Keynote Speech by Minister PENG Gang at the CCCEU 2024 Europe-China Business Summit (14th June 2024)

This article was initially published at the website of the Chinese Mission to EU.

Distinguished guests,

Ladies and gentlemen,

Dear friends,

Good afternoon!

It gives me great pleasure to join you at the CCCEU 2024 Europe-China Business Summit. I am delighted to be among friends, both old and new, for face-to-face exchanges on promoting China-EU pragmatic trade and economic cooperation, and preventing and defusing relevant risks. Here, on behalf of the Chinese Mission to the EU, I’d like to extend my warmest congratulations on the convening of the Summit.

Europe-China Markets: deeply intertwined and highly interdependent. The theme of this Summit is timely and meaningful. The world today has entered a new phase of turbulence and transformation, while the global economic recovery faces quite a few uncertainties. As major economies in the world, our cooperation bears strategic significance and demonstration effect to international community’s stability and global economic prosperity.

The essence of China-EU trade and economic relations is mutual benefit and win-win. Our economies have long been highly symbiotic. In 2023, China-EU trade in goods stood at 783 billion US dollars, with an average trade volume of nearly 1.5 million US dollars per minute. Our bilateral trade keeps deepening, improving people’s well-being and living standards and boosting social and economic development for both sides.

Our two-way investment is complementary and keeps expanding. Both Chinese and European enterprises continue to be optimistic about each other’s markets. Investment from Europe has promoted China’s reform and opening-up as well as its economic and social progress, from which Europe has also benefitted itself. At the same time, China’s trade and investment in new energy, electronics and other areas of Europe have accelerated its green and digital transitions.

As of the moment, the stock of two-way investment between China and the EU has exceeded 250 billion US dollars. EU’s investment in China was 10.6 billion US dollars in 2023, up by 5.5%, exceeding 10 billion US dollars for the second consecutive year. According to the survey released by the European Union Chamber of Commerce in China (EUCCC) in 2023, more than 90% of the surveyed European companies plan to make China their investment destination. The 2023 Annual Report of the China Chamber of Commerce to the EU (CCCEU) shows that more than 80% of the surveyed Chinese companies plan to expand their investment in Europe.

For some time, however, the EU has been selling the false narrative of de-risking, trade imbalance, so-called overcapacity in China’s new energy sector, subsidization, and so-called unfair competition. On the pretext of the narrative, the EU has used its trade defense instruments (TDIs), Foreign Subsidies Regulation (FSR), International Procurement Instrument (IPI) and other policy tools in a discriminatory manner, and opened intensive investigations into Chinese electric vehicles (EVs), locomotives, photovoltaics, wind turbines, security equipment, medical devices, etc. Such dense concentration of trade protectionist measures against China have sharply raised the risks of China-EU economic and trade frictions, which is rather worrying and aroused widespread concerns from China and the EU and even the business communities around the world.

I believe you all must have noted that just the day before yesterday the European Commission pre-disclosed the level of provisional countervailing duties it would impose on imports of battery electric vehicles (BEVs) from China. Many EU member states and a large number of European automobile manufacturers such as Mercedes-Benz, BMW, Volkswagen, and Stellantis have clearly opposed the EU’s action. The Chinese business community is deeply disappointed and firmly opposes it. The Chinese side has made clear its solemn position that it is highly concerned about and strongly dissatisfied with the EU’s practices. At the same time, we have noted that the European side also expressed its willingness to properly address the concerns of both sides through dialogue and consultation. We look forward to seeing the EU back to the right track of resolving concerns of both sides through dialogue, exchanges and consultation with the Chinese side as soon as possible.

As Minister in charge of trade and economic affairs at the Chinese Mission to the EU, here I would like to share a little bit more of my views on some trade and economic hot issues.

First, China-EU pragmatic trade and economic cooperation brings opportunities rather than risks. The economies of China and the EU are highly complementary. China’s mega-market and EU’s Single Market of 450 million population offer great opportunities to each other.  At present, de-risking promoted by some politicians is high on the agenda of EU’s economic and trade policy towards China. We understand that all parties have their own security concerns, but what matters is to set boundaries and prevent risks in a rational way. If one turns economic issues into political, ideological or security issues, expands the definition and extension of security issues without limit, takes normal trade and economic cooperation as risks, and treats China as a source of risks, these actions are not conducive to our bilateral cooperation of mutual benefit, to the EU’s own economic growth, nor to the stability and health of global industrial and supply chains. They will only turn de-risking into “de-opportunity”, “de-cooperation” and “de-growth”.

For a long time, quite a lot of European companies have made their voices against trade protectionism and expressed their wishes to maintain and expand trade and economic cooperation with China. Most European companies show such enthusiasm for China because they value China’s economic prospects and market potential. In their view, cooperation with China brings them opportunities rather than risks. We believe that even if the EU wants to prevent risks, it should give the initiative back to business and not let political decisions replace commercial choices. Now the world economy is closely intertwined. For us, the biggest risk is not to cooperate, and the biggest insecurity is not to develop.

Second, we should look at trade imbalance with an objective and rational view. Trade surplus or deficit is a result under the combined influence of macro-economic environment, international trade conditions, and the industrial structures and actual demand of the two sides. It is not imposed on one side by the other. Therefore, we should not simply attribute it to one side. Over the past years, China’s manufacturing sector has continuously gained competitive strength internationally. Chinese products with high quality and affordable prices have met the needs of both Europe and other markets, and have contributed to Europe’s green development. It is a natural result of market operations by companies from both sides and the international division of labor. It is also an independent choice made by consumers, which should not be restricted artificially or interfered with excessively. In fact, China has never deliberately sought trade surplus. Instead, China stands ready to import more products from the EU that align with its market demand. China welcomes European companies to enhance their business in China through ways like more active participation in the China International Import Expo (CIIE).  It is hoped that the EU could relax export restrictions on high-tech products to China as well, so as to jointly push for more balanced development of bilateral trade.

Third, the so-called overcapacity of China’s new energy sector is a total fallacy fabricated by some American and European politicians. Overcapacity is a comparative concept. It should be measured by supply and demand, global market and future prospect.

First of all, from the perspective of the supply and demand, in 2023, the production and sales of new energy vehicles (NEVs) in China reached 9.59 million and 9.5 million units respectively, basically striking a balance between production and sales, of which domestic sales account for 87.4% and foreign exports only account for 12.6%. China’s production capacity utilization rate has always been around 80%, comparable to the levels of other major industrial countries.

Next, as to the market, production and consumption should be viewed based on the global picture. Developed economies such as the United States, Europe, and Japan have long exported a large amount of goods to the world. Over 80% of the cars made in Germany, over 50% of the cars made in Japan, and over 25% of the cars made in the United States are sold to the international market. More than 80% of the chips produced in the United States are exported to other countries. Boeing and Airbus have long taken the lion’s share of the global market. If only 12.6% export of Chinese EVs are labeled as overcapacity, then it would be fair to infer that Europe and the United States have overcapacity to a pretty high level.

In addition, we need to take into account the future prospects. At present, the global new energy capacity is far from enough and there is no such overcapacity at all. According to calculations by the International Energy Agency, in order to achieve global carbon neutrality, NEV sales worldwide need to reach 45 million units by 2030 which is 4.5 times that of 2022. Several international organizations have reported that whether for the global response to climate change or the EU’s green transition, more new energy capacity and high-quality products are needed.

Fourth, China’s industrial subsidy policies are reasonable and legitimate. Using industrial subsidy policies to guide industrial development and adjust industrial structure is a common practice adopted by countries all over the world. What matters is the policies should be in line with WTO rules and always adhere to the principles of fairness, transparency and non-discrimination. China’s industrial subsidy policies are mainly directional, strictly abide by WTO rules, apply to all kinds of market entities, and all the enterprises can enjoy it equally. China has notified its relevant subsidies to the WTO timely and thoroughly. There is no subsidy prohibited by the WTO in China.

By contrast, the United States and the EU have significantly increased their subsidies in recent years. In many areas of shared subsidies, the subsidies introduced by the United States and the EU far outweigh that of China and often have a host of exclusive and discriminatory practices. For instance, the US introduced the Inflation Reduction Act, which clearly stipulates discriminatory subsidies and excludes EVs, batteries and critical minerals produced by other countries out of the subsidy. It obviously violates the WTO rules and is a typical action of protectionism. The European Commission has also approved a large number of subsidy programs.

Fifth, the one with competition and competitiveness. I believe that only fair, healthy and effective competition can improve competitiveness of enterprises and the market. For all the enterprises, foreign-invested ones included, China has long since transformed from a market purely for profits to a race field for companies to compete for strengths and core competitiveness. Mr. Joerg Wuttke, Former President of the EUCCC, once said that China is akin to a fitness club for European companies which have gained and benefited a lot from the Chinese market. I quite agree with him on that.

Competition is the natural attribute of a market economy. China’s reform and opening-up path, along with the global economic trajectory, have clearly shown that excessive protection cannot safeguard market and generate competitiveness. The edge of Chinese enterprises and manufacturing sector is rooted in the hard-working, innovation, and competitive spirit of generations of Chinese entrepreneurs.  It is accumulated through long-term market competition with continuous technological innovation and striving efforts.

From another perspective, Chinese products and enterprises coming to Europe will bring more healthy competition to Europe, improving the competitiveness of European companies and fostering its scientific development, corporate strength, and people’s well-being accordingly. 

Ladies and gentlemen,

Dear friends,

Last month, during the tri-lateral meeting with French President Macron and European Commission President von der Leyen, President Xi Jinping stressed that China always views its relations with the EU from a strategic and long-term perspective. It regards Europe as an important dimension in its major-country diplomacy with Chinese characteristics and an important partner on its path toward Chinese modernization. It is hoped that the China-EU ties could be promoted for a steady and sound growth. 

Looking ahead, China stands ready to work with the EU to promote our mutually beneficial cooperation. China will continue to leverage its advantages of strong innovation capabilities, great market potentials, well-developed infrastructure, complete industrial chains, and huge and high-caliber workforce to pursue a higher-level opening up. China will continue the efforts to provide better services for foreign investors, in order to make China a favored destination for foreign investment. China will make continuous efforts to make it easier for foreigners to work, to study, and to travel to and travel in China. China will continue to further foster a world-class business environment that is market-oriented, law-based and internationalized. We warmly welcome more and more European entrepreneurs to invest and do business in China.

I hope that all of you could make the most of the Summit as a platform for exchanges. Your insights and suggestions could not be more valuable for us to explore the potential of China-EU cooperation in various areas, promote our pragmatic cooperation for brighter prospects, and bring more benefits to our people.

In conclusion, I wish this Summit a complete success.

Thank you.