Premier Li Qiang delivered the Government Work Report during the annual session of the National People’s Congress on March 5, outlining the Chinese government’s economic priorities for this year. As an economist and former undersecretary at Italy’s Ministry of Economic Development, I have been studying China’s economy and its relationship with Europe.
China’s economy is at a critical juncture. After decades of rapid growth, China now faces significant challenges, including rising geopolitical tensions, and the need for structural reforms.
Despite all these challenges, China has set a GDP growth target of about 5 percent, a figure that underscores the necessity of stabilizing the economy while addressing underlying vulnerabilities. That China has set a growth target of 5 percent for 2025 reflects its pragmatic approach. The country has realized that rapid growth may no longer be sustainable in the face of an aging population, increasing debt and rising unemployment. Therefore, it is vital for China to transition toward a model of growth that emphasizes quality and sustainability over mere quantity.
A central theme of this year’s Government Work Report is its emphasis on innovation and technological advancement. This focus is crucial for China’s long-term economic success. In order to maintain competitiveness in a rapidly changing global economy, China must transition from an investment-driven model to one that prioritizes innovation and high-tech industries.
The government’s commitment to achieve technological self-sufficiency, particularly in critical sectors such as semiconductors and artificial intelligence, is commendable. However, this ambition comes with inherent challenges. The drive for self-sufficiency may heighten tensions with Western countries, particularly the United States, which has imposed restrictions on technology transfers to China. So it is imperative that China cultivate an environment conducive to innovation while remaining open to international collaboration.
As we examine China’s economic landscape, the country’s relationship with the European Union emerges as a vital area for cooperation. The EU is one of China’s largest trading partners, and fostering strong ties with it is essential for mutual prosperity. In light of the global challenges, including post-pandemic economic recovery and climate change, there is a compelling case for enhanced collaboration between China and the EU.
The EU’s Green Deal presents an opportunity to China to engage in sustainable development initiatives. By working together in areas such as renewable energy, green technology and infrastructure development, both China and the EU can create synergies that benefit their economies and contribute to global sustainability efforts.
But despite the potential for cooperation, several challenges could undermine China-EU relations. In particular, since the rise of protectionism and nationalistic policies poses a risk to trade and investment, it is essential for both sides to engage in constructive dialogue to address mutual concerns and promote common economic development.
Moreover, the EU has adopted a more cautious approach to China in recent years, particularly on human rights and market access. But it is important for the EU to balance its values with pragmatic economic considerations, because a nuanced approach that fosters engagement without compromising fundamental principles is essential for nurturing a strong and productive relationship between China and the EU.
Looking ahead, China should evolve its economic strategy to address domestic challenges and meet international expectations. The Chinese government’s commitment to reform and innovation is critical, but it must be accompanied by a willingness to constructively engage with its global partners, particularly in Europe.
I see significant potential for China to consolidate its position in the global economy this year by focusing on green technology and sustainable development. By aligning its economic goals with that of the EU, China can lay a solid foundation for long-term cooperation that benefits both economies.
As I reflect on the Government Work Report and its implications, I am reminded of the importance of collaboration in today’s interconnected world. The path forward for China and the EU is to show mutual respect, understand each other, and build a future of shared vision. Through innovation, dialogue and cooperation, China and the EU can navigate the complexities of a rapidly changing global landscape.
I hope both China and the EU will recognize the potential for collaboration that lies ahead, leading to a more prosperous and sustainable future for all. Together, we can address the pressing challenges of our times and build a brighter future through partnership and cooperation.
The author is former undersecretary of state at the Italian Ministry of Economic Development. The views don’t necessarily represent those of China Daily.
