China and the EU should work together to unleash the great potential of their cooperative relations

Due to the pandemic, the Chinese economy in the first quarter recorded its sharpest downturn since the launch of reform and opening-up over 40 years ago. However, with the spread of the virus having been basically controlled within the country, the Chinese economy has been gradually rebounding. But facing new changes and trends in the domestic and global landscapes, China is aiming to open up to a higher level.

As the size of the Chinese economy has grown, the contribution of foreign demand has decreased, and President Xi Jinping has put forward the new development pattern of "dual circulation", which puts the emphasis on the domestic market.

In most major economies, the internal circulation takes a dominant role. The history of economic growth in developed countries such as the United States and Japan suggests that after an economy develops to a certain level, it becomes more reliant on domestic consumption. The per capita GDP of China has hit the $10,000 mark, and the middle-income population has surpassed 400 million. The comparative advantage of the country has shifted from an abundant labor force to its huge market and complete industrial system.

The new development pattern is also conducive to world economic growth. The uncertainties and volatilities of the pandemic and the pushback by some countries against globalization threaten the security of industrial chains.

Facing these challenges, China is focusing on releasing the potential of domestic demand and building a complete domestic market system, and improving its independent innovation capacities.

Under the new development pattern, China will import more quality goods and services and thus inject new impetus into globalization and propel the sustained growth of the world economy.

Since the launch of reform and opening-up, the Chinese economy has become increasingly integrated in the economy. Spurring reform and development through opening-up has proved to be a successful practice in China's modernization drive. The raging pandemic highlights the urgency of building a community with a shared future for humankind, and demonstrates that opening-up and cooperation is the only way for humans to rise to common challenges and build a better world.

Taking the domestic market as the mainstay does not mean establishing a closed domestic loop. Instead, the dual circulation pattern means a rebalancing between domestic and international markets. In the process, China will adhere to its fundamental national policy of opening-up and strive to bring it to higher level.

During a video conference with German Chancellor Angela Merkel and European Union leaders in September, President Xi proposed that China and the EU should stick to peaceful coexistence, stay committed to opening-up and cooperation, uphold multilateralism, and continue their dialogues and exchanges, thus bringing the bilateral relationship to a higher level. The two sides are in urgent need of cooperation more than ever before and they enjoy a solid foundation for cooperation to fuel their economic recoveries and boost the global economy.

The cooperation between China and the EU is conducive to the two sides and the world at large. The trade between China and the EU has shown strong resilience during the pandemic. In the first half of the year, the Belgian port of Zeebrugge and the Greek port of Piraeus have seen their volumes of cargo rise despite the pandemic, thanks to the expanding trade activities between Europe and China and the Far East region. The number of journeys made by China-Europe freight trains amounted to 5,122 in the first half of this year, up 36 percent year-on-year, and the container throughput hit 461,000 twenty-foot equivalent units (TEU), up 41.7 percent year-on-year. That has helped stabilize the supply chains of China and Europe as well as countries and regions along the rail line.

It has been proven that the Chinese economy and the European economy are highly complementary and economic and trade cooperation between the two sides are not only good for each side, but also benefit surrounding regions. Strengthening their cooperation would release a positive signal to the world.

Second, China and the EU should view each other as partners rather than competitors. The signing of a bilateral agreement that protects China and the EU's geographical indications in each other against imitations has been a positive development. The pact is the first comprehensive and high-level GI protection agreement China has signed with a trade partner, and it is expected to greatly boost the bilateral trade between the two. Meanwhile, the negotiations between China and the EU on an investment agreement have made progress and it is expected to be concluded by year end.

However, Chinese enterprises in the EU have become increasingly worried about the EU's anti-monopoly investigations, and investigations into foreign investment security and subsidies, which have raised questions over whether the EU's business environment is still welcoming. It is hoped the China-EU investment agreement will dispel these concerns.

Third, China and the EU should take advantage of their respective mid-term plans and grasp the overall trend to push for breakthroughs in bilateral cooperation with a strategic vision.

China is drawing up its 14th Five-Year Plan (2021-25), and EU leaders agreed in July a recovery package that includes 750 billion euros ($875 billion) raised from the financial market and 1.1 trillion euros from the bloc's 2021-27 budget.

China and the EU should conclude the negotiation over the EU-China Strategic Agenda for Cooperation 2025 as soon as possible to enhance the alignment of their mid-term development plans. The green economy and digital economy, in particular, will be the key fields for development in the coming five years and beyond. The two sides are highly complementary in technology, capital and markets and share many concerns in formulating global standards and rules. The two sides should establish green economy and digital economy partnerships.

The cooperation potential between China and the EU is greater than the competition between them and their consensus is bigger than differences. The two sides should further tap the potential of their common ground and endeavor to forge higher-level cooperative relations.

The author is the president of the Chinese Academy of Social Sciences. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.