Sino-Europe Ties in Challenging Times

“EU-Chinese ties are in turbulent and challenging times，” Minister Radostaw defined the current relationship of Sino-Europe in his speech “China– Europe: New Approach for a New Time” delivered at the opening of the conference of China V4 think-tank round table in September. During the speech， he talked about the current Europe debt crisis， the rising of new economies， the special position of Poland in Europe and the future of China and Poland.

Be optimistic about the future of European economy

Nowadays， one of the most important issues on everybody’s mind in Europe is the eurozone crisis.

At the beginning of September， European Central Bank President Mario Draghi announced that the governing council decided on the modalities for undertaking Outright Monetary Transactions (OMTs) in secondary markets for sovereign bonds in the euro area. In the following， Federal Constitutional Court of Germany approved the ratification of the European Stability Mechanism (ESM)， paving the way for the permanent bailout fund and other crisis-battling instruments to go into operation. However， the economies that the heavily indebted countries in the euro zone such as Greece， Italy， and Span are shrinking. Even Germany’s economy has appeared the sign of slowing down. Now， the European economy which accounts for 30% of global economy output is dragging the global economy.

Concerning above， Minister Sikorski is still optimistic about the future of Europe. He said:“We should put everything in the right perspective on the base of figures. The European public debt has remained below that of the United States or Japan. In fact， the average debt level of V4 countries was around 53.5% of their GDP， about 10% above China. The European countries are not as profligate as it may seem. Europe still remains the world’s leading economy.” According to the UN Human Development Index puts EU countries， on the whole， clearly ahead of most other countries and regions in the world. Almost 38% of Top 500 World Universities ranked by the Shanghai Jiao Tong University are located in the European Union. He pointed out:“Europe is quite a power house of human capital. Given that the economy is based on knowledge， it gives us pretty good prospects for the future.”

Regarding the statement that the European single currency is in its death throes， he thought that it is grossly misleading. He emphasized that the euro has maintained a strong position in the international currency markets. Its share in the global basket of reserve currencies has stayed fairly steady at about 25%. Russia， one of the world’s largest currency reserves’ holders， keeps almost 41.5% of its reserves in euros. The EU remains the largest donor of development aid， more than half of ODA comes from the EU. He said that the claims of a European downfall are premature to say the least.

Minister Sikorski pointed out that the current difficulties of the eurozone are not a harbinger of democracy’s failure. He said: “If anything， they demonstrate a deficit of democratic legitimacy. The cure to the present predicament， as my good friend， Timothy Snyder， convincingly argues in his recent article ‘How democracy can save Europe?’， is more democracy， not less.”

Although Minister Sikorski is confident for the future of eurozone， for when Poland joined the eurozone， he confirmed that Poland’s government will join the eurozone， but the time is not decided. It depends on the development of eurozone and when to solve the problem of Europe debt. He hoped that after 2012， when Poland completes related preparations and also wished that the Europe debt could be solved by then.

Poland as a bridge between China and Europe

When talking about the rising of new economies from Asia， Africa and Latin America， Minister Sikorski said that in Europe， they don’t believe that the world must be a zero-sum game. Someone’s rise is not necessarily someone else’s decline. The EU is the best example.

The fact that Europe is focused on its own problems is not to suggest that it does not recognize and in fact embrace the “rise of the rest”. He believed that a monumental change is happening in the international system — it is becoming more egalitarian， with new powers claiming their share of success and prosperity. He thought that to strengthen the cooperation between Europe and these new economies is win-win.

Minister Sikorski spoke highly of the growth of the Chinese economy. He thought that economic modernization which has lifted 500 million people out of poverty and led to dramatic improvements in living standards in China is unprecedented in the history of the world.

He said that Poland may serve as a bridge between old and new Europe， between East and West， North and South. When mentioning the meeting between Chinese Prime Minister Wen Jiabao with the leader of Central Europe during his visit to Warsaw last April， he expressed that there is new chemistry between Poland and China. China setting up an investment cooperation fund with the goal of raising 500 million USD and sending trade and promotion missions to Central Eastern European Countries with the aim to increase two-way trade to 100 billion USD by 2015 that are clear examples of this.

It may not be widely known but the total value of the Visegrad Group’s GDP is approximately 1 trillion USD. He said: “In terms of the purchasing power parity， the V4 as a single entity is 15th in the world， ahead of the economies of Indonesia， Turkey or Australia. Our firms are well integrated in the European and global market for goods and services. The V4’s combined population of 65 million makes us as important a player in the EU as France or Germany， and one which is increasingly active and vocal in the EU decisionmaking process.”

“We should think of ways of making this positive momentum last， including by continuing the ChinaCentral Europe economic forum on an annual basis. I appreciate the fact that more progress was made on the issue of mutual cooperation at the first follow-up meeting of all involved sides last week in Beijing. Let me also stress that the more ties there is between our region and China， the better it is for the EU-Chinese relationship. For Poland， the order of the day in the EU is integrity and cohesion of European policy towards its strategic partners.”He added.

The socio-economic transition closes the relationship between China and Poland

“The socio-economic transition of the last twenty years brings us even closer together. Both China and Poland have been brave modernizers. We may not have equally spectacular rates of growth in Poland but we think of ourselves as a success story. Just as China is a rising global power， Poland is a regional one. A recent article from Wall Street Journal Market Watch called Poland a new European tiger.” Minister Sikorski believed that both sides have many in common.

He thought that economically， in Poland the reforms were first of all about unleashing the entrepreneurial spirit of the people. “We have put most of the state property in private hands. We now have 1.67 million registered companies， 99.8% of which are SMEs， providing about 67% of work places and creating about half of the GDP. The Warsaw Stock Exchange， created in 1991， has become number one in Central and Eastern Europe， leaving behind the well-established markets such as Vienna. From the outset， we’ve built into the system prudential measures staving off excessive borrowing and future trouble，” he added that one of them was the introduction of an unprecedented debt break clause in the Constitution in 1997. Capping all debt incurred at 60% of GDP helped Poland avoid being infected with the post-2008 global economic and financial crisis. So， he thought no quantitative easing， money printing or stimulus packages have been needed in Poland.

But， he considered that both China and Poland need to enter the next phase of the modernization process.“Your discussion is about an economic remodeling， ours about creating new competitive advantages. Both our countries need to move up the value chain. Innovation， brand creation， technological advances are a must for us to prosper in the more crowded international environment. You have your 12th Five-Year Plan. We have our Poland 2030 longterm strategy. We should think about ways we could use our newly established strategic partnership as a tool of modernization. Rule of law， regulatory regimes， privatization and commercialization of state owned enterprises as well as local self-government reform and urbanization are all areas where we can benefit from each other’s experience.” He suggested.

Minister Sikorski believed that setting up a Polish-Chinese Intergovernmental Committee is an important step in advancing cooperation in various fields. He proposed that in the future this mechanism has potential to become one of the most significant communication platforms between our government agencies and business representatives. He also quoted the address from Chinese Prime Minister Wen Jiabao at the Economic and Trade Forum: “ China’s commitment to promote balanced growth of twoway trade with the view of doubling its volume in five years. We shall not let this momentum be sapped. We need to make sure that our economic， industrial， infrastructural， scientific， and technological cooperation indeed yield a bumper harvest.”

EU is China’s main trading partner and the bilateral relationship is crucial for the stability of the world economy. He said， “the issue which will decide about the future of globalization and the prospects for EU-China relations is that of fairness. In particular， facing the complex global situation， protectionism should be concerned.”And he also mentioned that “A journey of a thousand miles begins with a single step” — as the Chinese proverb goes， both nations should tend the relationship building.