Great advances have been made in the relationship between China and the EU.
China's 12th Five Year Plan, which sets the strategic direction for China's economy through to 2016, shows that Beijing decision makers are determined to change China's development model from low-grade labour-intensive manufacturing towards a greater emphasis on services and innovation. They want to design the next iPad, not just manufacture it. And, as resources become ever more scarce, the incorporation of the principles of sustainable development and resource efficiency are moving up the priority list. The EU has strengths in areas that China is looking to expand and, as China emerges as the world's largest economy over the next two decades, there are substantial economic opportunities for the EU. As the largest emitter of greenhouse gases, in no area is cooperation with China more important than on energy and climate change.
The Five Year Plan includes policies and measures designed to help China achieve a 40-45 per cent reduction in the carbon intensity of GDP from 2005 levels by 2020. The recent announcement that China is planning to use the experience of its sub-national pilot emissions trading schemes to inform the development of a national scheme, probably by 2016, demonstrates the seriousness with which China is taking climate change, while also showing it is willing to follow the EU's lead in developing market-based mechanisms to cut emissions – albeit without the mistakes. China has no obligation to do this but they are pursuing these policies because there is a recognition at the heart of government that climate change is as likely to affect China's population and growth as much as, if not more than, anyone else's.
Importantly the relationship will not just be one-way traffic; it is increasingly clear that technology transfer will be two-way. China is already the world's largest manufacturer, and user, of solar panels and the largest investor in renewable energy. The planet's fastest high-speed rail services are in China. Both sides have much to gain from a stronger, closer, broader and deeper partnership.
It was therefore disturbing to read the direct criticism of China by EU delegates after the most recent climate change talks in June. However, frustrating specific interactions may be, it is political folly to react in such a way when the relationship has the potential to be so critical to Europe's future development. China takes a hard line in the UN climate negotiations. That is to be expected when the context is one of a lack of delivery and broken promises by the industrialised countries. But we should not get hung up on the minutiae of the official process, for which the bulk of the blame, if any is to be attributed, should be directed at major developed economies.
As those that have invested time in the relationship with China over many years understand, megaphone diplomacy rarely works. The article published recently in the New Statesman magazine by former Australian Prime Minister and Sinologist, Kevin Rudd, provided an insight into the internal dynamics operating within China. The overriding message was China has politics, too, and he challenged the West to engage with China in a very different way while the opportunity to do so remains. This does not mean that the EU should be a silent non critical partner but the scale and scope of the relationship needs a radical rethink if the EU is to grasp the opportunity to forge a mutually beneficial low carbon partnership. In that context manoeuverings in formal processes can be put in perspective.
Ultimately, if climate change is to be tackled successfully, it will be due to much closer bilateral and regional cooperation between those countries that share a vision of a prosperous, energy secure future in a stable climate. Such cooperation will accelerate the transition to a low carbon economy, lead others and magnify the benefits that, together, will help to create the national political conditions that enable an international agreement to be reached. Agreements at the UN reflect national political conditions; they rarely define them.
There is a long way to go before China has a fully-fledged carbon market, or one that could be linked to the EU. But the potential is clear. Such co-operation could build low carbon industries in both regions and align the EU to the world's future largest economy, improve political ties and strengthen business links. This is why a group of European legislators from GLOBE are working to bring together the world's largest economy in waiting with the world's largest single market.