This should be the 'year of deliverables'

A challenging period awaits policymakers in Beijing and Brussels, so we need to work together

China and the European Union will be preoccupied with tough domestic challenges as a new year starts.

For Beijing, getting the economy right - with all the different and complex tasks this entails - is going to be top of the agenda. The EU faces multiple challenges as governments grapple over responses to the refugee crisis, worsening relations between Eastern and Western Europe and the dark shadow cast by Britain's upcoming referendum on EU membership.

The world won't stop for either China or Europe. Wars will go on, refugees will be on the move, the environment will continue to deteriorate, and disease, food and water insecurity will still haunt many millions. In this rapidly changing and very troubled world, cooperation between Beijing and Brussels will become an even more compelling necessity.

First, tackling most global challenges or nontraditional security threats such as climate change, human trafficking and pandemics will require even more intense international collaboration, including between China and Europe. Global alliances focused on key topics will become even more urgent as the world becomes even more complicated and interdependent.

Second, it is in the interest of both China and Europe to work even more closely together in order to deal with domestic challenges. China's new normal certainly means a slowdown in economic growth - but China will remain an important market for European exports and investments, and hence a significant source of growth and jobs in Europe. As it continues its economic transformation, China, for its part, will continue to need European technology, experience and know-how.

As China and the EU embark this year on the fifth decade of their diplomatic relationship, there are many avenues for further China-Europe interaction. But also there are some clouds on the horizon.

On the plus side, China-Europe connectivity will continue to grow. China has the money and the determination to invest in Europe - whether it is to upgrade transport systems in the United Kingdom or ports and technology elsewhere. Europe needs the money. This is the rationale behind the synergies being explored between the Belt and Road Initiative and the European Fund for Strategic Investments - also known as the Juncker Plan, named after European Commission President Jean-Claude Juncker.

In addition, the EU can contribute to China's future by taking a close look at the country's new five-year national socioeconomic blueprint, to be released in March, which will set the world's second-largest economy on a new development course for 2016-2020. The first such roadmap to be adopted under the leadership of President Xi Jinping, the 13th Five-Year Plan is expected to put innovation at the center of China's future development.

Among other key priorities, the plan will aim to "green" the Chinese economy, assist the shift from manufacturing to the service sector, cultivate strategic industries and modernize agriculture. These are areas where there are vast opportunities for EU-China cooperation. Europe also needs to ask itself how this economic roadmap will impact areas such as sustainable development, climate change and global governance.

Once concluded, an EU-China bilateral investment treaty would expand opportunities for greater economic connectivity between the two sides and give European firms more room to work with their Chinese counterparts on a level playing field. Although the EU remains reluctant to start discussions on an EU-China free trade agreement, the signature of an investment treaty could be a stepping stone toward such a goal. Also, as things stand today, while EU-China trade remains buoyant, two-way investment flows need a boost.

But an important challenge also lies ahead. The debate on granting China market economy status is expected to gain momentum in 2016 ahead of the WTO deadline for deciding the issue by the end of December. The discussion could also become very acrimonious - not just between China and the EU, but also within Europe. Those for and against the move have already set out their positions on the issue, turning what should be a technical decision into a major political debate on China's current and future economic landscape.

According to a widely circulated study by the Economic Policy Institute, an alliance of 30 EU industry associations, the pain to Europe of granting China market economy status will be immense. The study contends that the EU could lose up to 3.5 million jobs if the EU were to recognize China as a market economy.

But others argue that the WTO provision in question is not about China's market economy status per se but rather on amending the method of calculating dumping margins in EU-led anti-dumping investigations into Chinese products. In other words, the EU's ability to take anti-dumping action to safeguard its industries would not be eliminated.

Both China and the EU will have to stay coolheaded as the debate gathers steam this year. Too often in the past, although they affect a very small percentage of trade, conflicts on trade issues have been allowed to sour the overall relationship.

This should not be the case this time. Too much is at stake. The EU-China partnership today is just too big - and too important for both sides - to be allowed to falter.

Instead, in the words of European Commission Vice-President Jyrki Katainen, 2016 should be the "year of deliverables" on the range of cooperation projects that China and Europe have embarked on.

The author is policy director of Friends of Europe, a think tank in Brussels. The views do not necessarily reflect those of China Daily.

(China Daily European Weekly 01/01/2016 page15)