Webinar: EU-China Forum on Innovation – July 15, 2021

Webinar: EU-China Forum on Innovation – July 15, 2021

The EU-China Business Association organized a webinar to promote the EU-China cooperation in the field of innovation on July 15, 2021.

Ms Gwenn Sonck, Executive Director of the EU-China Business Association, welcomed the participants to the webinar focused on the importance of boosting innovation between the EU and China so as to improve economic performance. This is a very topical subject as both the EU and China are important partners of one another and both are looking at ways to enhance trading and investment opportunities.In 2020, China became the EU's biggest trading partner in goods, overtaking the U.S. and the EU is China's biggest trading partner. Innovation is a clear driver of mutual economic growth and competitiveness. Innovation is also one of the reasons why European companies want to be in China. The Chinese market is becoming a global driver for innovation. Many European business leaders see Chinese firms also as equally or more innovative than European ones.

The EU and China have been formally working on innovation issues together since 2012 but for innovation to prosper in our society, governments and the private sector must work together to develop new innovative services. This is the key issue for discussion at this webinar. What are the opportunities and challenges facing both China and the EU today in the context of working together on innovation policy issues and on ensuring that innovative products can reach the marketplace? Innovation is also a key component in ensuring that the 17 targets of the UN Sustainable Development Goals are fully implemented. Horizon Europe is the biggest EU research and innovation program ever with nearly €96 billion of funding available over seven years (2021 to 2027). It is open to the world, which means that participants from all over the world, including China, can participate in most calls. The program will develop solutions for a healthier life, the progress of the digital transformation and the fight against climate change.

The European Union China Business Association acts as an umbrella organization of bilateral China business associations in Europe. Today, we have 20 member associations and represent more than 25.000 European and Chinese companies. In normal non-Covid-times, we receive high-level Chinese delegations and introduce them to our member companies and we also organize high-level meetings between European and Chinese authorities, Ms Sonck said.

HE Ambassador Gabor Baranyai, Deputy Permanent Representative of Hungary to the EU, welcomed the participants to the forum and delivered the introductory remarks. All governments are analyzing how to best come out of the crisis. The virus knows no borders. It is of pivotal importance that the EU and China – two of the most technologically advanced trading blocs – cooperate. We have to settle very significant problems and technology, innovation and cooperation must be prominent. One is urbanization as 67% of citizens live in urban areas where health problems, climate change and poverty are concentrated. The second is connectivity, including transport, high-speed railways and electrification, which are all critical for our era. The digital economy has been rising as fast as global GDP and is a key driver of innovation and recently also of survival of economic activities and personal safety. The EU has launched a digital decade program, taken regulatory measures and provided a great amount of money to solve digital questions. This is also the time China is implementing the “Made in China” program focused on digitalization and innovation. All ingredients for a successful cooperation are in place. We hope that the signing of the Comprehensive Agreement on Investment will further boost this cooperation. We are looking forward to seeing a lot of bottom up cooperative projects. Hungary is one of the countries which has very broadly welcomed Chinese investments. We also believe that technology has no nationality. As long as a technology is suitable and safe to be used it should be used.

Ms Gwenn Sonck, Executive Director of the EUCBA: Could you talk about how Chinese companies based in Europe can support the development of higher levels of innovation in Europe? Mr Xu Haifeng, Chairman, China Chamber of Commerce to the EU: The Chamber represents about one thousand Chinese enterprises based in the EU. Over the past years innovation has become a key policy of both China and the EU. In the 14th Five Year Plan China identified digitization, innovation and industrial modernization as the most important priorities. China is pushing for more applications of digital and smart solutions. Chinese enterprises are active in the field of innovation, especially in artificial intelligence and 5G. Through their activities in Europe they are producing better products. The number of patents granted to Chinese enterprises is on the rise with an annual compound growth of 36%. China is now third in the number of European patents applied by non-EU countries. This shows the rising quality of innovation by Chinese enterprises in the EU. Chinese and EU enterprises have launched technical cooperation to join hands in strengthening and promoting technology together. Cooperation between China and the EU is the general trend. Chinese enterprises operating in the EU like to set up R&D centers to lay the foundation for innovation. For example, Huawei set up 23 R&D centers in 14 countries with 2,030 R&D employees. CRRC, the Chinese locomotive and rolling stock company, set up a joint R&D center in Germany with an investment of €36 million, making a great contribution to the innovation in this sector. Chinese enterprises could also support education of talents in European countries. Innovation of Chinese enterprises needs to comply with local laws and regulations, including data privacy. Chinese enterprises will join hands with their European partners in supporting innovation and recovery.

Ms Sonck: How can the EU and China work together more closely to push their economic performance? Ms Sara Medina, Member of the Board, Sociedade Portuguesa de Inovação: SPI has been in China for more than 20 years. Europe and China have a long history of cooperation. It is a partnership that brings together two very unique partners. China has been growing very fast, not only economically, but also in science, technology and innovation. Every time she goes to China, Ms Medina said she was impressed by the development of business incubators in many cities, such as Suzhou, Wuxi and Nanjing. They are already very developed in terms of science and technology. China is now associated with high-level development. Before we saw China as low-level production, but this has moved to countries such as Vietnam and Bangladesh. EU-China cooperation has been established to manage different global challenges. China has a leading position in many sectors and put investments in areas such as biotechnology and software. On the other hand, Europe has technology and know-how that China still does not have and many Chinese organizations are strongly interested to obtain the best technology existing in Europe. From the European side there is also Horizon Europe in which Chinese enterprises could participate. To achieve a better dialogue, Europe needs to learn more about China.

Ms Sonck: As a private company operating in both Europe and China, how can companies like Huawei contribute to the EU and China innovation policy agenda? Mr Abraham Liukang, Chief Representative to the EU institutions, Huawei: International organisations such as the World Bank, the International Monetary Fund, the European Commission and the OECD all point to the strong benefits for governments and for broader society from the building of more innovative economies. Innovation is the driver of positive economic growth. Governments together with the private sector must put in place the necessary policy frameworks and incentivization programmes for businesses so that innovation can thrive and prosper. The EU and China are drivers of innovation across a range of different sectors including in the ICT, agriculture, health, transport and energy sectors. One of the findings of European Innovation Scoreboard that was published on June 21 this year was that innovation performance in Europe has increased by 12.5% since 2014. This year’s European Innovation Scoreboard is based on a revised framework, that includes new indicators on digitalisation and environmental sustainability, bringing the work of this scoreboard in line with EU political priorities. The EU, by investing in innovation is investing in its capability to build a more sustainable, a more digital and a more resilient European economy. This improved innovation performance in Europe is due to enhanced spending by governments and by private sector companies alike on R&D.

EU research, innovation and sciences programs are open to the world. Over the past six years there were 590 Chinese participations in 268 different projects under the EU Horizon 2020 instrument. These research collaborative engagements covered ICT, agriculture, energy, transport and climate change sectors. In other words, Chinese and European researchers are working hand in hand in tackling the key global challenges facing society today. The pursuit of excellence must be built on open scientific frameworks. The next EU research, innovation and science program Horizon Europe is open to participation from private, public, educational and research bodies from all over the world. Horizon Europe is backing the development of more innovative and disruptive scale-up companies through the work of the European Innovation Council. More concrete partnerships between research, business and educational stakeholders will be built up by the European Institute of Innovation and Technology which is headquartered in Budapest.

Huawei is in a very strong position to support the policy agenda of the EU under Horizon Europe. We are the 8th most innovative company in the world this year according to the Boston Consulting Group. We are the 3rd highest private sector R&D investor globally. Huawei employs 2,400 researchers in Europe in 23 centers from 12 different countries. Huawei has the depth of expertise in a range of different research disciplines that can ensure, for example, the speedy development of 6G in Europe, enhanced levels of semi-conductor production in Europe and AI innovation. The key to success in terms of building stronger innovative economies is enhanced international collaboration. There must also be a stronger level of mobility between researchers and innovators traveling from China to Europe and from Europe into China. A whole variety of research and innovation projects as published by the Chinese Ministry of Science and Technology in recent years are fully open to EU participation. This is a win-win situation for all of us.

Ms Sonck: How do you see the process of innovation engagement develop between China and the EU? Dr. George Tzogopoulos, EU-China Advisor to the European Council on Foreign Relations: Cooperation remains the key to guarantee world stability and the relationship between China and Europe is catalytic. There are frameworks which are facilitating cooperation between the two on innovation at the sectoral level. In 2012-13 an important dialogue on innovation was launched. Last September, a dialogue on digital affairs was inaugurated, which is also contributing to a better understanding between the two and facilitating contacts to join forces on innovation. Cooperation on a regional level is also very important. It is always important to look at opportunities beyond the central level. Secondly, the discussion should be linked to the general geopolitical environment. The Covid pandemic remains a serious challenge for the world. Cooperation between China and the EU is key in order to respond to the challenge not only of the two continents, but also other continents, such as joining forces in Africa to reach the UN sustainable development goals. Regarding China-EU relations there are positive and negative viewpoints. The glass is half full. The job of politicians is to manage differences and look for breakthroughs. We should not be nostalgic towards a previous period which is over but work to build symmetry where both sides can find common interests. The better both sides understand each other, the better it will be.

Ms Sonck: What are the challenges that your companies face as they seek to build up stronger partnerships with EU companies? Mr Xu Haifeng: Chinese companies want to have good cooperation in innovation and business development. They would appreciate a more friendly environment and level playing field. Some of the latest legislation in the EU might create uncertainty for investments and economic activities, e.g. there are restrictions for Chinese enterprises in 5G. Huawei and ZTE have created around 20,000 jobs locally but still face obstacles for the development of their business in Europe. However China and the EU have many common goals in research and innovation. Chinese companies are eager to engage more with European partners.

Ms Sonck: What are the challenges that must be addressed if levels of China-EU cooperation in the field of innovation are to be improved? Mr Abraham Liukang: It is very important that the EU and China work together to ensure that common standards are put in place. Unitary as opposed to decoupled standards reduce costs for innovation and inefficiencies in the global supply chain. During the past one and a half years of the pandemic we had to rely on the digital infrastructure to talk to each other. We need an open approach when it comes to putting in place higher levels of collaboration. The process of innovation does not stop at a geographical border. Stakeholders need to walk together in open and transparent ways.

Ms Sonck: Is there enough political goodwill to push a strong common innovation agenda forward? Dr. Tzogopoulos: There is political will, but we should not ignore the current landscape. The main principle that can drive Sino-EU relations forward is more respect. We as Europeans should appreciate what China did, such as the eradication of poverty. At the same time, we Europeans are proud about our own system and expect the same respect from the Chinese side. The more the two sides talk to each other the better. The decision of the European Parliament to freeze the ratification of the CAI is a setback but it is how the European system works. The differences can be overcome but we should also respect the different systems because otherwise the relationship cannot move forward. There will be a convergence of business interests in order to recover from the pandemic.

Ms Sonck: How will the EU and China shape the bilateral cooperation on innovation and what are the concrete outcomes for our economies? Mr Jochum Haakma, Chairman EU-China Business Association (EUCBA): The EU and China clearly have a mutual interest in reinforcing their technological infrastructure and capabilities to be able to compete and thrive worldwide. According to the EU-China 2020 Strategic Agenda, innovation is an essential pillar of the economy and indispensable to maintain growth in the long run. The EU-China Steering Committee and the EU-China innovation cooperation dialogue have been launching a fruitful collaboration on science and technology in emergent industries. It will involve synergies among universities and research institutes, the construction of common infrastructure to cope with common problems, the joint development of skills, and the creation of a bilateral financing scheme. This will bring golden opportunities as entrepreneurial cooperation is a sine qua non to achieve results. The continuous search for the frontline of innovation is a feature that brings together our peoples and should be used to tackle common issues. Innovation is an all-comprehensive concept that the EU and China are able and willing to employ in many fields. The active participation of SMEs will translate into a winning cooperation.

A Q&A session concluded the webinar. Mr Haakma congratulated Huawei as the real innovation player, the eighth most innovative player in the world with 23 R&D institutes in Europe after a presence of 21 years. This is a beautiful example for many players. This is the horizon many are looking for. There is an enormous willingness between universities and research institutes in China and Europe to work together. From the European side often the money is lacking. R&D budgets are lower than in China. The political will should also be there. The EU Commission and governments have the obligation to bridge the gaps and seek common ground. The pandemic showed us how important it is to work together. Innovation is a central cog in the wheel of economic recovery.