As we begin 2014, Europe has reached a turning point. The financial sector is more stable. The recovery of the European Union economy is expected to gather some speed this year. We are near to completing the "Banking Union", which will ensure we have a comprehensive framework for dealing with bank crises and break the negative link between sovereigns and failing banks. EU member countries are doing what they need to do to repair their public finances. Europe must implement a wide-ranging program of necessary reforms and improve the competitiveness of the European economy.

With new leadership and renewed guidelines for reform, China, too, is poised to roll out comprehensive and deep reforms. The Third Plenary Session of the 18th Communist Party of China Central Committee in November and the Central Economic Work Conference in December paved the way for significant economic, financial, fiscal and social reforms in the country.

Both the EU and Chinese leaderships will need determination to adopt the relevant measures in a holistic and consistent way so that, despite the possibility of the process of change being painful, people at all levels of society can feel the benefits. This will happen if people in both economies can be served by greener, more balanced and more inclusive economic growth.

The EU and China are strongly interconnected. As a result, the state of our economies and the social, economic, financial and political reforms we undertake have an important impact on the other's territory. We need to move forward together; move together in the context of our partnership in the G20 and in the World Trade Organization; and move together in our close bilateral cooperation, the latest expression of which was the EU-China Summit in November.

Over the last five years, we have taken radical steps in Europe to better regulate the financial sector, return public finances to health, and improve the governance of the eurozone. None of this has been easy. It has been a painful but necessary process, one in which Europe's people have made real sacrifices and faced reduced public services and lower incomes. This has affected consumer spending which, in turn, has had an impact on the world, including on China.

Europe needs to complete the recovery and restore domestic demand by making the single market work even better, boosting its vibrant services economy and bringing a new dynamism to its industrial sector.

And as China develops its reform agenda, it too is aiming to regain balance in a number of areas, such as the balance between internal and external demand, between economic growth and environmental sustainability, between urban and rural areas, and between the State and the market. While it is clear that State-owned enterprises will continue to play an important part in China's economy, the approach announced at the plenum that the market is to play a "decisive role" in allocating resources is welcome. It will be a pivotal factor in China's growth strategy and we in Europe will be watching with interest to see how this policy is delivered in practice.