answered whether the tightening of laws and 
enforcement  in  the  last  decade  in  China  can  be  traced  in  EPI 
indicators.  However,  for  ‘climate’  there  is  a  drawback  because 
e.g. China’s great efforts to stimulate renewables does not appear 
in the climate indicator as only problematic gases are included. 
China’s EPI ranking in 2019 was no. 120 (of 180 countries) and 
this ranking has not changed in 2020. Since this ranking is poor, 
without any doubt, it is good to understand why that is so. Of 
ten rankings of important ‘green’ aspects, leading to this overall 
ranking, three dominate as the EPI gives them a greater weight 
of in total 59% of EPI: biodiversity & habitat (ranking only 172, 
much too bad for the chair of the Kunming UN conference in 
2021), air quality (ranking 137) and climate change (103).

Many  other  sub-indicators  in  the  EPI  show  much  better 
results  for  China  although  only  one  is  in  the  top-50  (fisheries 
with  a  ranking  of  31)  and  another  3  are  close  (sanitation  & 
drinking water, with ranking 54, heavy metals with ranking 54 
and  agriculture  with  ranking  55).  Other  rankings  hang  in  the 
middle: waste management with 66, water resources with 67 and 
pollution emissions with 91. Overall, therefore, it is not possible 
with such rankings to speak of a ‘beautiful China’ as president Xi 
has done. It will undoubtedly take much more sustained efforts. 
However, over a longer period China did improve the EPI rank-
ings.  Over  a  ten-years  period,  China  improved  its  score  (on 
which rankings are based) with 8.4 points to 37.3.

EU/China Sustainable Development Cooperation: Towards Convergence?250

The  third  research  question  in  the  green  pillar  is  whether  EU 
trade policy and cooperation vis a vis China with respect to sus-
tainable development systematically pursued the NTPOs of envi-
ronment and climate mitigation since the late 1990s and whether 
this pursuit has been effective in supporting a process of conver-
gence? 

The initial status of China’s environment in the late 1990s and 
the emerging realisation of the major problem of global warming 
mitigation via CO2 reduction and controlling other GHGs served 
as wake-up calls for the EU. The strategic partnership with China 
(1998)  and  the  strategic  and  comprehensive  partnership  (since 
2003)  created  a  form  of  trust  and  stability,  thereby  forming  the 
foundation for a steady increase in both the scope and the inten-
sity  of  environmental  and  climate  mitigation  cooperation.  With 
China becoming an upper middle income economy, this cooper-
ation became both more urgent and more feasible. Thus, initially 
EU  policy  and  EU/China  cooperation  in  environment  and  cli-
mate  was  directed  at  stimulating  and  improving  China’s  policies 
in  this  respect,  whilst  the  facts  (indicators)  on  the  ground  were 
still  pointing  to  a  rapidly  deteriorating  status.  In  other  words,  a 
gradual and at first slow emergence of more sound environmental 
and  climate  policy  in  China  coincided  with  worsening  practices 
in  the  economy,  generating  pretty  extreme  negative  externalities 
for citizens and workers, and similarly for nature in many forms. 
A manifestation of the ‘great green paradox’. Only when the per-
sistent  and  wide-ranging  EU/China  cooperation  matured  over 
several channels and topics, and the indicators had become intol-
erable, policies and enforcement were significantly tightened. This 
is of course not only and possibly not even primarily due to EU/
China sustainable development cooperation but the present report 
shows in abundant detail that there cannot be any doubt that the 
EU  has  been  unfailingly  pro-active  in  sustainable  development 
with China for two decades and has been most responsive to any 
request or policy interest from China in these fields, whether for 
support or knowledge transfer or for pursuing common activities 
or a common pursuit in multilateral settings (a key activity given 
the many MEAs the two partners share). 

Weinian Hu and Jacques Pelkmans251

The third research question for the social pillar

We  have  attempted  to  address  the  social  pillar  of  sustainable 
development  in  the  EU  /China  trade  and  investment  relations. 
This  seemingly  simple  statement  is  actually  confusing  because 
it  is  not  entirely  clear  what  this  social  pillar  actually  comprises. 
One  concept  combines  internationally  recognised  labour  stand-
ards and a system of social protection. Another – especially in the 
context  of  nearly  two  decades  of  EU  /China  of  cooperation  and 
joint  programmes  –  could  be  the  collection  of  EU/China  joint 
activities in this area. And a third view may consist of the social 
clauses in recent EU FTAs in the sustainable development chapter, 
as  an  expression  of  EU  values,  even  if  China  and  the  EU  never 
have concluded a FTA so far. If one takes the EPA with Japan as 
an ambitious example, it has 25 clauses on the social pillar of the 
sustainable development chapter. Most are on or closely related to 
core ILO Conventions on labour rights, with the rights of associ-
ation and collective bargaining as the bedrock - the two founda-
tions for workers to organise themselves effectively. Some clauses 
are directly or indirectly referring to (aspects of) social protection, 
e.g. with references to ‘decent work’. Social protection is therefore 
either an implicit issue – one on which a lot of EU/China cooper-
ation has actually taken place and still occupies the two partners 
– or partners consider that these two areas (labour standards and 
social protection) are naturally closely connected. This can also be 
concluded  if  one  reads  the  UN  SDG  no.  1.3.  In  the  actual  prac-
tice of EU / China cooperation on the social pillar, most projects 
and programmes have been on aspects of social protection. China 
has apparently  not been prepared  or  interested in joint  work  on 
labour standards, with one exception: occupational safety & health 
of workers, where a targeted project on OSH in coalmining and 
chemicals  has  successfully  been  implemented.  More  far-fetched 
but not implausible is the possibility that the EU – initially or until 
recently  –  perceived  risks  of  a  non-level  playing  field  in  labour 
relations  and  the  perhaps  artificially  low  total  labour  costs  per 
unit of Chinese exports. In that case, jointly addressing the social 
dimension  of  the  bilateral  trade  and  investment  relations  would 

EU/China Sustainable Development Cooperation: Towards Convergence?252

both serve the upholding of EU values and help to pre-empt dis-
torted bilateral economic relations. 

We  have  discussed  the  undisputable  value  part:  international 
labour standards. Although four core ILO conventions are not rat-
ified by China, China has meanwhile developed some legislation 
in various ways in order to address some of the fundamentals and 
at the same time gradually developed, with some painful imper-
fections, a system of social protection. Nevertheless, the refusal by 
China to move on the right  of association and of collective bar-
gaining, both closely connected with the monopoly of the ACFTU 
and indeed the political monopoly of the CCP, and the great hes-
itation about the two conventions on forced labour (e.g. in camps 
for  ‘re-education’),  remains  a  sore  point  for  all  workers  and  the 
ILO but surely also for EU/China cooperation. China may be seen 
as having made a prudent move on the two conventions on forced 
labour in the draft CAI treaty between the partners on investment. 
One should expect that quite some time will lapse before these two 
conventions might be ratified and implemented by adjusting penal 
laws. 

In  social  protection,  China  has  improved  the  predicament  of 
workers  (and  indeed  all  citizens)  in  China,  not  merely  via  high 
economic  growth  but  also  by  means  of  a  broad  system  of  social 
protection,  with  universal  coverage  where  appropriate.  China 
steadily  built  on  the  social  protection  system  and,  as  off  2014, 
accomplished a ‘national’ system by finally combining some forms 
of social security for both rural and urban citizens. Nonetheless, 
as so often in China, there remain two realities. By sticking to the 
hukou registration, even if with greater flexibilities, and by main-
taining  a  highly  fragmented  administration  at  local  or  regional 
level,  often  with  limited  capabilities,  undeveloped  or  incompat-
ible IT systems and insufficient pooling, the practical problems of 
transferring entitlements between provinces are huge. As a result, 
the  system  malfunctions  in  many  ways.  In  addition,  numerous 
outbound migrants have remained informal workers (some 65%!), 
although  the  system  of  social  protection  is  built  strictly  on  con-

Weinian Hu and Jacques Pelkmans253

tracted workers. The upshot is that precisely those workers mostly 
in need of social protection obtain the least. 

We  survey  EU/China  cooperation  on  labour  standards  and 
social protection, effectively begun in 2005. A series of major pro-
jects  and  programmes  have  been  undertaken  jointly:  on  social 
security (partly inside Chinese ministries), on safety and health in 
high risk sectors (esp. mining and chemicals), on social protection 
reforms, besides high level Dialogues for 15 years. The EU has also 
strongly encouraged China to work still more with the ILO which 
eventually China has done directly bilaterally (for example a four 
year programme on Decent Work), and also trilaterally (EU/ILO/
China),  for  example  on  Improving  China’s  institutional  capacity 
towards  universal  social  protection  (2019-2022).  Included  are 
two  detailed  analyses  of  projects.  One  is  on  occupational  safety 
&  health in coalmining and chemicals. It  is shown what the  EU 
project’s value-added has been (with technical standards but also 
including an insistence on worker participation bottom-up when 
improving  OSH  in  mines  and  chemical  plants  and  storage).  In 
the  meantime  China  has  enormously  reduced  the  fatalities  in 
coalmining, although it firmly remains above e.g. levels of fatalities 
in India. The other is the project on reforms of social protection 
where a detailed ex-post evaluation is provided in order to illus-
trate actual and potential value-added. 

That further reforms are badly needed follows from an assess-
ment of the main tenets of social protection in China today. The 
picture has once again two sides. It is undeniable that China has 
done much to improve social protection, both by stricter and more 
ambitious laws for companies (and workers where relevant) and 
by  spending  more  from  the  general  budget.  At  the  same  time, 
zooming in on details as well as on what the effective results for 
rural  people  or  migrants  from  rural  areas  but  working  in  urban 
areas are, we show that there are still considerable discrepancies 
between  the  overall  intentions  and  the  basic  social  facts  on  the 
ground.  In  terms  of  redistribution  affected  by  social  security  – 
a  desirable  policy  given  rather  sharp  inequality  in  China  –  it  is 

EU/China Sustainable Development Cooperation: Towards Convergence?254

striking that these effects are small or very small except for pen-
sions  in  urban  areas.  In  rural  areas,  the  redistributive  effects  of 
social protection are minimal, even though there they would seem 
to be more desirable. China’s ‘war on poverty’ was formally ended 
by the leadership in 2020, yet there are serious concerns about lin-
gering  poverty,  both  in  terms  of  disposable  incomes  being  very 
low and the size of the groups suffering. Again, two realities. The 
analysis is complemented by a review of Human Development in 
2018, because poverty traps comprise more than mere disposable 
income.  China  has  greatly  improved  the  HDI  but  the  education 
pillar remains relatively weak. Recent academic work has shown 
that large parts of rural areas suffer from an educational gap with 
urban areas, such that simulations show that over 2 decades the 
secular economic growth rate of China risks to fall to around 3% 
(due to low human capital). 

Finally, we explore briefly whether a level-playing field between 
the EU and China matters as far as social protection and labour 
standards are concerned. This is based on a more extensive anal-
ysis in Hu & Pelkmans (2021, section 12). We conclude that the 
EU has in fact pursued a combination of promoting actively sus-
tainable development in China in both pillars, with an emerging 
level-playing-field  approach.  This  approach  has,  so  far,  been 
capable of constraining EU forces insisting either on protectionist 
responses or (interventionist) domestic counter measures or both, 
whilst keeping up its values approach. 

After having answered the first two research questions for the 
social pillar, we turn to the third research question: Has EU trade 
policy  vis  a  vis  and  cooperation  with  China  on  sustainable  deve-
lopment  systematically  pursued  the  NPTOs  of  labour  ‘standards’ 
and social protection since around 2000 and has this pursuit been 
effective in supporting a process of convergence ? 

There is no doubt that the EU has been ready to cooperate with 
China ever since China and the EU concluded the Strategic and 
Comprehensive Partnership in 2003. And right from the start of 
the first major project (following early meetings of the Social and 

Weinian Hu and Jacques Pelkmans255

Employment Dialogue with China), these were joint projects with 
a strong degree of ‘ownership’ on both sides. However, apart from 
the interesting and seemingly effective OSH project for the high-
risk coal mining and chemicals sectors, which is essentially about 
labour  standards,  the  projects  mostly  covered  technical,  admin-
istrative,  financial/actuarial  and  conceptual  questions  of  social 
protection. There  is  very  little  published  evidence  of  any  project 
activities  directly  related  to  internationally  recognised  labour 
standards, in particular about non-ratified core ILO Conventions. 
In this sense there is an obvious discrepancy between the need, as 
perceived by the EU, to prepare for ratification and full domestic 
implementation of these four Conventions, and almost certainly 
some other ones (as China has also not ratified a series of other 
ILO Conventions that would appear to be desirable), and the man-
ifest  –  though  ‘silent’-  positioning  of  China  not  to  do  so.  There 
is  an  opening,  however:  the  recent  CAI  draft  treaty  comprises  a 
cautious  quasi-commitment  by  China  to  strive  towards  ratifica-
tion of the two Conventions on forced labour. It should be noticed 
that, on OSH for workers, the coal mining and chemicals project 
appeared to have been hands-on and useful, in particular for the 
miners themselves. 

In contrast, China and the EU have been active in cooperation 
on social protection and continue to attempt searches for further 
improvement. A profound impediment is the domestic multi-lay-
ered structure of China’s governments, their coordination (or the 
lack of it) and the limited capabilities at local levels. There is also 
a  high  degree  of  path  dependence,  with  lingering  inefficiencies 
proving  hard  to  iron  out.  Moreover,  there  are  deep-rooted  ine-
qualities between rural and urban, partly resulting from traditions 
and old barriers to intra-China mobilities. Finally, there are major 
educational inequalities between rural and urban which are deep-
seated  and  may  have  caused  hysteresis  for  another  generation. 
Given  all  the  inhibitions,  the  joint  determination  of  the  EU  and 
China  to  address  social  protection  and  help  improve  it  in  many 
ways,  already  for  more  than  15  years,  cannot  be  expected  to  be 
successful so easily. This determination has recently led to a tripar-

EU/China Sustainable Development Cooperation: Towards Convergence?256

tite set-up together with the ILO (until at least 2022). 

The  short  answer  to  the  third  research  question  is  therefore 
that the EU has pursued, in earnest, durable EU/China coopera-
tion with respect to social protection, but that this turned out not 
to be acceptable to China as far as non-ratified ILO core Conven-
tions are concerned but acceptable – indeed, welcome – for social 
protection. In terms of effectiveness, given the inevitable limits of 
bilateral cooperation, the social protection cooperation has been 
effective and practical – not least because activities, projects and 
programmes were truly ‘joint’ – and still continue, whereas, with 
respect  to  labour  standards,  the  only  breakthrough  is  the  recent 
CAI draft treaty with its prudent quasi-commitment with respect 
to two Conventions on forced labour. 

Weinian Hu and Jacques Pelkmans257

5. PROSPECTS FOR EU-CHINA 
COOPERATION ON  
SUSTAINABLE DEVELOPMENT

Writing  in  early  2022,  it  is  worthwhile  to  briefly  reflect  on  the 
prospects of EU-China ‘green’ and ‘social’ cooperation. While not 
strictly based on systematic empirical research, one cannot escape 
pertinent  questions  about  more  strictly  linking  EU  trade  and 
investment  policy  and  sustainable  development.  It  may  well  be 
that the past of EU-China cooperation in sustainable development 
we studied is not a good guide to anticipate and comprehend the 
near future. 

5.1  EU-China sustainable development cooperation – a 
little recognised success story

The foregoing discussion makes clear that EU-China cooperation 
in sustainable development, both ‘green’ and ‘social’, has assumed 
a very wide scope and grown in intensity for two decades or more. 
This  cooperation  has  been  voluntary  and  not  based  on  agreed 
mutual obligations (e.g. a sustainable development chapter in an 
FTA). Indeed, it was solely based on functional considerations for 
both  partners,  underpinned  by  a  Comprehensive  and  Strategic 
Partnership, and usually as ‘equal’ partners with a joint organisa-
tion and shared funding. On the whole, this cooperation has been 
useful, often targeted to specific agreed objectives and leading to 
or  supporting  concrete  progress  in  a  broad  range  of  policies  in 

258

China  and/or  jointly  multilaterally.  There  seems  to  be  no  other 
bilateral  relationship  generating  such  an  intense,  durable  and 
wide-ranging cooperation in sustainable development. Moreover, 
this steady cooperation has undoubtedly supported the EU-China 
relationship for the two partners, other things equal. We conclude 
this eBook with an assessment of the prospects for extending this 
broadly successful cooperation. 

Perhaps  a  warning  is  in  place  before  discussing  the  prospect 
of  this  cooperation.  “Successful  cooperation”  –  here  in  sustain-
able  development  –  does  not  necessarily  mean  full  convergence 
and  bilateral  agreement  on  almost  everything.  It  does  imply  a 
sustained willingness to work, together, on aspects of policies and 
institutions relevant for sustainable development and of sufficient 
importance for the participating countries to achieve well-defined 
goals.  At  all  levels,  preferably  simultaneously.  However,  striving 
after  congruence  is  neither  realistic  nor  necessary.  Where  dis-
agreements  remain,  respectful  consultations  matter  and  a  good 
understanding supports the trust in the relationship despite occa-
sional differences. It is and will always remain a matter of judgment 
whether and when discrepancies and differences start affecting the 
partnership negatively. 

Nonetheless, this long-standing functional cooperation in sus-
tainable development between the EU and China has not received 
the  attention  and  appreciation  it  deserves.  Policy  debates  in  the 
three  principal  EU  bodies,  the  Council,  the  Parliament  and  the 
Commission, in Brussels are rarely discussing this cooperation, let 
alone embracing a long-run view about it in the EU-China con-
text. This is a curious inconsistency and a shortcoming on the part 
of the EU in the overall perspective on EU-China relations. It is 
inconsistent because there is a lively EU debate, both political and 
legal, on the importance and specificity of sustainable development 

Weinian Hu and Jacques Pelkmans259

chapters in FTAs,256 whilst largely ignoring the undeserved silence 
about the rich “cooperative” alternative without mutual legal obli-
gations. And this is even more curious because it is China, often 
regarded  rather  critically,  which  is  at  stake  here.  Precisely  with 
China an EU-FTA would not be easy to accomplish and obtaining 
a high standard sustainable development chapter in such an FTA 
might well add to this difficulty. In Pelkmans, Hu, Francois et al. 
(2018)  an  extensive  almost-chapter-by-chapter  verification  of  a 
possible  FTA  with  China  is  conducted  in  great  detail.  The  con-
clusion is that an FTA would imply a lopsided agenda with by far 
most of the work to be done by China. In this light the success of 
the bilateral cooperative [‘alternative’] route in sustainable devel-
opment is interesting and its effectiveness in the case of China sur-
prising. It deserves some acclaim. 

The  absence  of  public  appreciation  is  hard  to  explain  but  we 
shall offer two possible explanations. One reason for this lack of 
recognition may well be that the Commission (here, including the 
EEAS) does not organise the overall reporting of all the Dialogues 
and the related projects, programmes, and many other activities. 
Individual Dialogues and activities are irregularly reported and – 
more often than not – in superficial ways, for example, by sum-
marising their progress in a couple of words in the summit joint 
statements.  It  is  therefore  largely  ‘under  the  radar’,  even  though 
it  is  not  secretive.  Annual  or  bi-annual  reporting  on  the  func-
tional  cooperation  in  the  bilateral  Partnership  –  with  hard  facts 
and results – would significantly contribute to a better recognition. 
Whilst  there  is  a  lot  of  criticism  of  the  EU-China  relationship  – 
some of it justified – there is little basis to be found or published in 
common sources about the accomplishments in sustainable devel-
opment. That is unbalanced and regrettable. 

256  A recent milestone in this permanent debate is the study commissioned (by the Euro-
pean Commission) from a team brought together by LSE, published on 10 February 
2022.  It  analyses  seven  EU  FTAs.  See  the  press  release  at  https://trade.ec.europa.eu/
doclib/press/index.cfm?id=2360  with  a  link  to  the  study.  In  the  Press  release  Trade 
Commissioner  Dombrovskis  notes  “that  positive  engagement  can  be  most  effective 
in bringing about positive and sustainable change”. This touches exactly the point we 
make in our work (on EU-China). The cooperative alternative can also generate such 
change, even with China. That seems little known. 

Prospects for EU-China Cooperation on Sustainable Development260

Another reason probably is found in the sharpening of tone in 
EU-China relations, from both sides. This is often connected with 
the increasing blurring of (EU) foreign policy and EU trade policy, 
and the a priori requirement based on the Lisbon Treaty and recent 
EU trade policy strategy papers that EU trade policy (broadly con-
ceived) and ‘EU values’ (incorporating sustainable development) 
be  closely  connected,  if  not  coupled.  Even  though  the  present 
eBook cannot deal with the EU foreign policy vis-à-vis China – in 
fashionable jargon called ‘geo-political’ and/or ‘geo-economic’ or 
indeed ‘strategic autonomy’ – it is not a secret that China became 
much more assertive in the early 2020s, seemingly more inclined 
to signal power political approaches. China’s human rights viola-
tion  in  Tibet  and  Xinjiang,  its  squeezing  of  democracy  in  Hong 
Kong and its rejection of even the mildest criticism besides con-
sidering it as a strictly domestic matter where interference is not 
accepted, renders it more difficult for the EU to retain functional 
cooperation under the Strategic Partnership, as before. 

5.2  Bilateral ‘green’ and ‘social’ cooperation: more of 
the same? 

After  two  decades  or  more  of  intense  cooperation,  the  question 
arises  whether  China  and  the  EU  can  be  expected  to  continue 
with ‘more of the same’. We suspect that this is doubtful. There are 
good  reasons  not  to  expect  a  simple  extrapolation  of  the  steady 
and largely successful functional cooperation in these two ‘values’. 

First,  in  both  ‘green’  and  ‘social’  cooperation  during  this  epi-
sode, China could learn – at first - much from the EU and occa-
sionally adopted its practices, technical or other standards or ideas. 
Joint projects, with Chinese ‘ownership’ as well, were often helpful 
for ministries, specific sectors or policy-makers. They also taught 
EU policymakers and officials as well as numerous experts much 
about China  in many different policy  domains  and the thinking 
or attitudes behind them. From both sides there was – more often 
than not – an eagerness, going further than a mere willingness, to 
work together and frequently even a degree of excitement to help 

Weinian Hu and Jacques Pelkmans261

China develop with much greater respect for these two values in 
sustainable development. Today it would seem that this episode is 
largely over. The functional drives behind such an extensive and 
intensive  bilateral  cooperation  programme  have  become  much 
more  selective.  On  its  own  account  China  has  become  far  more 
active in ‘green’ policymaking. President’s Xi ’s repeated promise 
to create a ‘beautiful China’ is more than just a slogan, even when 
the date of ‘delivery’ is only in 2035. Much more credible laws in 
air, soil and water have been adopted and are meanwhile enforced 
in more meaningful ways. In climate China has ratified the Paris 
Agreement, with its five-year reporting in Nationally Determined 
Contributions (NDCs). The country now has its own China style 
ETS that is operational nation-wide. In social questions, social pro-
tection has been built up. Its two weaknesses – discussed in detail 
previously - will have to be addressed if the system is to support, 
in earnest, all workers: on the one hand, its very foundation based 
on formal labour contracts is not helping the many tens of millions 
of intra-China migrant workers who avoid (or do not get offered) 
contracts, and, on the other hand, the redistributive effects of the 
protection is rather weak, and almost negligeable for rural workers. 
On core labour standards, the draft agreement of the Comprehen-
sive Agreement on Investment (CAI) has shown that China might 
be willing to ratify the Conventions on Forced Labour. However, 
the two quintessential ILO Conventions [on free association and 
collective bargaining] remain a taboo for China, despite its claim 
that it is a socialist – indeed, a “People’s” - republic. It would appear 
most unlikely that EU-China cooperation might attempt to work 
on this archetypical property of the PRC. 

Second, the two-plus decades covered by our RESPECT research 
were characterized by a common – be it not always explicit – pref-
erence  that  China  should  catch  up.  China’s  growth  model  at  the 
time left no doubt that very high economic growth was overriding 
anything. We have dubbed this “growth at all costs”. However, the 
desired catching up applied in particular to the negative fall-out of 
this reckless growth path. The ‘green’ and ‘social’ values in sustain-
able development were long ignored and several ‘green’ indicators 

Prospects for EU-China Cooperation on Sustainable Development262

grew far worse before slowly turning into the right direction. The 
early  EU  policy  notion  that  China  needed  development  aid  was 
gradually phased out – certainly after China’s entry into the WTO 
in 2001 and the subsequent upgrading of the EU-China 1998 Com-
prehensive Partnership into the 2003 Strategic and Comprehensive 
Partnership  [SCP].  Basically,  the  SCP  aimed  at  creating  equality 
and common ownership, with lasting consequences for the nature, 
set-up  and  emphases  of  bilateral  cooperation  programmes.  The 
decision to establish a regular EU-China Summit since 1998 and 
the 2013 EU-China Strategic Agenda for Cooperation (until 2020) 
further cemented the conviction of being equal partners. For most 
of  this  period,  and  dependent  on  the  policy  domain,  China  was 
nevertheless  eager  to  catch  up  in  e.g.  the  quality  of  social  pro-
tection, occupational safety & health, the abatement of CO2 and 
other GHG emissions (including the long avoided pricing instru-
ments in the overall toolbox) and a host of deep-seated non-cli-
mate environmental problems such as pollution of water, soil and 
air (and related waste treatment). The one area where China chose 
to develop its own path early on is renewables and related tech-
nology such as solar panels and wind turbines as well as modern-
ised nuclear energy. And successfully so. For all these reasons the 
post-2020 period is therefore not going to be “more of the same”. 
In  that  sense,  the  scope  and  intensity  of  EU-China  cooperation 
as  surveyed  in  previous  chapters  is  bound  to  become  less  abun-
dant and more targeted. The uniqueness of EU-China trade and 
cooperation is likely to become less conspicuous. Some of the huge 
EU-China programmes – some with up to 400 projects and many 
follow-ups – will not be repeated anymore. The mutual interest in 
‘green’ and ‘social’ cooperation is likely to stay, the eagerness will 
be far more selective. 

Third,  the  overall  governance  and  political  stimulus  of 
EU-China  cooperation,  possibly  also  in  sustainable  develop-
ment,  has  been  tarnished  in  recent  years.  And  this  is  bound  to 
engender consequences. Although interruptions happened before, 
the  EU-China  Summit  is  now  handicapped  in  giving  leadership 
to  cooperation  by  recurrent  doubts  about  its  being  held  at  all 

Weinian Hu and Jacques Pelkmans263

and by the narrowing of its agenda due to tensions about human 
rights inside China (Tibet, Ughurs, Hong Kong’s changes). These 
frictions  have  been  exacerbated  by  sanctions  slapped  on  China 
and  some  of  its  leading  officials  involved  in  the  Uighurs  drama 
of  secretive  camps  with  an  unusually  large  number  of  locals  for 
an unusually long (often undetermined) time and suffering from 
lamentable  practices,  followed  by  Chinese  counter  sanctions  to 
EU  MEPs  and  think-tanks.  The  EU  (both  Commission  and  EP) 
has put the CAI on hold, despite its innovative character and the 
inclusion  (novel  for  China)  of  sustainable  development.  These 
non-trivial frictions came on top of EU irritations about China’s 
conduct and selective actions during the first year of COVID-19. 
Other irritants for the EU are perhaps less prominent but surely 
do  not  help.  They  include  the  Belt  and  Road  Initiative  in  nearly 
70 countries (based on a lack of impartial governance, dominance 
of  non-transparent  Chinese  procurement  practices  and  de-facto 
imposition of Chinese technical standards) and China’s 17+1 pro-
cess with 12 EU countries and 5 non-EU countries on the eastern 
flank of the Union. In both cases some patched-up accommoda-
tion between the EU and China has taken place but both initiatives 
remain less well-regarded in Brussels for several reasons. China’s 
recent treatment of Lithuania has also generated bad blood in sev-
eral  capitals  in  the  EU.  So  far  China  has  not  lent  support  to  the 
Russian  occupation  of  Crimea  –  such  support  would  be  incon-
sistent with China’s strict territorial integrity and sovereignty phi-
losophy – but its ‘neutrality’ about Russia’s recent maneuvering e.g. 
about Ukraine for geo-political reasons has not been well received 
by the EU. Altogether, unlike previous EU-China frictions in the 
past (e.g. the post 1989 weapon embargo), there are more of them 
today and they occur with higher frequency. 

Fourth, and fundamental, although the pursuit of sustainable 
development  (here,  ‘green’  and  ‘social’)  is  a  long-standing  policy 
preference of the EU, the great advantage of bilateral cooperation 
rather  than  legal  obligations  in  an  FTA  is  that  (EU)  trade  and 
investment policy and the EU pursuit of ‘values’ remain distinct 
and  disconnected.  In  other  words,  the  pursuit  of  these  values  is 

Prospects for EU-China Cooperation on Sustainable Development264

active and clear but it is not coupled to EU trade policy. However, 
since the Lisbon re-write of the EU treaty, Art. 21 speaks about a 
duty to maintain ‘consistency’ between EU trade policy and such 
values, here ‘green’ and ‘social’. The question is whether this cou-
pling is actually a good idea (Pelkmans, 2022). But in the case of 
EU-China there is no FTA, no proposed FTA and GSP+ does not 
apply to China. Therefore, the legal instruments for the coupling 
of  EU  trade  policy  and  ‘green’  and  ‘social’  values  do  not  apply 
to  EU-China  bilateral  relations.  Put  differently,  whether  values 
are  violated  or  ignored  does  not  burden  EU-China  trade  policy 
(whether in WTO or directly bilaterally) or indeed bilateral invest-
ment treaties like the CAI. They are on separate tracks. This does 
not  mean  the  EU  abdicates  from  pursuing  these  values.  But  the 
EU’s disagreement with policies of partners undermining or vio-
lating  such  values  can  be  expressed  via  foreign  policy.  However, 
also here there is genuine doubt whether these tracks remain sep-
arated in future. 

For sustainable development, instead, bilateral cooperation is 
the preferred option, based on mutual agreement and ‘ownership’. 
This has worked very well with China for two decades. This rela-
tive stability and predictability in sustainable development coop-
eration has undoubtedly encouraged a wider scope of and greater 
intensity in bilateral cooperation. In a U-turn in 2021 led by the 
European Parliament, the ratification of the draft CAI treaty was 
suspended for reasons of human rights (Ughurs), which has dis-
rupted  the  relatively  undisturbed  climate  of  cooperation.  This 
U-turn is a break with the past. What had long remained discon-
nected  (EU  trade  policy  and  foreign  policy  advocating  ‘values’) 
has now been re-coupled. The risk is that neither the CAI will be 
ratified for long, nor that China will amend or overhaul its harsh 
regime for many Ughurs. In the process also cooperation in sus-
tainable development is likely to suffer a serious setback. 

Weinian Hu and Jacques Pelkmans265

5.3  Conflicting signals about EU-China sustainable 
development cooperation in future

These four reasons together do not justify too much optimism for 
EU-China ‘green’ and ‘social’ cooperation. From this perspective 
one  might  expect  ‘some  of  the  same’  but  probably  not  ‘more  of 
the  same’.  Nonetheless,  on  both  sides  there  is  a  clear  willingness 
to  retain  as  much  as  possible  the  functional  approach.  Chinese 
ministers have publicly indicated that they do want the CAI and 
underlined  that  the  CAI  is  clearly  in  the  EU  interest.  In  the  EU 
there are rumors (e.g. France and Germany) that a bilateral ver-
sion of the CAI could be a temporary substitute. And one ought 
to realise that bilateral activities ‘under the radar’ can more easily 
continue  even  in  a  frostier  climate.  Both  in  ‘green’  and  ‘social’ 
cooperation,  bilateral  activities  are  ongoing:  in  ‘social’  there  is  a 
three-years project with the ILO and China until late 2022 (called 
”Improving China’s institutional capacity towards universal social 
protection”) and in ‘green’ the EU-China Environmental Dialogue 
(since 2003) had a meeting in April 2021 preparing the Kunming 
Biodiversity CoP 15, the BCM (on forestry and FLEG) implements 
the  2019  work  plan  including  a  country-specific  handbook,  the 
China-Europe Water Platform continues and the EU-China envi-
ronmental  project  (initiated  in  2018)  is  developing  better  envi-
ronmental  governance  and  the  integration  of  environment  into 
other Chinese policy domains. In September 2020 the High Level 
Environmental and Climate Dialogue between China and the EU 
was established, with a rich follow-up meeting in September 2021. 
Apart from a lengthy list of ‘soft’ commitments, “both participants 
agreed  to  continue  and  expand  the  cooperation”  in  no  less  than 
12  issue  areas  in  environment  and  climate.257  It  is  also  too  often 
neglected  how  much  EU-China  cooperation  actually  takes  place 
in a multilateral environment. Much of the bilateral obligations in 

257  Biodiversity conservation, chemicals management, climate legislation, energy conser-
vation and energy efficiency improvement, circular economy, renewable energy, green 
transportation, green buildings CCUS and hydrogen energy. Joint Press Communique, 
10  Oct  2021,  https://ec.europa.eu/clima/news-your-voice/news/joint-press-commu-
nique-following-second-eu-china-high-level-environment-and-climate-dialogue 

Prospects for EU-China Cooperation on Sustainable Development266

FTAs’ chapters on sustainable development are based on multilat-
eral processes and outcomes. The intense negotiation work in the 
WTO on fisheries continues unabated. Altogether, the suggestion 
that the frictions, described above, have killed all bilateral cooper-
ation would be entirely false and without any basis. But there is no 
denying that the same frictions risk to hurt the trust, the informal 
machinery as well as the predictability stimulating new initiatives. 

There  are  already  some  signs  on  the  wall.  The  2020  Strategic 
Agenda  for  Cooperation,  which  expired  by  late  2020,  has  not 
been  renewed  as  yet.  A  true  EU-China  Summit,  also  spending 
some time on issues and the blessing of cooperation in addition 
to several ministerial and secondary meetings, has not been held 
after mid-2020. Some truncated summitry took place (sometimes 
between a few PMs and president Xi rather than the Commission 
and Council presidents) but mainly with a view to pre-empt fur-
ther frictions, not to initiate leadership about new bilateral coop-
eration programmes. There is regret on both sides but ‘high poli-
tics’ seems to be in the way. 

If this frosty period continues, there is likely to be less and less 
intense  EU-China  cooperation  in  sustainable  development.  This 
might be regrettable for social values but it has to be recognised 
that  the  China  –  as  it  is  ruled  today  -  cannot  be  expected  to 
embrace the two core ILO Conventions. Not only are these Con-
ventions not negotiable for China, strong EU insistence on their 
adoption might well be considered as subversive given the extreme 
- indeed even increasing - forms of control the government and 
Party maintain formally and informally. However, for social pro-
tection, cooperation may well be continued. For ‘green’ coopera-
tion the matter is very different. No profound differences of view 
between  the  EU  and  China  prevail  and  no  threat  to  the  Party 
seems immanent. Moreover, China is essential for global (hence 
also  EU’s)  climate  strategy.  For  non-climate  environmental  poli-
cies problems are less acute in a transborder sense. Nevertheless, 
China’s modes of production and consumption are still adverse to 
a good shepherdship of the earth, with its longstanding dispropor-

Weinian Hu and Jacques Pelkmans267

tional imports (and inefficient use) of raw materials and minerals, 
including a strong reliance on oil and gas. Its bilateral frictions over 
cross-border rivers, its remaining generation of acid rain affecting 
neighbouring countries, its fisheries policies are all key examples 
where  cooperation  and  an  agenda  for  improvement  could  make 
a  difference.  The  shining  counterexample  is  China’s  forestation 
strategy already making considerable progress for some 4 decades 
and still to continue until 2035. Also the EU can benefit from some 
of  the  advances  in  clean  energy  (e.g.  modern  ultra-safe  nuclear) 
and renewables.

Apart from lowering expectations to ‘some of the same’, there 
are a number of lingering queries which do matter for this brief 
assessment.  The  most  important  one  is  about  the  following:  so 
far, in the ‘green’ and ‘social’ cooperation between China and the 
EU, the link with EU trade policy was loose. Much of the cooper-
ation was a ‘stand-alone exercise’, barely or not affected by ongoing 
negotiations  about  ‘trade  irritants’  or  other  aspects  of  market 
access  or  trade  defence  issues.  The  link  was  more  seen  as  indi-
rect  and  long-run.  As  noted,  that  began  to  change  since  around 
2015/6 when newly set-up cooperation was tasked to help resolve 
trade policy questions (from fisheries to the newly initiated High 
Level Environmental and Climate Dialogue). This trend is likely to 
continue. Of course, the nature of such sustainable development 
cooperation is more an extension of trade policy and touches upon 
vested  interests.  It  will  be  much  harder  to  be  successful.  At  the 
same time, the agenda of the newly established High Level Envi-
ronmental and Climate Dialogue, agreed just before the Glasgow 
COP-26 meeting in November 2021 when the CAI frictions were 
already in place for months, looks impressive and seems similarly 
broad as in the recent past. Would an attitude of ‘we agree to dis-
agree’ still permit to continue with extensive ‘green’ cooperation? 

There are also some other queries the answers to which need 
to be considered. They are directly or indirectly related to a pos-
sibly very difficult ‘greening-of-trade’ issue: embedded carbon. Just 
for  reflection,  consider  the  following  four  important  ones.  First, 

Prospects for EU-China Cooperation on Sustainable Development268

how to address in earnest China’s fossil addiction, which is much 
bigger than coal alone (which is already so disproportional), for 
instance its large oil and gas imports? Second, can China and the 
EU cooperate to bend [dirty] ‘rare earth’ mining and processing 
into a much cleaner & green direction? Third, how could China 
and the EU (possibly with others) cooperate in order to ensure in 
the longer run that China’s massive imports from parts of Africa 
and from Brazil [turning rain forest into soybean fields for export 
to China] become far more supportive of ‘green’ objectives. Fourth, 
quite  apart  from  trade  defence  issues  of  products  from  heavy 
industries exported by China to the EU and other countries, there 
is  an  issue  for  bilateral  or  plurilateral  cooperation  in  that  China 
exports  what  the  EU  (and  some  others  like  Japan)  have  chosen 
no longer to  produce or much less. Arguing  that China’s overall 
industrial performance is more polluting – though correct – might 
be seen as partly due to policy choices made by the EU and other 
advanced  countries.  All  these  queries  are  intimately  connected 
to  carbon  footprints  and  the  considerations  behind  the  CBAM 
(even  when  not  actually  introduced).  China  rejecting  a  CBAM-
type measure does not solve these underlying problems. Much of 
embedded carbon is directly a function of trade, not just bilaterally 
but also with third countries. If the CBAM would not be feasible, 
trade-related  cooperation  in  these  areas  between  China  and  the 
EU may well be appropriate to address these aspects in earnest. Or 
some combination of the two. But it seems unlikely that such vital 
cooperation will again remain ‘under the radar’. On the contrary, it 
will be difficult and move slowly. 

Weinian Hu and Jacques Pelkmans269

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QM-05-22-129-EN-N