by
Martin Banks
But Ingeborg Graessle, a German Member of the European Parliament, insists that a "carefully initiated, problem-oriented dialogue" is needed between the two sides.
The centre right politician says this is vital to develop a "mutual understanding" and "common solution."
"That is what can help to overcome the inefficiencies of the EU-China partnership," she said.
In an exclusive interview with EBR, Graessle, said that as a member of Parliament's delegation for relations with the People´s Republic of China she is "eager to better understand this large and diverse country and to foster the relations to China."
"As I see it, the wish for a European-Chinese Partnership is mutual. Both partners are longing for a better cooperation. However, for Europe, foreign policy is both, about values and interests. This is what makes the functioning of the EU-China partnership at times ineffective and reciprocally provoking."
Graessle says that next to good economic relations and flourishing trade, peace in the region is of "vital importance."
As an example, she cites the peaceful coexistence between Taiwan and China, saying this is "as important" as good relations between China and Japan.
Graessle, who chairs the Parliament´s influential budgetary control committee, describes the current Chinese economic policy is "impressive."
"Within only a few decades, China has succeeded to set its economy on a sustainable growth path and has lead millions of its citizens out of poverty."
From a German perspective with the Wirtschaftswunder-experience and the concept of `Sozialer Marktwirtschaft´ (social market economy), she believes that besides efforts to establish a "free, output-oriented, competitive" market economy in China, other issues need "constant" attention.
These include social security, social justice, social peace and ecological sustainability.
"In my opinion," she says, "a functioning rule of law with clear property regulation and the adherence to democratic values and human rights are critical pillars for long-term success."
The MEP asserts that corruption and nepotism are "paralysing venoms" for economic and social development.
"Tackling these issues will be challenging, but eventually beneficial for China."
On the economic front, Graessle is not sure whether the Chinese input factor driven growth has come to an end, yet.
"However," she adds, "in the long-term, the reallocation of capital and labour will only provide for growth to a certain point. At this point, input factor efficiency and innovation driven economic growth will need to be pushed into the centre of economic policy."
She goes on, "Anyway, there is still an enormous growth potential for China."
Graessle is tipped to lead the China delegation, which was established following the first direct elections in 1979. Inter-parliamentary meetings have being taking place since 1980.
EU relations with China were established in 1975 and are governed by the 1985 EU-China Trade and Cooperation Agreement. The EU is China’s biggest trading partner, while China is the EU’s largest source of imports and second largest two-way trading partner.
Annual summits and regular political, trade and economic dialogues are held, including over fifty thematic dialogues and agreements.
The delegation´s main task is to maintain relations with the National People's Congress (NPC) through regular inter-parliamentary meetings. It is also the focal point for relations with the Legislative Councils of the Special Administrative Regions (SAR) of Hong Kong and Macao.
The Heidenheim-born deputy believes the current problem of slower growth in China has two causes: On the one hand, the ongoing "flight to safety" in capital markets has lowered the influx of foreign investments in the Chinese economy, thus reducing GDP growth.
"At the same time the beginning of the end to a glut of money – both in the United States and in China – has unfolded with depressive effect. The availability of cheap money has led in the last few years to a very high credit growth in the Chinese economy. Empty-apartment buildings and overcapacities in a lot of industries are signs of a debt dependent and highly risky development in China."
China’s total debt load grew within 5 years from 150% to over 250% of Chinese GDP and Graessle believes "that is enormous for an emerging country."
The risks associated with this big Chinese credit volume "need to be addressed" and, she predicts, the effects of the adjustments may be "harsh especially since all the highly indebted undertakings and banks are held by the Chinese government.
"China will need to proof to the world that it takes sustainable development serious."
But Graessle, a member of the Christlich Demokratische Union Deutschland, still asserts that the growing Chinese economic power is "first and foremost an opportunity" for the Chinese people and for Europe.
However, there are certain risks attached to this development.
"The sheer size of the Chinese economy and the current political system have its natural downsides. The scale of external effects – may they be of economic or ecological nature – and the inter-dependencies with such a huge Chinese economy should not to be underestimated. With a growing economic power, there will also be a growing global responsibility of Chinese leadership."
On China´s recent generational change in political leaders, she says, "I am a realist. In the end, the current Chinese leadership will need to be measured by their track record. Until then, I would always recommend real reforms – towards a broader social and economic participation of the Chinese people."
Moving to China´s position in the world, Graessle, who, after May´s European elections, is just starting her third term as an MEP (having first been elected in 2004), said, "Already today, China has an important role in the architecture of the ‘global governance’ order. It is a real European interest of developing reliable relations to China and foster those of China towards the United States."
But, despite being largely positive about EU-China relations, she also has some real criticisms of China, adding, "Corruption and nepotism are paralysing venoms for economic and social development. To encounter both is a challenging but necessary and at the same time a highly beneficial undertaking for the Chinese economy and society – as it still is in Europe. Human rights and the rule of law, however, are not subjected and should not be sacrificed for the fight against fraud and corruption.
"They are rather preconditions for a true success. Interlinked to this issue is also the fight against contraband and counterfeit. There is still a lot that needs to be done."
Graessle, who is well known within the EU as an strong proponent of increased transparency and accountability for the institutions, said that EU-China relations can be improved by better working together, "not only politically but also by tackling global issues like organized crime."
As rapporteur for OlAF, the European Anti-Fraud Office, she found it "unfortunate" that there is no longer a liaison officer of the Brussels-based agency to the Chinese authorities.
The OLAF liaison officer in China was dealing with smuggling of contraband and counterfeit of tobacco products until 2012.
This prompts the 53-year-old to declare, "I think we need to cooperate with China in mutual respect wherever it is beneficial and possible to both the European and the Chinese people."
By: N. Peter Kramer
