'Significant opportunities' lie ahead to build wider economic relationship

Future cooperation between China and the European Union should be seen as a stepping stone to a wider global governance partnership and reform, according to a new report.

The document - EU-China Economic Relations to 2025: Building a Common Future - identifies key trends and areas of potential economic collaboration.

It cites the "significant opportunities" for China and the EU to deepen their economic ties, with scope for an "enormous increase" in investment.

But it also warns of potential obstacles, including "significant differences" between the political and economic systems of China and the EU.

"Building a genuine strategic partnership will require greater effort from both EU and Chinese leaders," the report says.

The document, which was published on Wednesday, is the culmination of an 18-month study by the China Center for International Economic exchanges, Brussels-based economic think tank Bruegel, Chatham House, and the Institute of Global Economics and Finance at the Chinese University of Hong Kong.

It says the EU and China should conclude an "investment agreement" that would pave the way for a future free-trade pact and relax visa requirements for each other's businesspeople and students.

It also calls for joint research and innovation projects and for greater cooperation on energy security and climate change.

"Against a background in which the United States is increasingly drawing into question its commitments to free trade and the global commons - and with the uncertainty resulting from Brexit - there clearly exists a need for China and the EU not only to increase the breadth and depth of their cooperation, but also to act more strategically in the way they relateto each other," the report says.

The Belt and Road Initiative is seen by the report's authors as a platform for further expanding bilateral trade and economic cooperation, with the EU potentially becoming its "western anchor". They say the "strategic goal" of China and the EU should be to move closer "in response to US uncertainty".

"This is a critically important moment for the EU and China to consider how to deepen the full range of their bilateral economic relationship," it says.

Trade is the most developed area of interactions between China and the EU, with each being the other's largest source of imports and second-largest export destination.

While trade relations are well developed, the report says there is room for improvement in foreign investment levels, cooperation on industrial and technological innovation, and financial market integration.

It adds that only a "sensible" Brexit deal will enhance benefits of closer China-EU relations and the economies of China, the UK, and the EU "have a mutual self-interest in seeing a constructive outcome from the Brexit negotiations".

Trade between China and the EU reached 515 billion euros ($614 billion) in 2016, compared with 113 billion euros in 2001.

The EU and China are each other's largest source of imports and their second-largest export destinations. Last year, China accounted for 20.2 percent of all EU imports, while Europe provided 13.1 percent of Chinese imports. China was the destination for 9.7 percent of EU exports, with the EU taking 16.1 percent of Chinese exports.

Mike Harrison is a media consultant to China Daily UK.