Europe, China increase cooperation despite specter of rising protectionism

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Nikhil Rathi, CEO of the London Stock Exchange, could barely conceal his excitement over an innovative project.

A freight train carrying containers with goods from China arrives at DB Cargo's London Eurohub rail freight depot in Barking, east London, Britain, on Jan. 18, 2017. [Photo/Xinhua]

"We are looking forward to further milestones on that project this year," Rathi said of the much anticipated Shanghai-London Stock Connect at a recent forum in central London.

The project, the first of its kind in Europe, will make it possible for investors in either Shanghai or London to trade stocks listed in the other market through depository receipts after its launch, scheduled for this year.

Such a project, which Rathi said could potentially change the outlook of the global financial markets, is a strong testimony to the growing cooperation between an increasingly open China and Europe, both supporters of free trade and globalization, in the face of the specter of protectionism.

Industrial Duisburg rejuvenated

The German inland port city of Duisburg was a heavy industry center in the Ruhr region in its heyday, but later struggled in economic terms.

Nowadays, the China Railway Express (CRE) freight service runs regularly through the town. The city is booming, with transport terminals in place of steel mills, in hopes of becoming a logistics hub in West Europe.

Photo taken on April 16, 2018 shows containers of China Railway Express at Duisburg Intermodal Terminal (DIT) in Duisburg, western Germany. [Photo/Xinhua]

The CRE freight service now links 48 Chinese cities with 42 cities in 14 European states as it winds its way across the vast continent. Made-in-China laptops, mobile phones and textiles are the most popular products reaching Europe thanks to the trains, while made-in-Europe high value-added fine wines and vehicle spare parts are shipped to China.

The CRE freight service has been a flagship project in line with the spirit of the Belt and Road Initiative (BRI), a development initiative proposed by China in 2013 envisioning trade and infrastructure networks connecting Asia with Europe and Africa along the ancient Silk Road routes.

Partly thanks to the CRE, more than 6,000 jobs have been created in Duisburg.

A "small industry" has even emerged, generating tax revenues and strengthening the reputation and importance of the city, said Markus Taube, an economist with the University of Duisburg-Essen.

"So closely linked together"

Jim O'Neill, chairman of the renowned British think tank Chatham House, known for coining the acronym BRIC for Brazil, Russia, India and China in 2001, said the BRI is "possibly one of the most important things for the future world trade."

China has been encouraging other countries to dovetail their development plans with those of other countries and regions under the initiative.

The synergy between the BRI and the development plans of the EU will create opportunities for the world, said Zhang Ming, head of the Chinese mission to the European Union (EU).

Despite the specter of rising protectionism and unilateralism, China and Europe are determined to increase their cooperation.

"We see now very dangerous elements in the world ... I think China and the EU have to work together with other partners to guard the World Trade Organization and the rule-based global system," said Jo Leinen, chair of the European Parliament's delegation for relations with China.

The EU itself is a multilateral system of 28 member states, Leinen said.

Arancha Gonzalez, executive director of the Geneva-based International Trade Center, said unilateralism is not effective to address systemic problems in economy and trade and called for a coordinated approach.

Dr. Michael Borchmann, a former ministerial secretary of the German state of Hesse, said in Berlin that it is very important for countries like China and Germany, both supporters of globalism and free trade, to work together.

The world economy is "so closely linked together" and the impact of U.S.-initiated trade disputes and rising protectionism can be felt in Germany, he said.

Photo taken on Sept. 19, 2016 shows a power plant built by Chinese company Dongfang Electric Corporation in Stanari, Bosnia and Herzegovina. [Photo/Xinhua]

Change in Chinese investment

Former Slovenian President Danilo Turk sees a role for the BRI in helping bridge the gaps in Europe.

China and the Central and Eastern European (CEE) countries have worked together to improve transport networks, like the E763 highway project in Serbia, the Budapest-Belgrade railway, and a thermal power plant in Bosnia and Herzegovina.

Maribor, the second largest city in Slovenia, could become a logistics hub in eastern Europe if the infrastructural links can drive its development as envisioned, Turk said.

The BRI has led to "a massive change" in the direction of Chinese investment, said Piotr Romanowski, global accounting and consulting firm PricewaterhouseCoopers (PwC)'s partner on advisory business in CEE countries.

"In recent years surging investment from Chinese companies has brought real business opportunities to the (CEE) region," he said.

From less than 20 to 1,500

China, after four decades of reform and opening-up, has pledged steps to further open up its market and improve intellectual property right protection. It will host the first China International Import Expo in Shanghai in November.

Airbus, the European aviation giant, delivered its first aircraft to China in 1985 and that number had only grown to less than 20 by 1994. However, by late 2017, there were more than 1,500 Airbus commercial jetliners in service in China, and nearly a quarter of Airbus deliveries went to China, said Chief Executive Officer Tom Enders.

Airbus launched its first final assembly line outside of Europe in Tianjin in 2008. Laurence Barron, head of the Tianjin final assembly line project and former CEO of Airbus China, said the company aims to have 2,000 aircraft operating in China before the end of 2020. In 2017, Airbus established its second global innovation center in Shenzhen, a young city known for pioneering China's reform and opening-up efforts.

"The achievements made by Airbus in China are a good example of how foreign companies can take advantage of the reform and opening-up and better position themselves in China," Barron said.

In London, Rathi said the Shanghai-London Stock Connect "will allow global investors to benefit from China's growth through London, and UK-listed companies will be able to access Chinese investors directly."

"The opportunities are immense with new ways of connecting," Rathi said.