There are now clear signs that China is moving to a lower, but sustainable, growth trajectory with a more balanced external position following the introduction of structural reforms aimed at strengthening the service sector, broadening social safety nets, and developing further private financial institutions.

But while the predictions by pessimists have been disproved, the challenges ahead remain formidable. The eurozone needs to complete the construction of the Economic and Monetary Union and inject new dynamism to its economy, while China has to accelerate its transition to more consumer-led, environmentally friendly and inclusive growth, which requires determined policy delivery.

Yet both the eurozone and China have the capacity to emerge from the financial crisis stronger than before.

The eurozone, which combines efficiency, integration and solidarity, has what it takes to succeed in the global economy of the 21st century: It is well-positioned in the global value chain and committed to trade openness and international economic integration; it is putting its public finances in order; and European countries are reforming their welfare systems. This will not only ensure a more equitable distribution of incomes and a lower proportion of people at risk of living in poverty, it will also reduce the social impact of external shocks and dampen the demand for protectionist measures from those affected.

Meanwhile, China is taking measures to move in the direction of more sustainable growth and it will remain one of the strongest engines of global growth. The upcoming third Party plenum is expected to announce deeper and broader reforms, thereby addressing the systemic risks, including the environmental ones, that would otherwise endanger China's stability.

In the years to come, complementarities between Europe and China will develop further. As two major trading partners, it is essential they strengthen their cooperation both at the bilateral and multilateral level. In this respect, they are joining forces in the G20 to elaborate credible and cooperative growth strategies so as to ensure a successful outcome for the G20 Summit that will be held in Brisbane next year.

Marco Buti is director-general for Economic and Financial Affairs at the European Commission. Peter Bekx is director for International Economic and Financial Relations, Global Governance at DG ECFIN of the European Commission.

(China Daily 11/01/2013 page8)