Ladies and Gentlemen,
It is a pleasure for me to be here with you today for many reasons. The economic miracle of China started in Guangdong province. The European Union and many EU investors have put their confidence into China’s determination to grow and to progress. And many have done so in Guangdong.
Guangdong Province has been a hub for EU direct investment in China. Since the year 2000, hundreds of EU investments came to this province investing over USD 18.7 billion. This is 13% of all EU investment in China. Our EU business community in Guangdong is one of the most vibrant and prominent, bringing innovation and know-how, employment and tax-revenue.
The South China Chapter of the European Chamber of Commerce has more than 300 members covering the entire South China region. The EU chamber is an active partner of the municipal and provincial governments. I look forward to our business to government meetings later today, with you governor MA Xingrui, and with your government.
For EU business in Guangdong and Foshan, close and trustful cooperation with, province and municipality is essential. And the success and prosperity of Guangdong and Foshan is in our interest as much as it is in yours. However, we do not operate in a vacuum, and the success and prosperity of EU-China relations is equally important.
So let me turn first to this wider picture of EU-China relations before turning to investment and innovation questions.
As two of the three biggest economies and leading traders in the world, the EU and China have a deep and comprehensive strategic partnership. Annual summit meetings cover all aspects, political, trade and economic, and people-to-people relations.
The latest summit in June 2017 has produced a number of outcomes in diverse areas like a dialogue on state-aid-control, joint investments in SMEs, cooperation on energy, cooperation on transport infrastructure projects, customs cooperation, cooperation on the protection and enforcement of intellectual property rights, decisive steps towards protecting geographical indications, cooperation on research an innovation, the EU-China tourism year 2018, and the EU-China blue year 2017.
We can and do work well together in many areas.
The facts show that the EU and China have a shared interest in an open trading system. Trade in goods between the EU and China is worth over €1.4 billion a day. EU exports to China amount to €170 billion and imports from China were €345 billion in 2016. Bilateral services trade shows a positive balance for Europe of €10.9 billion in 2015.
EU firms invested over €141 billion in China between 2000 and 2016. The Chinese investment stock in the EU for the same period totalled over €110 billion.
Trade mean jobs and prosperity. So we have every interest, together, to be champions of openness for investment and for innovation, to demand solutions at national level and to create solutions at provincial and municipal level.
The EU is a leader of free and fair world trade. The EU commitment to the WTO is widely recognized. The EU pushes forward with a vast and positive agenda of trade agreements. And the EU is positively addressing the challenges of globalisation to make it fair and sustainable.
President Xi has set-out a grand vision for open globalisation in his speech in Davos. The reform agenda of the third plenum, and of State Council Documents Nr. 5 and Nr. 39 (2017) describes an ambitious programme to achieve exactly this: True and meaningful openness of China to foreign investment, equal access to funding, or to public procurement to name but a few.
The EU wholeheartedly welcomes this commitment and we are looking forward to see its full implementation. It will be an important signal to the world as we see total investment to China slowing by 5% during the first half of 2017, and even by 23% from the EU to China.
Together, the EU and China also negotiate a bilateral investment agreement. Early and ambitious conclusion of these negotiations would also send a clear and positive signal of reciprocity and more openness.
Such true national openness will be important for Guangdong and Foshan which always have played a leading role in China’s impressive economic development. Guangdong, Foshan and EU investors here need this space for the next phase of economic development.
We all need the right inviting ecosystem for investment, and we all need the right inviting ecosystem for innovation.
The fact that so many EU companies came to Guangdong and to Foshan speaks for itself.
The commitment of EU business here also shows itself in the thoughtful broad recommendations which the European chamber makes to Guangdong province and to Foshan for example on the three flows:
To lower the barriers for migrant workers and foreigners,
To improves customs operations (we also call this trade facilitation, and the EU has plenty of experience here), and
To increase internet speed and to guarantee free flow of commercially relevant information.
These 2020 goals present a unique opportunity for Guangdong and Foshan to attract further substantive investment.
Chinese leaders highlight innovation as the corner stone for sustainable growth over the coming decades. China is dedicating an unprecedented amount of funding to R&D as large as 2,1% of its GDP (i.e. USD 232 billion) in 2016.
IPR spending to overseas owners rose to $24 billion in 2016 from $1.94 billion in 2001, an annualized increase of about 18 percent. In the first half of this year, the amount rose 23 percent year-on-year to $14.3 billion.
And the EU and China have developed an intense cooperation on Research and Innovation.
Research institutes, universities and innovative companies from Guangdong province are active participants in EU research and innovation programmes. EU programmes cover information and communication technologies, agriculture, environment, aviation, space, health, nanoscience and technology, energy, transport, and mobility of researchers.
Private partnerships and cooperation under EU Members States research Programmes are also well developed.
For innovation, and in particular for foreign investors to come and bring their know-how and to continue innovating, the right environment is crucial.
Again, the constructive specific recommendations of the EU chamber point in the right direction, among which I would highlight here the call for effective IPR protection and enforcement at provincial and municipal level.
Between the EU and China, we are very keen to support these efforts. Our cooperation programme IP Key does exactly this:
Mofcom announced on 1st September a new draft document on protecting IPRs of foreign companies in China. The focus here is to intensify the crackdown on online IPR infringement and stealing business secrets. We welcome this move.
But, more can be done to create more opportunities for innovative foreign investors, investors that bring know-how, jobs and revenue: For example address legislation that makes it difficult for those investors to come (e.g. the high and new technology enterprises law whose tax reductions incentivise IPR hand-overs, the law on scientific and technological progress which makes research funds contingent on Chinese ownership of the resulting technology, or the vast cyber policies which risk to stymie innovation in addition to unresolved cost and compliance questions).
For Guangdong and Foshan, European business the EU chamber are positive partners whose key recommendations will contribute to making this a more attractive place for investment and innovation.
We have much to gain by working together. We are eager to listen to your experience and your ideas.
You can count on our support in this crucial endeavour which is a top priority in EU-China relations. Your discussions today will certainly contribute to this important goal.