Analytics, China, Direct Speech, EU – Baltic States

International Internet Magazine. Baltic States news & analytics Saturday, 30.05.2020, 15:11

China is ahead in the game – where is Europe

Sirpa Pietikäinen, Member of European Parliament, Baltic Rim Economies review,, 07.03.2018.Print version
In order for Europe to compete economically but also to remain a relevant, viable partner to China, we need to strategically plan our future cooperation models. Europe has the option to keep doing more of the same and see China fly past in terms of development and innovation. But by being smarter and transforming faster, Europe has the potential to develop exportable concepts as a basis for continued cooperation, trade and sustainable global development.

China is big, thinks big, and does big in every sector. Around 18% of the world’s population lives in China. At the same time, China’s share in global gross domestic product adjusted for purchasing power-parity is over 15%. China holds a place among the world’s fastest growing economies. The value of China - Europe trade alone is on average over €1 billion a day.

Like the economy, infrastructure development and mobility have seen huge growth in the last decade. Over half of the world’s highspeed railway network is in China. And Chinese high-speed trains are getting faster. China is researching next-generation maglev trains that could eventually reach theoretical maximum speeds of 4,000 kilometers per hour. Infrastructure development ambitions are not limited within the Chinese borders, as reflected in China’s call for a new Sino-European Silk Road.   

The investments in infrastructure are being paralleled with investments into academics. The reputation of China’s education sector has been improving with an increasing number of Chinese institutes lifted onto the Times Higher Education World University Rankings list. 

The growth has not come without an environmental price. China has challenges with environmental degradation, air pollution, and waste management, for example. China has plans to address these. China is a leader when it comes to clean energy investments, with plans to invest over €300 billion into renewable energy generation by 2020. China also has a circular economy strategy and law, following the inclusion of the concept in both the 12th and 13th Five-Year Plans. From the planning phase, industry is designed to ensure that waste from one industrial process can provide efficient and effective input to others. From January this year, Chinas has refused to accept imports of plastic scrap, textiles or mixed paper imports, including from millions of metric tons of low-grade waste from EU countries. While China is determined to make use of recycled materials from its own domestic market, it also forces the EU to find alternative solutions for what to do with materials previously collected and exported to China.

Chinese growth is taking place in a global environment, where discussions about peak-oil, reducing stocks of sand, scarcity of water and overall depletion of natural resources and biodiversity are frequent. There is no doubt that parallel to the move to a circular economy and doing more with less resources, China like all countries is making strategic plans about how to ensure supply of raw materials and resources also in the future.   

China is not interested in import and supply of raw materials only, but also of human capital. This is evident in their large-scale business deals. They are not only for the acquisition of infrastructure or machinery. They also aim to ensure that Chinese specialists, engineers, scientists, and/or IT experts, learn to service, sustain and up-keep them. In this manner, Chinese experts acquire knowledge and skills, which can be further adopted and applied.

It is also evident that with increased globalisation and shortened distances, few international projects implemented on a massive scale are purely technical. They also carry political implications. Transportation and movement of goods, services and capital will always warrant political and security analysis, and from the perspective of the originating and recipient countries and of neighboring countries. 

To some extent, the rapid expansion and development of China has not registered in its full significance, perhaps due to the fact that China is not considered paternalistic in its policies. Yet China is not afraid to take bold steps in the international arena, when it serves their interests. The decision to move ahead with the launching of a new international development bank two years ago, despite opposition from Washington, serves as an example of this. The number of countries that joined the Asian Infrastructure Bank (AIIB) reflected China’s growing economic influence not just in the region but in Europe as well.

 Europe need not despair, but it does need to strategically consider how it will compete with the pace and level of China’s development. The key is to be fast and to consider where it has an added advantage. 

Certain choices with regards to economic investments have to be made in order to stay ahead of the game. Will Europe hold on to outdated subsidies for coal-based energy production? Or will they remain relevant and ahead of the game in the clean energy transition? Whether Europe can compete in the circular economy arena with China, given the investments China is already making towards this transition remains to be seen. The level and focus of European investments into research and innovation, including through the EU’s Horizon 2020, will influence this. How Europe supports entrepreneurship, including among women where it has been lagging far behind considering both China and the United States, and among youth, will also be of significance.

Where Europe has significant potential is in exporting concepts and solutions, rather than raw materials. A good example is in the area of e-Health and wellbeing. If European countries can, applying new e-Health technology for prevention, treatment and monitoring of individuals based on concepts and models of wellbeing, provide solutions to challenges that societies in the future will face, this will make Europe relevant. We will have something to offer that is valuable to governments at all levels, and in individual demand. We just have to be clever about how we foster, market and sell it.

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