On 19^th May, 2015, China’s State Council unveiled their China Manufacturing 2025 strategy, also known as Made in China 2025 or the ‘fourth Industrial Revolution’. It aims to turn China into a leading smart manufacturing nation by encouraging innovation and digitalisation, where production processes and speeds will be adapted to minimise costs and increase efficiency. Mireia Paulo, Business Development Manager at A&Z Law Firm, outlines areas for potential collaboration between the EU and China within the framework of the Made in China 2025 strategy and the EU-China Investment Cooperation.

Premier Li Keqiang has repeatedly stated that the Made in China 2025 strategy will be implemented in conjunction with Internet Plus, a plan that focuses on the Internet of Things, mobile Internet, Big Data and cloud computing. The Chinese Government has pledged support that will cover tax incentives and special funding for ten industrial sectors that have been identified as the core of the plan. These include: next generation information technology; automated machine tools and robotics; aerospace and aeronautical equipment; maritime equipment and high-tech shipping; modern rail transportation equipment; new energy vehicles and equipment; power equipment; agricultural equipment; new materials; and biopharma and advanced medical products.

Possible avenues for the EU-China Investment Cooperation

The launch of China’s One Belt, One Road (OBOR) initiative coincided with the launch of the European Commission’s Investment Plan for Europe (IPE), also known as the ‘Juncker Plan’. During the last EU-China High Level Economic Dialogue, held in Beijing on 28^th September, 2015, officials from both sides explored possible areas of collaboration open to the EU and China in light of these two economic initiatives.

The OBOR and the IPE share a common interest in that both projects seek to channel investments. Three main avenues for cooperation were identified for 2016:

• Set up a joint working group comprising experts from both the EIP and OBOR initiatives, who will be charged with the responsibility of establishing cooperation mechanisms.
• Establish an EU-China Connectivity Platform to facilitate discussions on cooperation strategies, plans and policies.
• Launch a European Investment Project Portal, which will be used to attract future domestic and international investment into projects in the EU.

Establishing a common ground

On 16^th February, 2016, a workshop on China’s OBOR Initiative, the European Fund Strategic Investment and the EU-China Investment Cooperation was held at the European Parliament in Brussels. It was organised by Ernest Maragall, MEP and member of the Committee on Budgets of the European Parliament. The workshop provided an opportunity to review and discuss the achievements of EU-China investment cooperation in 2015, with the aim of exchanging views between European and Chinese official institutions, as well as the business and investment experts working on the EU-China Investment Cooperation.

During the workshop, Madame Yang Yanyi, Chinese Ambassador to the EU, emphasised the many converging interests that exist between Europe and China’s economic agendas, such as China’s Internet Plus strategy and Europe’s Digital Agenda. She also elaborated on the advancement of EU-China cooperation in the digital economy, including the development of 5G.

At the same event, Miguel Gil-Tertre, member of the cabinet of Jyrki Katainen, Commissioner/Vice President for Jobs, Growth, Investment and Competitiveness, and Laurent Bardon, Policy Coordinator, China, Hong Kong, Macao, Taiwan, Mongolia at DG TRADE, European Commission, highlighted strategic areas for the EU-China Investment Cooperation to focus on for the present year:

1. Encourage Chinese investments to advance European digital infrastructure and services in accordance with the Juncker Plan.
2. Create a High Level Task Force to identify specific opportunities for European businesses in China. Also, expand Chinese business in Europe in fields such as hi-tech innovation, green and renewable energy, and agricultural equipment.
3. Establish major investment funding and incentives focused on incubating hi-tech start-ups and collaborative innovation in both Europe and China
4. Enhance cooperation on Smart Cities.

Potential opportunities open to EU-China industry

According to the Made in China 2025 strategy and the EU-China Investment Cooperation, it is possible to identify key common sectors and new smart manufacturing technologies that are of equal interest to both European and Chinese companies, such as Big Data, cloud computing, mobility and the Internet of Things. A large number of business opportunities have already been identified in the following sectors: pharmaceutical and healthcare; automotive; hi-tech innovation (robotics, low carbon technologies and green energy); transportation (railway equipment, aerospace and aviation equipment, maritime engineering equipment and high tech vessel manufacturing); as well as research and innovation.

For instance, Miao Wei, China’s Minister of Industry and Information Technology, encouraged local Internet companies to develop electric vehicles, which will consequently reduce the reliance on imported oil and reduce China’s carbon footprint.[1] A McKinsey Global Institute report shows that China’s chemical industry is exploring new ways to employ Big Data on inventory levels. Big Data also has the potential to provide great support to farmers, enabling them to monitor crop conditions in real time, which will cut production costs, increase farm yields and allow product customisation. The Internet of Things also entails new business opportunities for the healthcare sector, for example, the implementation of remote patient monitoring. This is a growing field offering advantages to the home healthcare and elderly care sectors, and anyone residing in an isolated area.[2]

It remains to be seen how the cooperation will play out once the Made in China 2015 strategy has been fully realised. In the meantime, the ability to align the strategy with the EU-China Investment Cooperation will bring numerous cooperation opportunities in both China and Europe. Most importantly, a regular communication between European and Chinese officials will ensure a streamlined approach to the investment in both regions, facilitate B2B exchanges and increase enterprises’ cooperation through joint ventures or merger and acquisitions.

A&Z is a leading Chinese law firm, which employs over 50 experts consisting of attorneys, legal practitioners, and business analysts across 10 jurisdictions. The Shanghai, Beijing, Dalian, Wuhan and Tokyo offices provide a full range of services covering foreign direct investment, corporate and contracts, labour and employment, intellectual property, environment and safety, merges and acquisitions, restructuring and insolvency, anti-trust, anti-dumping compliance, import and export registration and licenses, real estate, and litigation, arbitration and dispute resolution.

[1] Tate, Paul, China Adopts ‘Smart Manufacturing’ Strategy To Up Its Game in Manufacturing, 10^th March, 2015, <www.gilcommunity.com/blog/china-adopts-smart-manufacturing-strategy-its-game-manufacturing/#sthash.M5E0C9Dj.dpuf>

[2] Woetzel, Jonathan et al, China’s digital transformation, July 2014, <http://www.mckinsey.com/industries/high-tech/our-insights/chinas-digital-transformation>