Further supplementary memorandum from
Julia Longbottom, Head of Far Eastern Group, Foreign & Commonwealth
Office
PARTNERSHIP AND
COOPERATION AGREEMENT
The last round of negotiations on political
articles of the PCA took place in late September. Text on Taiwan
has been exchanged but is yet to be negotiated formally. Elements
of the text on human rights have been agreed but agreement on
the full article is likely to take some time yet. Market access
issues are pursued through official-level dialogue; at yearly
meetings of the Joint Committee; and at the annual High-Level
Trade and Economic Dialogue.
Beyond discussion of specific articles during PCA
negotiations, the PCA as whole is always discussed during high-level
bilateral meetings. A review of progress will form part of the
agenda for the upcoming EU-China Summit next month. We continue
to encourage both the Commission and China to conclude negotiations
as soon as possible in order to set the relationship within a
comprehensive framework that will allow cooperation to develop
positively and deepen engagement between the two sides.
CLIMATE CHANGE
The EU and China have a close and constructive
relationship on the issue of climate change, with sustained dialogue
taking place through both the European Commission and Member States.
Coordination of European positions through the Commission Representation
in Beijing ensures coherent communication with Chinese interlocutors,
and adds to the effectiveness of EU-China cooperation.
This cooperation has contributed to the positive
positions that both the EU and China have adopted ahead of the
Copenhagen climate conference in December. We hope that this positive
dynamic will be furthered by the EU-China Summit next month. We
support Summit plans for a high-profile EU-China Partnership on
Climate Change, and a new Low Carbon Taskforce, which will look
at ways the EU and China can work together to promote low carbon
development in China. This will include further funding for the
EU-China Near Zero Emissions Coal (NZEC) initiative, and support
for Low Carbon Zones in China.
The International Energy Agency's carbon capture
and storage (CCS) Roadmap, published on 12 October, brings home
the imperative of having CCS deployed by 2020 in developed and
developing countries. The EU-China NZEC project will play a vital
role in the development and deployment of CCS technology in China.
We are working with EU and Chinese partners to secure an accelerated
timetable for the NZEC project with the aim of getting demonstration
plants operational by 2015. We hope the next EU/China Summit will
agree a Memorandum of Understanding to that effect.
We and our EU partners very much welcome President
Hu's speech to the UN on 22 September at which he committed to
a cut in China's carbon dioxide emissions per unit of GDP "by
a notable margin by 2020 from the 2005 level". This was an
important signal of leadership, which has injected momentum into
the UN climate change negotiations. We will work with other members
of the EU negotiating team to build on this. We are also encouraged
by recent signals of China's strengthened interest in the economic
opportunities offered by the transition to low carbon, including
the recent addition of new low carbon zone pilot projects in a
number of cities and provinces. We are working with Chinese and
EU partners to develop and accelerate these projects.
HUMAN RIGHTS
The mechanism through which the EU raises issues
of concern is its bilateral human rights dialogue with China,
as well as through political lobbying and project work. The last
round of dialogue took place in May this year. The next is scheduled
for late November. The review of that dialogue will be relevant
to the way in which we process the concerns raised at the Universal
Periodic Review (UPR). The review, covering the period 2005-Spring
2009, has recently been completed and is now subject to evaluation
by the human rights working group, COHOM, in Brussels. Overall
we consider it a useful report and it has been agreed that missions
in Beijing should be invited jointly to consider the report and
revert to COHOM, keeping the Asia working group informed. Once
this has been completed we will advise on the outcome and conclusions
drawn.
A number of Member States maintain their own human
rights dialogue with China, including the UK, and we can expect
individual Member States to monitor the implementation of their
own UPR recommendations through their own human rights dialogues
with China.
CHINA'S
ECONOMY
The Chinese economy has responded smartly to
the fiscal stimulus package, supported by a dramatically higher
volume of state bank lending, since the end of last year. It looks
increasingly likely that the economy will grow by at least 8%
this year, the minimum rate that the government believes is necessary
to generate sufficient new employment and assure social stability.
Although there are some longer-term questions about the sustainability
of high levels of growth in China—particularly if the revival
of world trade is sluggish and there is slow progress in rebalancing
the economy towards domestic consumption—most forecasters
expect China's economy to continue growing relatively robustly
in the year ahead.
China, which is poised to become the world's largest
exporter, has generally refrained from new protectionist trade
and currency responses to the global economic crisis. Chinese
exporters nonetheless continue to benefit from an undervalued
currency (which has depreciated recently in effective terms, thanks
to its de facto peg with the US dollar), cheap state bank credit,
and other subsidised inputs. Chinese exports are increasingly
the target of anti-dumping complaints from the EU, US and other
trading partners. There remain some important barriers to foreign
participation and inward investment in China, despite the generally
low level of tariff protection, and China's public procurement
favours domestic suppliers.
The EU retains a generally high level of openess
to Chinese exports and investment, and is China's largest trading
partner. The willingness of the EU to take further measures to
benefit Chinese exporters and investors is likely to depend on
China's willingness to respond constructively to the concerns
of EU businesses about market access and the business environment
in China.
I hope the Committee finds this useful and I
look forward to reading their inquiry report.
3 November 2009
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