 We are very fortunate to have here Dr Carine de Vergeron, who is Associate Director and Head of the Europe Programme at the Global Policy Institute. She is also an Associate Trit хочется to the Robert Sch美味 Foundation in Paris and Senior Fellow of the Federal Trust. She has contributed to Charunderme Heus to the Foreign Affairs Committee of the Assembly National. She has published widely. I won't go through the publications. They include the New Silk Roads, European Perspectives, Perceptions and Perspectives, and contemporary Chinese views of Europe that was published with Chatham House, and contemporary Indian views of Europe. So, Doctor de Vezurong is extremely qualified to talk on the various aspects of this, what is quite a complicated structure. So, over to you. Thank you. Good afternoon, ladies and gentlemen, and thank you very much to the Institute of International and European Affairs for inviting me today, and choosing this topic, which is of great significance for your China relation, in particular also for the future developments. There are three specific challenges that I would like to really highlight this morning, in terms of the challenges for Europe, in the context as well of the French perspective. The first is China's current economic development, and what this means actually for European economies. The second is France and Europe's strategy towards China in the context of the Belt and Road Initiative across Eurasia, and the consequences of that for European unity. And third are the consequences of those developments for Europe as a pull of power globally, and what this means also for the future of the EU-China partnership. So, let me first start with the economic dimension, and the fact that China has in fact become an increasingly important trading partner over recent years, and not just for France, but for the whole of the EU. The EU is still China's largest trading partner of goods. It amounts to 14.8% of China's trade, but it has also become China's primary source of import, 12.8%, well ahead of South Korea, which is standing at 9.5%, and Japan, 8.5%. And at the same time, China now represents as well one of the fastest growing market for European exports, and accounts for 15.4% of EU trade up from 10% in 2006. In other words, it means that in relative terms the importance of China to EU trade has grown very significantly over recent years and is almost on an equal footing right now. The deepening in fact of this economic relationship between China and the EU has been all along, I would say, the very defining feature of the partnership, and it will continue to be so. The two markets are trading on average 1.7 billion a day, and I'm not going to be going into length about the question of the EU deficit with China, but it's also notwithstanding the fact that the EU is also a major trade and investment partner with the whole of Asia beyond China. Moreover, if you look at the New Silk Road, some experts actually estimates that well beyond the impact on bilateral trade between China and the EU, it could cover a quarter of global GDP. So we're talking about very significant levels of trade, potentially, and the effect for the Sino-European partnership. These economic developments, as you may know, have been going also hand in hand with China's new emphasis internally on generating major and sustained investments in various future orientated sectors, and especially in automated industrial manufacturing processes, which are often referred to as the Industry 4.0 technology, or the Made in China 2025 program. What the Chinese government is seeking to do here is to heavily subsidize research, development, and investment through state support to achieve greater dominance in high-end technologies. This includes building expertise at production machinery, which also means that China is also taking aim directly at sectors which used to be core strength of the European economies. If you take, for example, and this is more concerning Germany, but an important component of the Sino-European trade, car and car parts amounted for 19% of the total German exports in goods towards China, and machinery around 14% only two years ago. At the same time, the trend is that an increasing number of European companies are also becoming more dependent on the Chinese market. Also, as China is seeking to go up the manufacturing value chain and massively accelerating the modernization of its industry, it is also benefiting in the long run from a number of skills I'm thinking about the American Chinese working in the Silicon Valley in terms of potential of further innovation for the Chinese economy. The reason I'm saying this is because it will really be crucial for Europe to continue to also improve its own technological edge and be confident that it can continue to innovate where technology transfers with China have not yet taken place. There is a growing appreciation in France but also across Europe that the balance of challenges and opportunity presented by China over recent years has clearly shifted. In the last decade, China's economic power and political influence have grown with unprecedented scale and speed, reflecting China's ambition to become a leading global power. Although you may be aware that the 2016 EU-China strategy is really the cornerstone of the bilateral engagement between China and the EU, the latest EU strategic outlook, which was released in March, reflected in a real development in a way in which Europe is also looking at bilateral ties with China, taking in mind this wider economic context, which is very important also for the future of European economies. Here I would say that the EU engagement is now based on a two-fold approach and it's also very much the French perspective. The first is that the EU should deepen clearly its engagement with China to promote common interest at a global and bilateral level and there are a number of subjects that are to the benefits of both sides, but that it should also, at the same time, seek a more balanced and reciprocal conditions governing the economic relationship and this is clearly also of great importance for the EU. This is of paramount importance, especially in the context of what has been probably a more aggressive strategy from China in terms of increasing investments within parts of Europe and I'm thinking in particular about Central Europe, Eastern Europe but also Southern Europe and acquiring key stakes in high-end technologies. For example, the takeover of CUCAR, the robotics firm in Germany, going right to the heartlands of Germany's high-end technology in late 2016. I can also mention in terms of infrastructure investment, the investment which was made in the 380 million bridge in Croatia over the Adriatic Sea, all the highway going from Montenegro to Silvia, also partly funded by Chinese investment. Here I just want to make a quick parenthesis, but I remember working back and you mentioned them in 2007 and 2011 on two publications on Chinese views of Europe. One of them was Chatham House and when considering this aspect of EU China trade, and in particular in 2011, it was just a few years after the 2008 crisis, the question of increasing investment within Europe was important and to the benefit of EU economies as well. But it was already clear at the time for a number of European businesses based in China that one should not blame China for being clever, strategic about pursuing its rationale and its interest, but it was up to us, European, to actually be more united into having a coordinated approach of our common interest, in particular in case of strategic takeovers and to limit foreign holdings, not just coming from China, but more generally also globally. European businesses on the ground had actually been advocating for a long time what the EU set itself to do and to allow the possibility of a screening of foreign investment on co-technological and high value-headed European businesses to avoid unfair competition from state subsidised companies. For example, if you look in some sectors of the industry, in the chemical industry, it has now become almost impossible for any single European company to compete against a Chinese bead for takes over for new business ventures, new business partners, simply because the funding which is proposed is something that we cannot match. At the same time, it's also very important to note that there are developments within China and that the draft of China is new for an investment law which came out just a few weeks ago and it's a law which should be passed for January 2020, so the beginning of next year is proving to be in many ways accommodating to European concerns and that's a very important development. As China growth is slowing down with an estimated 6% in the third quarter of this year, it seems that improving the environment also for foreign businesses is becoming of greater importance to ensure that foreign investment continues to flow in the country, also especially in the context of the US-China trade talks. What is clear to me is that China will really seek to avoid any risk in derailing its economy from its longer term goal which is looking at 2040-2050, the 100 years anniversary of the creation of the People's Republic of China in 1949, where actually by then a doubling or tripling of GDP per capita is sought to actually reach the position of leading global economic power. It was also very interesting to see if you look at the list of demands at the beginning of the trade talks you referred to from the United States towards China, a number of those items were actually looking at the future of China, that is to say taking aims at the large states to subsidise effort in advanced technology for 2025, such as energy vehicle and artificial intelligence. Now, this is also of great importance for the EU and there is here a clear mutual interest between Europe and China to seek to come to an agreement soon on the Comprehensive Bilateral Investment Agreement with the hope that that might come to turn next year on the German presidency. Now, the second challenge I would like to talk about in the context of future EU-China ties and how France sees that is China's border geopolitical and geoeconomic aspiration within the context of the Belt and Road Initiative and Eurasia. There are potentially here many opportunities actually for Europe in developing new infrastructure able to link the Eurasian continent in a way which could benefit European exports across Eurasia and towards China. This will, however, I believe require much more strategic and coordinate approach from our side as a management of the initiative to the benefit of both China and the EU. China is actually seeking to redefine Eurasian trade through its new geographical and continental project as a model of driving economic integration. And it's also, of course, clearly for China to be able to export its infrastructures and products with neighbouring countries because the idea is the economic centre of gravity to far west within China as well, reaching out to the region and ultimately European markets to increase commercial expansion from a Chinese standpoint. I'd like to say that in that, the current volume is not still as transformative as the narrative would like it to be. And if you look at projected 500,000 continents in volume only via the northern and the central railway corridor which is planned for 2020, you compare it to 22 million continents in terms of EU-China trade for 2014 alone, which was six years ago and trade has increased a lot. You see that the narrative is still actually in development in terms of its trade scale. But, of course, it has huge potential in the long run and is already influencing a range of strategic interests and I'm thinking particularly about energy supplies, especially across central Asia. So the French analysis on this is very clear. If China controls the departing points of the road, Europeans should actually be much more aware of their strategic strength in comprehending the selling points, selling outlets, and also the fact that the roads also start in Europe from the other direction. The aim here is actually to seek to turn it into an opportunity for greater exports towards China and the Asian market. And this is very much what is behind the EU-Asia connectivity strategy which was launched last year, but much more needs to be done in that direction. There is clearly still concern about the Belt and Road initiative potential to possibly erode unity amongst European Member States looking for Chinese investments. This reflects also very different perceptions and analysis across the European Member States, depending on the level of investment that China has already been making in those countries. I won't go back to what you mentioned about Italy, but of course within Europe, and it is a challenge, there are different analysis and perception that each European Member States is doing about the Belt and Road initiative itself. This is especially true with regard to Central and Eastern Europe, which has been seen by China as one of the gateway into European markets. I'll only mention, for example, the modernisation of the Budapest and Belgrade railway line which was agreed upon in 2015 with a loan, a Chinese loan, which was covering more than 85% of the cost. Now, within the remit of the, we used to be called 16 plus one summit, which is now 17 plus one with Greece, actually joining in earlier this year. Other mechanism for cooperation have been put in place within this context, was the development of two permanent secretariat, one in Riga, one in Belgrade, where we coordinate cooperation in transport and infrastructure developments. There was also a secretariat for maritime affair for the 16 plus one strategy, which was launched in Poland last year, and a range of centres across Central Europe dedicated to technology transfer have been put in place. I think what is very important here, and the main concern for the EU, is to consider that important issue pertaining to trade matters linked to standards, rules, norms and practices could be actually dealt with outside of where the EU has exclusive competence, which is to say 16 plus one outside of the EU itself. This is an issue in terms of unity that we really need to address and make sure that this unity of interest at EU level is not eroded in any kind of form. This is very much the French perspective on the issue. There are still ongoing concerns across some European countries about avoiding any political cost to European unity of action, and I'll just refer quickly to 2017 when Hungary and Greece blocked EU statements on human rights towards China, which was actually the first time that the EU together fell to make a joint statement at the UN Human Rights Council. There is also relative importance of Chinese investment in the Balkans developing with Chinese infrastructure loans and sovereign guarantee reaching the level of one third of national GDP, just in the case of Macedonia, and increasing level of investment also in Serbia, not just for ice speed railway line, but also a 1.5 kilometre bridge over the Danube River and a number of other industrial projects taking place there. So the ongoing challenge really for Europe is the fact that these European attitudes continue to be shaped primarily by national reviews towards BRI, although of course a coordinated approach is seeking to emerge. But here there is much more room for greater political coordination in Europe, including by seeking to further, in more concrete terms, what will be the EU Asia connectivity strategy, including an external market of third countries where joint projects also with China within the remit of the Belt and Road Initiative could be further considered. I'd like to mention one example in terms of promising opportunity prevailing in project channels jointly by the Asian investment, infrastructure investment bank and the EBRD, which is the Trans Anatolian Natural Gas Pipeline, which is joint refinance and which is going through Turkey through southern Europe. Now according to European estimates, Asia was roughly 60% of the world population, accounts for 35% of EU exports and 45% of all EU imports. So the challenge here is for us, in terms of the long-term investment but also in terms of trade in the rule standards and norms and practices needed to promote market access and the movement of good services, capital and people, across borders along the connectivity project that we will be seeking to find or develop and foster. And here France does share the view as does Germany as well, that the Silk Road's fully fledged success should be eventually determined by the ability to promote balanced cooperation as well as social and environmental, financial, anti-corruption norms and standards and the respect of intellectual property rights across the connectivity projects and developments infrastructure but also beyond that will be made. And in this context, I think it's important to mention the non-material dimension also of the Belt and Road Initiative of the Silk Road which should be further explored in digital infrastructure, people-to-people interactions and cultural exchange along the roads and especially between Europe and China. This is a component which is also important to the bilateral senior European relationship. All these developments will be also particularly relevant for the EU given the constantly evolving nature of the EU. Actually there is no clear definition of what the Belt and Road is. It's been evolving, changed names over the past six years also since its creation, since it was launched. And Europe will need to be able to adapt and adopt a quick, fast and flexible approach to developments also as they come in within the remit of the Belt and Road Initiative. This is also true when you consider Europe's wider role in world affairs. The French President Emmanuel Macron recently advocated in the wake of the G7 summit in Biarritz last August the possibility to forge a new relationship between Europe and Russia in the realms of defence, cybersecurity and strategic relationships which will be coherent from a French perspective with Europe's own strategic interest towards ensuring stability in the region. The French analysis here underlines what it sees as Europe's long-term strategic interest in creating a new relationship with Russia as part of a new architecture based on trust and security in Europe in the wider context also of Eurasia and the new Silk Roads. This is of particular relevance for the EU with a view to develop also European norms and standards through connectivity, notably at a technical level and in particular with the emerging Eurasian Economic Union and seeking to avoid the risk of pushing Russia further away from Europe towards the East on some of those issues. Now, and this will be my third point. The French global perspective within this framework is very much to emphasise the idea of European sovereignty that was called by the French president. France, as you will know, has had long-standing relationship with China and not just because of the recognition by the Général de Gaulle in 1964 of the People's Republic of China which was an extremely important moment for the bilateral relationship. Seen from Beijing and in the context of Brexit, France is actually expecting to be taking on a greater role in the development of European ties although of course Germany remains China's most important trading partner within the EU in economic terms. Now what the French president Emmanuel Macron is seeking to do is to build what he calls a new euro-Chinese partnership for the 21st century. One which is based in the economic field as we have seen on a more balanced trade relation with a level playing field in both ways and one which is also based on a greater unity of action and interest at European level across the range of EU-China cooperation to the benefits of both China and the EU. Once again, it's not about criticising Chinese or Chinese investors for being pragmatic and clever sometimes in the opportunities they've seen all benefiting from divisions within Europe which was clearly the case over recent years. It is about us to seek a much more coordinated approach at European level and greater consideration of European interest in its continental scale. The French president has made a clear reference to the need for greater European unity in the conference to the ambassador last August. The reason here is that France really sees itself as playing a decisive balancing role globally and together notably with Germany as taking responsibility for a much more systematic European approach in particular with China. One example which you briefly referred to was the actually very unprecedented step to invite Chancellor Macron and President Juncker for the bilateral visit of President Xi Jinping in Paris last March which used to be bilateral national relationship but the French president decided also that he wanted to have a European approach together with Germany and President Juncker and also with China which was a very positive development in that direction. There are at least three key priorities for France where this fully united European cooperation agenda should be fostered. First is the economic and trade agenda towards a more balanced bilateral trade relationship as we've already touched upon but this should also require in my view a European country to seek to reduce their dependency on exports in the longer run and stimulate domestic growth forces and investments as well as strengthening of European innovation policies. China is actually now able to shape the global economy in a way that will increasingly require adjustments from our part. This is true for example in the digital field where the Chinese company Huawei is already beginning to install 5G technologies and mobile technologies in Europe which is the prerequisite for autonomous driving but European countries, France in particular but more generally also Germany should take this as a stimulus to strengthen Europe's economic competitive edge rather than being distracted by political division inside and near Europe at a time when China herself is extremely conscious of its own strategic vision in particular for Eurasia. An economy continent is rising, one which is already able to take over some parts of our economy and parts where we actually used to be very good at so we should not really be complacent about that and take this as a real opportunity to improve our strength. The second priority within the French perspective is a multilateral agenda focused on climate change and biodiversity where China has really become an ally in that direction and there is a lot that can be further explored in terms of bilateral cooperation. And third is an Eurasian agenda which would enable better convergence between the Chinese Belt and Road Initiative and the European Connectivity Strategy. The challenge here again is really to ensure that European sovereignty and unity is fostered but beyond all of this what is also a stake is really the future of Europe's role globally and that of European values, culture and civilization in a new multipolar world order that is rising and to avoid also bipolarisation between the United States and China. The old certainties and I think in part the old diplomacy that had held the Western Alliance for a long time no longer pertain and the better Europeans fully recognise this the sooner they will be really able to forge for themselves a new role in this fast changing word order. The key question is really whether European leader will have the necessary common purposes to look at that together on this issue of strategic relevance to them. By 2050 just give a couple of numbers but Europe will account for around 6% of the world population 12% of the world economy against almost similar share for the United States and 16% for China. Though of course power is not only merely a question of economic strength nor only directed by the size of population it is also about political vision and the capacity to inspire economically, politically and culturally and I think this is also a very important component as both China and Europe share the fact of being old civilisation and there is great willingness in China and Europe to also engage and understand this deeper perspective in terms of looking at the bilateral relationship and more widely. This is very much where France is also actually seeking to take on a greater role for the future of EU-China ties and most importantly to further promote European unity. Thank you very much for your attention.