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Time to energize China-EU relations

By Luigi Gambardella | China Daily Europe | Updated: 2016-07-17 14:01

Both sides should uncap hidden potential using pragmatism and applying their talent, resources to industry and technology

Last year marked the 40th anniversary of diplomatic relations between China and the European Union. The two parties celebrated their shared achievements in political cooperation, economic development and people-to-people dialogue.

China and the EU are marching further on their path toward a comprehensive strategic partnership. The age of 40 is a fresh start in China's culture, indicating that by age 40, a person will have a better understanding of things and a clearer idea of what to do in life. It is a milestone for maturity and pragmatism.

The same can be applied here in the case of China-EU relations: It is time for the two sides to unveil the hidden potential, to face unaddressed issues and to realize ambitious dreams with a pragmatic approach hand in hand.

The largest potential cooperation between Europe and China lies in 5G technology, digital investment, Industry 4.0, e-commerce and startups.

Let us look at them one by one.

5G and the internet of things

There are already over 500 million people using 4G technology, comprising the world's largest internet market with over 700 million users. It will definitely take a leading role in the development of global 5G and the internet of things, which is the network of devices and other objects with software or sensors that allow them to connect. The first to ally with China will grasp the chance to be a forerunner, developing its own 5G and IoT capability at the fastest speeds and ensuring a large share in this new market.

Europe should be the one: We should maintain privileged relations with Chinese partners and promote joint actions both in the field of research and technology trials. Further concrete joint initiatives should be put in place, such as the first full 5G cities, located in Europe and China.

A digital fund

China has shown a strong commitment to the Juncker Plan, which is aimed at stimulating the European economy, announcing its will to contribute up to 10 billion euros ($11 billion). This sends a strong signal that China thinks Europe is a good investment. The EU should take advantage of this trust from its partner, use the money wisely and generate tangible results in the interest of both sides.

Digital is key to power up the economy. China is gearing up its economic growth through digitalization under its nationwide Internet Plus strategy, meant to integrate the internet with traditional industries, while the EU attaches great importance to the Digital Single Market strategy to revive its economy and regain competitiveness.

The Juncker Plan, combined with the entry of Chinese capital, provides a unique opportunity for Europe to create a joint digital fund with China, aimed at supporting small and medium-sized EU enterprises in information and communications technology or interested in helping transform traditional businesses into digital ones.

Industry 4.0

Manufacturing is about to undergo a digital revolution thanks to 5G and the introduction of new technologies. This is what Europe calls Industry 4.0. Think about how new applications are affecting our daily lives: artificial intelligence, 3-D printers and drones, just to mention a few. It will be an epochal moment, with disruptive consequences to traditional industries, similarly to what happened with Uber and the transport sector.

China has reacted to the new trend swiftly and is taking fast measures to adapt. European manufacturing must be ready as well. Creating an alliance with China, which is interested in increasing its investment and cooperation in Europe, can be a precious opportunity for European industry to accelerate its transformation.

E-commerce

China is the largest market for e-commerce in the world, with online retail sales totaling 3.9 trillion yuan ($583 billion; 529 billion euros) in 2015. Europe should focus on further strengthening its ties with Chinese e-commerce companies, and intensifying EU-China cross-border online trade.

Cross-border e-commerce also means huge potential for European SMEs to reach the expanding and increasingly demanding Chinese middle-class consumers. For example, in food and beverage, Italian products comprise only 1 percent of Chinese imports, versus 30 percent for US products.

Implementing Alibaba's proposed Electronic World Trade Platform, which would empower SMEs that had been largely left out of free trade, could be a very good start, but we need to explore more ambitious solutions, and take concrete measures to harmonize cross-border e-commerce rules and boost international transactions.

Startups

Startups can be seen as injections of fresh blood in the veins of an economy, carrying the enormous vitality needed for stronger performance. In China, 12,000 startups are registered every day. The cooperation potential is beyond imagination.

The ChinaEU association has created SilkCamp to explore such potential. The joint boot camp program aims to promote cooperation between European and Chinese startups in the high-tech and internet fields by providing support to navigate and scale up in each other's markets.

The author is president of ChinaEU, a business-led association that aims to strengthen joint research and business collaboration and investment in internet, telecommunications and high-tech between China and Europe. The views do not necessarily reflect those of China Daily.

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