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Stars and Dragons: The EU and China - European Union Committee Contents

Memorandum by Dr Nicola Casarini,* Marie Curie Research Fellow in the Robert Schuman Centre for Advanced Studies at the European University Institute Florence

  Science and technology have become, over the years, one of the central issues for bilateral cooperation between China and the European Union (EU). Chinese leaders have always emphasized that enhancing S&T cooperation with developed nations is a crucial factor for sustaining the country's modernisation process. Today, Europe is China's most important source of scientific expertise and advanced technology. EU-China cooperation in S&T is beneficial for both sides: for the EU and its Member States, as it advances Europe's role as a global centre in S&T affairs; for China, as it contributes to its economic growth and overall modernisation. Cooperation between the two sides has, however, evolved over the years, reflecting China's own advances in S&T.

    * Nicola Casarini obtained his PhD in International Relations from the London School of Economics.

    * Part of the material contained in this report draws from my book: Remaking Global Order: The Evolution of Europe-China Relations and its Implications for East Asia and the United States which will be published by Oxford University Press in Autumn 2009.


  In the 2001 blueprint for Medium to Long-term Social and Economic Development, the Chinese government singled out science and technology as the "primary production forces".[1]The necessity of narrowing the gap between China and the world's advanced science and technology nations figured among the main tasks. In 2004, the Chinese government adopted the 2020 Science and Technology Plan, with the objective of catching up with the developed countries and becoming a knowledge-based economy by 2020. In the outline of the 11th Five-Year Plan for China's National Economic and Social Development, approved in March 2006, it was stated that China will launch a number of major S&T projects, especially in ICTs, energy, water resources and environmental protection, biotechnologies, healthcare, industrial re-engineering, new materials, and space technology. Calling for a "scientific approach to development", the plan recognises that scientific research and innovation are key factors in increasing the overall technological level of industry and improving competitiveness across all sectors. Moreover, the Chinese State Council published an Outline of the National Programme for Long and Medium-term Development of S&T, indicating that the country's expenditure on S&T would account for 2.5% of GDP by 2020 and that the annual R&D budget would be around US$ 110 Billion, similar in percentage to that of the developed nations.[2] In 2008, China spent 1.45% of its GDP (up from 0.7% in 1998) on research and technological innovation (the highest percentage among developing countries). At the end of 2008, China would account for almost 3.5 million people engaged in various S&T areas, making this the largest S&T community in the world. Of these, around 1.5 million work on R&D related activities, putting China in second place after the United States.[3] In 2006, according to the World Intellectual Property Organisation (WIPO), China deposited 5,935 patents, (up 56.8% from the previous year) ranking eighth in the world.[4]

  2.  EU-China Knowledge Based Strategic Partnership

  Owing to China's advances in S&T, there has been a gradual shift from unilateral receipt of aid at the beginning of China's reform period in the late 1970s to the present environment of joint investment and research based on equality and mutual benefit, as in the case of high S&T projects such as ITER (the International Thermonuclear Reactor) and Galileo (the EU-led global navigation satellite system). Chinese leaders have highlighted on various occasions that cooperation in science and technology is a key element of the EU-China strategic partnership. In the 2003 China's EU policy paper it is stated that: "It is essential to promote China-EU scientific and technological cooperation on the basis of the principles of mutual benefit and reciprocity, sharing of results and protection of intellectual property rights."[5] In its last policy document on China, the European Commission recognised that scientific and technological cooperation is one of the "flagship" areas in EU-China relations.[6]

  Sino-European cooperation in S&T goes back to the beginning of the relationship and has greatly improved in recent times. The two sides launched their first science and technology cooperation programme in 1983. In 1998 an Agreement on Scientific and Technological Cooperation was signed and renewed in 2004 with the aim of linking research organisations, industry, universities and individual researchers in specific projects supported by the EU budget. A joint EU-China office for the promotion of research cooperation was established in Beijing in June 2001 to help Chinese scientists access the EU's Sixth Framework Programme (FP6—2002-06). In 2005, on the occasion of the 30th anniversary of the establishment of diplomatic relations between the European Community and China, the two sides held a high-level forum in Beijing after which they signed the Joint Declaration on EU-China Science and Technology Cooperation: Building a knowledge-based strategic partnership. The Joint Declaration highlights eight areas as specific themes of common interest: (i) environmental protection; (ii) ICTs; (iii) food, agriculture and biotechnologies; (iv) transport and aerospace, including Galileo; (v) urbanisation; (vi) health; (vii) socio-economic sciences; (viii) other joint platforms such as GRID (Global Research Information Database). EU-China knowledge-based strategic partnership is intended to provide the overall framework for a wide range of initiatives to establish cooperation on projects of common interest that will bring together companies, universities, and research institutes, as well as promote an increasing mobility of scientists, researchers and students.

  More recently, there have been attempts to link the EU Seventh Framework Programme (FP7) for Research, Technology and Development (RTD) for the period 2007-13 and the Competitiveness and Innovation Framework Programme (2007-13) with China's 11th Five-Year Plan (2006-10). The launch of the China-EU Science & Technology Year (CESTY) in October 2006 provided such an opportunity. China and the EU have also agreed to promote further cooperation in large science initiatives through early consultation (both in basic and applied R&D) and to open their research programmes to accommodate the increasing number of joint research projects. Chinese researchers are invited to participate in the EU-funded FP7 and to submit applications to the recently established European Research Council (ERC). In turn, China is attracting Europeans into projects under the Chinese National High-tech and Basic Programmes (P863 and P973) and joint calls are planned to combine funding under the FP6/FP7 and P863/P973 programmes, especially in research areas of mutual interest. To increase mobility within the scientific community and amongst university students, research institutes have been encouraged to provide better conditions for mobility as well as grant joint degrees for students studying on the two continents.

  With the establishment of strategic partnership between the two sides in 2003, a strategic element would be added to already growing S&T cooperation. This was best epitomised by the political agreement on the joint development of the Galileo satellite system, viewed by Chinese leaders and officials in the European Commission as a "model" for S&T collaboration between the EU and China.[7]


  The European Union and the European Space Agency (ESA), kicked off the Galileo project in March 2002. Galileo is a Global Navigation Satellite System (GNSS) that will offer both civilian and military applications once it becomes operational (which is now expected to be in 2013).[8] It is deemed to be an alternative to the dominant US Global Positioning System (GPS), though the EU and the US have reached an agreement on the interoperability of the two systems in June 2004.[9] Galileo is designed to encircle the globe with 30 satellites in medium earth orbit, comprising 27 operational satellites and three reserves, plus two control centres on the ground.[10] According to the European Commission, the estimated cost of the project would amount to €3.4 Billion.[11] It will provide users, ranging from aircraft and shipping to cars and trekkers, with a navigational fix accurate to within just one metre.

  On 30 October 2003, an agreement was reached for China's cooperation and commitment to finance 200 million euros (out of an estimated total cost at that time of 2.2-2.4 Billion euros) of Galileo. In the first phase (ie the manufacturing and launching of the first four satellites of the constellation) Beijing pledged to spend 70 million euros of which five million euros for the entrance fee. The Cooperation Agreement on Galileo between the European Community and the PRC provides:

    "for co-operative activities on satellite navigation in a wide range of sectors, notably science and technology, industrial manufacturing, service and market development, as well as standardisation, frequency and certification".[12]

  In February 2003, a joint Sino-European satellite navigation cooperation centre had been opened in Beijing. The China-Europe Global Navigation Satellite System Technical Training and Co-operation Centre (CENC) would serve as a focal point for all S&T activities on the Global Navigation Satellite System (GNSS), as well as promote industrial cooperation with special attention given to development of applications. The CENC is jointly run by the Chinese Ministry of Science and Technology, the Chinese Remote Sensing Centre, the European Commission and the European Space Agency.

  Cooperation in Galileo is meant to facilitate European businesses' entry into the promising Chinese aerospace market while also promoting the EU as a space power and a centre of gravity in international high S&T affairs.[13] This form of collaboration is also benefiting China, as it allows Chinese companies to acquire know-how and advanced space technology while fostering Beijing's space power internationally.

  The EU-designated Chinese industrial partner for the Galileo project is the National Remote Sensing Centre of China (NRSCC). The NRSCC, a coordination body under the Chinese Ministry of Science and Technology, is mandated to choose domestic research institutes and companies to undertake relevant research and development of Galileo applications in China. In October 2004, the two sides signed a Technical Agreement for the first phase of the implementation, including manufacturing and launch, of the first four satellites and a substantial part of the ground infrastructure.[14] The Agreement included details regarding the amount of money that the Chinese government would invest in Galileo (€70 million at that time) with the provision that these sums will remain inside the country and serve to build the Chinese infrastructure, components, and services for the satellite navigation system. Moreover, the Agreement contained clear indication that the rights of the technology developed while working on Galileo would remain the property of the National Remote Sensing Centre of China.

  By July 2008 (when the publication of the ESA's tender package for the second phase of the implementation would leave out Chinese contractors) around 35 million euros had been contracted to Chinese industries and research institutes for developing various applications of the Galileo system in China, including: Galileo Fishery Application (FAS); China Galileo Test Range (CGTR); Project of Location Based Services Standardization (LBS); Galileo Laser Retro-Reflector (LRR); Search and Rescue Transponder (SART); Early Galileo Service in China (EGSIC); Forward Link Service End-End Validation (EEV); Medium-altitude Earth Orbit Local User Terminal (MEOLUT).[15]

  The number of projects and the amount of money invested so far would make China the most important non-EU partner in Galileo. Chinese officials at the MOST and CENC are adamant in recognising that without the active involvement of European partners and European scientific expertise/know-how, including technology travelling to China, the local sub-contractors (companies and research centres) would have been unable to complete the above projects.[16] Among EU member states, French, German and Italian aerospace companies would be at the forefront of collaboration with Beijing. Since the late 1990s, European companies have sold telecommunication satellites and other space technologies to Beijing. Furthermore, some European commercial remote sensing companies (like their American counterparts) have been selling spatial imagery to China. According to analysts and official documents, some low-resolution micro-satellites have been sold by France to China.[17]


  Cooperation in the Galileo project is assisting China in fostering the development of its own, independent satellite navigation system. China has launched so far a number of navigation satellites (the high-resolution Ziyuan-2 and the Dongfanghong series, multi-function geostationary satellites) which have been employed in numerous areas, including mapping, telecommunications, water resources monitoring, traffic and transport, fishery, resources prospecting, forest fire fighting, and national security. In September 2007, the Chinese government unveiled plans for a Chinese GNSS announcing the intention to convert its previous regional system made up of the various above-mentioned geo-stationary orbit satellites into a fully-fledged global navigation satellite system: the Compass—or Beidou in Chinese (which stands for the Big Dipper constellation). The Beidou is set to become a global positioning system like the American GPS (and Galileo, once operational) and is meant to be used for both civilian and military purposes. Like the American GPS, the Beidou is not open to the outside world (unlike Galileo). For China, the development of an autonomous satellite navigation system stands as a powerful symbol of great power status, something to which the country's leaders (and the population as well) are very sensitive.

  The development of Beijing's own satellite navigation system is raising fears of a satellite challenge from China, triggering countermeasures from Europe. On 1 July 2008, the European Space Agency (ESA) published the procurement criteria for the second phase of Galileo, ie the manufacturing, services and launch of the remaining 26 satellites of the European satellite system.[18] In the document, the tender would be limited to a select number of countries divided up in two groups. In the first group—the inner circle with priority access to the procurement scheme—there are all the 27 member states of the EU (as the procurement is entirely financed out of the European Community budget). In the second group—the outer circle—there are a number of countries which can participate to the tender if they are signatories of the pluri-lateral Agreement on Government Procurement (GPA) adopted in the framework of the WTO.[19]

  As China is not a party to the GPA, its industries and research centres would not be able to access the second phase of the public procurement for Galileo. The publication of the ESA's document was a slap in the face for China which had always regarded space and satellite navigation cooperation with the EU as a model for Beijing's international cooperation in big S&T projects.

  The Europeans appear to be more and more wary of lack of significant progress in China's legislation, and actions, toward enforcement of IPR and increasingly preoccupied that the Chinese would use European advanced space technology to develop their own satellite system and challenge Galileo itself. The Beidou is now expected to be completed with 30 satellites before 2015, with 10 or more new satellites scheduled to be launched in the period 2009-11.

  The satellites put into orbit by China so far (as part of the Beidou system) seem to be using frequencies previously allocated to Galileo. Back in 2000-01, EU and Chinese diplomats would join forces at the International Telecommunication Union (ITU) in Geneva to obtain the frequencies for Galileo. However, while the Galileo project was slowed down in Europe due to problems encountered by the private-public partnership, the Chinese continued to work on research, manufacturing and service applications for Galileo in China as well as on their own system. Since 2006-07, there seems to have been an overlap between the Galileo Public Regulated Service (PRS) and some Beidou frequencies, in a situation where the Chinese system appears to be in a more advanced phase of development than Galileo, with at least 7-8 satellites in orbit (the last having been launched on 15 April 2009) against only two for Galileo. While US and EU policy makers (and technicians) have met various times to discuss the interoperability, and frequency compatibility, between their two systems following the transatlantic summit in Ireland in June 2004, EU and Chinese officials have not yet resolved their outstanding issues, including the question of signal compatibility discussed at the last bilateral technical working group in December 2008. As a result, while EU-China satellite navigation cooperation continues on the ground, the two sides' policy makers are currently reviewing their collaboration in light of recent changes in their respective GNSS policies and programmes.


  The case of satellite navigation represents a good example of the opportunities, and the challenges, inherent in EU-China S&T cooperation. The EU and its member states have substantial economic interests in developing S&T ties with China and collaborate on joint big science research projects such as Galileo. By doing that, they can promote scientific advances and take advantage of the seemingly limitless opportunities of the Chinese market with the overall aim of helping maintain Europe's global competitiveness and socio-economic welfare position. Similarly, scientific and technological cooperation with Europe is highly strategic for the Chinese leadership in order to modernise, improve the country's competitiveness across all sectors, and deliver higher standards of living to the Chinese population.

  However, since the beginning of the reform period, China has made dramatic achievements in the development of S&T. Thanks to domestic efforts and international cooperation with developed nations—in particular the European countries—China has succeeded in gradually upgrading the scientific and technological content of its productions. As a result, Beijing is now in a position to seriously challenge Europe on high-tech sectors such as satellite navigation. This provides EU policy-makers with the challenge of how to develop further the cooperation with China in science and technology and, at the same time, seek to manage China's emergence as a strategic competitor in high-tech sectors.

April 2009

1   Report on the Outline of the Tenth Five-Year Plan for National Economic and Social Development, delivered by Zhu Rongji, premier of the State Council, at the Fourth Session of the Ninth National People's Congress, 5 March 2001. Back

2   Data from interviews and personal consultations at the Chinese Ministry of Science and Technology (MOST) and the Chinese Academy of Sciences, Beijing, August 2008. See also: Yang Yang, "China and the EU: Science and Technology Cooperation as a Binding Factor in Partnership", in David Kerr and Liu Fei (eds.), The International Politics of EU-China Relations, Oxford, Oxford University Press, 2007, pp. 280-288. Back

3   Data from interviews and Yang (2007), p. 285. Back

4   Le Monde (Supplement Economie), 6 March 2007, p. vii. Back

5   China's Ministry of Foreign Affairs, China's EU Policy Paper, October 2003 (Title III). Back

6   European Commission, EU-China: Closer Partners, Growing Responsibilities, Brussels, COM 632 final, 24 October 2006. Back

7   Interview, Chinese Ministry of Science and Technology (MOST) and European Commission delegation in China, Beijing, August 2008. Back

8   For more details on the technical, military and political aspects of Galileo see: Gustav Lindstr½m and Giovanni Gasparini, The Galileo Satellite System and Its Security Implications, European Union Institute for Security Studies, Occasional Paper n. 44, April 2003; see also: European Community, Regulation (EC) n. 683/2008 of the European Parliament and of the Council of 9 July 2008 on the futher implementation of the European satellite navigation programmes (EGNOS and Galileo), Brussels, 9 July 2008. Back

9   Agreement on the promotion, provision and use of Galileo and GPS satellite-based navigation systems and related applications (between the European Community and its Member States, of the one part, and the United States of America of the other part), Dublin, 28 June 2004. On 26 July 2007, the United States and the European Union announced their agreement to jointly adopt and provide an improved design for their respective Global Navigation Satellite System (GNSS) signals. These signals will be implemented on the Galileo Open Service and the GPS IIIA new civil signal. Back

10   European Commission, Communication from the Commission to the European Parliament and the Council: Progressing GALILEO: re-profiling the European GNSS Programmes, COM (2007) 534 final, Brussels, 19 September 2007. Back

11   Ibid., p. 3. Back

12   Cooperation Agreement on a Civil Global Navigation Satellite System (GNSS)-Galileo-between the European Community and its Member States and the People's Republic of China, Beijing, 30 October 2003, p. 2; for more details on the political and strategic implications of EU-China satellite cooperation see Nicola Casarini, The Evolution of the EU-China Relationship: From Constructive Engagement to Strategic Partnership, Paris, EUISS, Occasional Paper n. 64, October 2006, pp. 26-29. Back

13   David Braunschwig, Richard L. Garwin, and Jeremy C. Marwell, "Space Diplomacy", Foreign Affairs, Vol. 82, n. 4, July/August 2003, pp. 156-164; Nicholas Peter, "The EU's emergent space diplomacy", Space Policy, Vol. 23, 2007, pp. 97-107. Back

14   Galileo Programme Technical Agreement between the National Remote Sensing Center of China and the China Galileo Satellite Navigation Corporation, Beijing , 9 October 2004. Back

15   For more details see: Nicola Casarini, Remaking Global Order: The Evolution of Europe-China Relations and its Implications for East Asia and the United States, Oxford, Oxford University Press, 2009 (forthcoming), in particular Chapter 5. Back

16   These claims are based on interviews conducted by this author with officials at the MOST and CENC in Beijing in August 2008. Back

17   Council of the European Union, Eighth Annual Report on the EU Code of Conduct on Arms Exports, 2006/C 250/01, Brussels, 16 October 2006, pp. 265-266. Back

18   European Space Agency, Galileo Full Operational Capability (FOC) Procurement: Tender Information Package (ESA-DTEN-NG-DOC-03087), Paris, 1 July 2008. Back

19   On the pluri-lateral Agreement on Government Procurement see Back

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