Normandy in Participative Building of “One Belt One Road”

  Time:2015-06-26   Hits:0

Chi Fulin

June 12, 2015

 

The one belt one road initiatives aim to more closely bridge the well-developed economic circle of Europe and the vibrant economic circle of East Asia through deepening inter-connectivity. Normandy used to be a vital node in Europe for the ancient Silk Road and the Maritime Silk Road; it was also one of the most important hubs for trade and cultural exchanges between China and Europe. Today, Normandy still has a pivotal role to play in Europe and Asia jointly building the Belt and Road.

1. Normandy’s pivotal role in driving forward the process of the proposed China-EU FTA

In view of the practical need to more closely connect Europe and Asia, accelerating the building-up of an inclusive FTA network between China and/among countries along the Belt and Road as well as between China and Europe, will create important platforms for continuously expansion of bilateral trade and investment between them.

First, the Belt and Road initiatives aim at promoting FTA in a broader scope. Confronted with complex and profound changes in the global economy, Europe and Asia jointly building the Belt and Road will contribute to the formulation of a large integrated Eurasian market, and further deepening of the trade and investment liberalization between Europe and Asia. In the coming 5 to 10 years, improving infrastructure connectivity along the Belt and Road, and accelerating expansion of the Eurasian FTA network, will be important routes for pragmatically advancing Eurasian economic integration.

Second, the Belt and Road initiatives also aim at advancing the China-EU FTA process. China and EU are two of the largest economies in the world. Although the aggregate economic size of China and EU accounts for 1/3 of the world’s total, their bilateral trade only accounts for 1.5% of the world’s total, leaving a huge untapped potential for China-EU trade cooperation. In the coming years, if the proposed China-EU FTA negotiation is to be put on the agenda in order to further liberalize their trade and investment, trade between the two economic giants may well grow at an annual rate of 9%, and by 2020, their bilateral trade will amount to 1 trillion US dollars. According to an HSBC research report, French enterprises in China will see their value added growing at an annual rate of 8% between 2016 and 2020. Once the envisaged China-EU FTA is signed, export of France, Germany and other EU member countries to China is sure to further expand.   

Third, Normandy has an important bridging role to play in advancing the process of the proposed China-EU FTA. Normandy is an important joint of junction between European continent and Asia. Currently, Haute-Normandie and Basse-Normandie have already become sister provinces for China’s Zhejiang and Fujian provinces respectively. They have been continuously deepening their cooperation in areas related to building the 21st Maritime Silk Road such as ports, shipping and maritime economy. With their advantageous location and their sea, land and air transportations extending in all directions, Haute-Normandie and Basse-Normandie will have a bigger and higher-level role to play in the participative building the belt and road. This will be a unique role in improving China-EU interconnectivity and in advancing the process of the proposed China-EU FTA. 

2. Normandy’s pivotal role in deepening China-EU service trade

The basic orientation of China’s economic transformation and upgrade during its 13th Five-Year Plan period is to form a new economic structure with the service sector as the key pillar industry. Therefore, China’s service market has a huge potential for China-EU cooperation. In the coming years, China will speed up opening of its service sector and development of its service trade in the process of participative building of the Belt and Road. This is sure to add more favorable conditions for advancing the process of the proposed China-EU FTA.

First, China will focus on promoting service trade. As the second largest economy in the world, China’s service trade is rather small and takes a tiny proportion of its total trade. In 2013, the global service trade accounted for more than 20% of the total, while that of China only accounted for 11.5% of its total trade, 8.5% lower than the world’s average. Opening up its service sector is not only an intrinsic requirement by China’s economic transformation and upgrade, but also a new highlight in better connecting the Chinese market with the European market in particular and with the global market in general. This will be one of the decisive factors for advancing the process of the proposed China-EU FTA. The Belt and Road initiatives thus will effectively increase the share of China’s service trade. It is widely anticipated that China’s service trade will continue to grow at an annual rate of more than 10% in the next 6 years. And in 2020, the total volume of China’s foreign trade in services will doubled, expanding from 540 billion US dollars in 2013 to 1 trillion US dollars. As a result, its foreign trade in services will take up 20% of its total foreign trade, reaching the world average in 2013. Certainly, all this will depend on the extent to which China will open its service sector and also on the lifting of service trade barriers of developed economies.

Second, China’s opening-up of its service market will unleash huge potential for China-EU cooperation. From 2001 to 2013, the annual growth rate of value added of China’s service industry was 10.6%. It is estimated that this growth rate would not be lower than 10% from 2015 to 2020. It is highly likely that the total size of China’s service industry will expand from 30.7 trillion RMB in 2014 to 54 trillion RMB in 2020. And China’s huge consumption demand for services will remain a strong driver for economic growth not only in China but also in EU and other parts of the world.

In the next 6 years, if China and EU make joint efforts to advance the process of the proposed Chin-EU FTA with the service sector as the focused area, facilitate market entry and promote the combination of China’s huge service market demand with EU’s rich human resources, service producing capacity and advanced technology, a new driver will be created for EU economic recovery and growth, On the condition that China’s foreign trade in services reaches 1.2 trillion US dollars and that the share of service trade in the total trade between China and EU rises from 13.2% in 2013 to 20% in 2020, the total volume of service trade between them will be as large as 200-220 billion Euros.

Third, Normandy’s important role in China-EU service trade. With its advantages in advanced technology, chemical engineering, electronics, agriculture and husbandry, and higher education, Normandy can conveniently deepen its economic and trade cooperation with China’s Pilot Free Trade Zones in Shanghai, Fujian, Tianjin, and Guangdong, and takes the lead to further advance trade facilitation and liberalization in service sector. This will help Normandy to become a going-first area of the envisaged China-France FTA and the proposed China-EU FTA. In this way, Normandy will play a unique role in advancing the process of both the envisaged China-France and the proposed China-EU FTA.

3. Normandy’s role in building a China-EU think tank alliance for the Belt and Road

Europe and Asia are commonly confronted with many problems and contradictions in joining hands to build the Belt and Road and in promoting trade and investment liberalization across Europe and Asia, which has created the need for think tanks in Europe and Asia to work together.

First, a China-France think tank alliance and then a China-EU think tank alliance will help provide intellectual support for joining hands in building the Belt and Road. My suggestion is that, on the basis of this ongoing forum, a China-France think tank alliance can be established and then expanded into a China-EU think tank alliance. With these in place, multi-layer exchange and cooperation mechanisms/platforms can be set up and institutionalized, such as think tank forums on belt and road, joint research projects and jointly designing cooperation programs. These mechanisms can be used to provide consulting services for bilateral and multilateral cooperation in the participative building of the Belt and Road.

Second, think tanks in both China and EU can start independent and objective joint studies of the feasibility of the proposed China-EU FTA as early as possible. I would like to propose that a feasibility study be launched as soon as possible. On the basis of in-depth analysis of the megatrends of the world economy and global trade as well as the potential of investment and trade cooperation between China and EU, Chinese think tanks and EU ones can submit policy recommendations respectively to their governments.

Third, Normandy has a unique role to play in promoting China-EU think tank cooperation. On one hand, Normandy has wide connection and cooperation with its Chinese counterparts and has favorable conditions to bridge think tanks in China and France as well as between China and EU. On the other hand, Normandy has widely engaged in cultural exchanges with many of China’s provinces, which is an important advantage for Normandy to play a leading role in promoting cooperation of Chinese think tanks with their French and EU counterparts.

As one of the most developed countries, France has long been well recognized as a model of free market economy and an important force of European economic integration. In the future, France can play an indispensably important role in promoting trade and investment liberalization between China and EU. I am quite confident that Normandy will act as a pioneer in promoting free trade between China and France, and a pioneer in promoting free trade between China and EU.

 

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