Trade and Investment

Asia and Europe can both gain from better trade links. But they need to cooperate, not compete

The largest container ship in world, CSCL Globe, docks during its maiden voyage, at the port of Felixstowe in south east England, January 7, 2015. The 400-metre-long vessel with a capacity of around 19,000 containers, owned by China Shipping Container Line, and built in South Korea, is the first of five similar sized vessels which will sail the Asia-Europe trade route, according to a news release by the Port of Felixstowe. REUTERS/Toby Melville (BRITAIN - Tags: BUSINESS MARITIME SOCIETY) - GM1EB1808PW01

The Asian market holds huge economic potential for Europe Image: REUTERS/Toby Melville

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Trade and Investment

This article is part of the World Economic Forum's Geostrategy platform

Some Western media outlets have compared the recent EU strategy, "Connecting Europe and Asia - Building blocks for an EU Strategy," to China's Belt and Road initiative (BRI), as it can draw wide attention to China-Europe relations and take advantage of the ongoing popular discussions on BRI.

But as long as the EU treats its Asian partners sincerely and with equality and reciprocity, China and other Asian nations will be glad to see the bloc play a positive role in the region.

The EU realizes Asia's economic prospects and the development potential of connectivity. This is the main reason why it has launched the strategy.

The EU has realized that in the long term, more than 90% of the world's economic growth will come from non-European areas, mostly Asia. The Asian market is of great significance to the EU, and will bring the bloc generous economic rewards.

Potential growth

There is huge growth potential for the Asian economy in the future, and the economic dependence between Europe and Asia will deepen. The EU needs to strengthen connectivity to open up and consolidate its Asian market.

The EU's goal in recent years has been to focus on infrastructure and seek economic recovery through connectivity inside Europe. The EU's strategy of bridging Europe and Asia is an extension of the aim.

In the European Commission's Investment Plan for Europe announced in November 2014, known as the "Juncker Plan," the EU said that priority will be given to sectors including energy, telecoms, digital and transport.

Infrastructure needs

The implementation of the Trans-European Transport Network (TEN-T) was also facilitated. In the strategy the EU says, "some estimate that Asia will require over €1.3 trillion a year of infrastructure investment" and the investment in the TEN-T for transport "is estimated to require €1.5 trillion in the period 2021-2030."

By connecting Europe and Asia, the EU wants to seek trade and investment potential to boost economic recovery, and to reduce the harm caused by US unilateralism and protectionism. That's another important reason why the EU has launched the strategy.

Although the trade tension between Europe and the US has temporarily eased because of the bloc's compromise, the dispute hasn't been resolved. As US policies are uncertain and US President Donald Trump is still capricious, their dispute can reignite anytime. As a result, it is in EU's long-term interest to seek a stable cooperation by connecting Europe and Asia.

But when stressing the European way of connecting Europe and Asia, the EU needs to be prudent and objective. The EU has made its policy of promoting Asia-Europe connectivity a priority. Europe used to promote connectivity in the Asia-Europe Meeting (ASEM), but it focused on one-way connectivity, including exporting Western values and its social system to Asia, ignoring infrastructure connectivity.

Instead of simply exporting values and systems, understanding and responding to Eurasia's needs is the only way to justify Asia-Europe connectivity.

In recent years, China and other Asian countries have helped make connectivity ASEM's priority, persuading the EU to pay attention to infrastructure.

The bloc should draw a lesson from such a policy change: instead of simply exporting values and systems, understanding and responding to Eurasia's needs is the only way to justify Asia-Europe connectivity. Whether the European way can ensure that the EU promotes the strategy smoothly depends on whether it adapts to diverse Eurasia.

What really turns the EU's strategy into cooperation is not simply promoting the European way, but seeking the common ground between Europe and Asia. The latest EU strategy describes the European way as "sustainable, comprehensive and rules-based connectivity." But the EU needs to discuss with its partners the need to seek the grounds for cooperation.

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Whether the EU strategy aims at countering China's BRI or not, as long as China and Europe stick to their current consensus and make concerted efforts on Asia-Europe connectivity, their cooperation will expand, and their ability to manage differences and risks will improve.

After five years of development, the BRI has stepped into a new stage of sustainable development. It will further promote comprehensive connectivity in policy, trade, finance and culture with its partners, and will seek coordination on the basis of mutual respect.

By proposing the strategy of connecting Europe and Asia, the EU may want to show its enthusiasm in Asia. But as long as its initiative is constructive and in line with the principle of achieving shared growth through discussion and collaboration, China and Europe can deepen their cooperation on the current EU-China Connectivity Platform and ASEM, and join hands on achieving connectivity.

In seeking connectivity, Europe should look for ‘common way’ with Asia, Cui Hongjian, director of the Department for European Studies, China Institute of International Studies

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Trade and InvestmentGeo-economicsChinaEuropean Union
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