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New priorities set in China's 11th Five-Year Guidelines are crucial to China's sustainable development and provide a foundation for future good Chinese-European relations, said a top European politician on Tuesday.

"I am so satisfied to see that China now has decided to focus more on social justice and social security," Poul Nyrup Rasmussen, president of the Party of European Socialists (PES), told Xinhua.

"That is quite, quite crucial and quite fundamental for ensuring a balanced and sustainable development in China."

He said he was impressed by China's new five-year plan, which aims to narrow the gap between cities and rural areas, to redistribute growth between the coastal east and the inner part of the country, to give priority to social justice and to give new weight to environmental protection.

Rasmussen and his PES colleagues were briefed on China's new development plan by a delegation of the Communist Party of China on Monday. PES is the second largest party group in the European Parliament.

"It is wise of them (Chinese leaders) now to give this priority. I hope they can do it. It would really demand new decisions in China in the next five years and certainly it is interesting to follow," he said.

He admitted that the rapid development of China poses new challenges to Europe whose labor markets are far less flexible.

But he argued that Europe should not lower its social standards to fend off the challenges from China or any other emerging markets in the world.

"We would not accept a race to the bottom. We would not accept social dumping in Europe. We would not accept competition among states in Europe," he said.

In addition, both China's and Europe's social security systems need reforms, Rasmussen argued.

"China must increase its social protection and we must modernize our social protection," he said.

"If we do that, then I see a win-win situation, where China can continue its high economic growth, redistribute its growth to social justice, and we in Europe can gain by selling more of our modern products to China."

Rasmussen said Europe needs to invest to enable people to move from old jobs to new ones so that the continent can still maintain its competitive edge even when China has the advantage of cheap labor.
 
"Europe should not compete on salaries. Europe should compete on qualifications," he said.

But investment in education and training cannot be done without having a welfare state, he argued.

Experiences of the Scandinavian countries, which are typical welfare states, show that modern social security can be reconciled with high competitiveness and flexibility.

He said the implementation of China's new policies is an "enormous job."

"It's not going to be easy, but I think you have a fair chance," he said.

The politician said his colleagues and he had "very concrete, very open, very frank discussions" with the Chinese delegation on wide-ranging issues.

"We confirmed our long-term vision for strategic partnership on scientific, on cultural, on research, and on economic basis in our mutual interests."

He said Europe and China have some common visions. "We don't want a unilateral world. We don't want a unipolar world. We want a multi-polar world and a multi-lateral world."

Europe must increase its cooperation and dialogues with China as China is the world's fourth largest economy and a political heavyweight, said Rasmussen.

Europe does not see China as a threat either militarily or in terms of trade, he said.

"We see China as a big political, economic power. But we don't see signs of aggressiveness, and signs of not respecting international law."

Europe and China can disagree on some questions, he said. "What is really crucial here is that China respects United Nations fundamental rules; China is a member of the Security Council; China has not been aggressive to its neighbors; and China is a part of the global economy."

On trade, he said Europe should continue to open up markets. "When it comes to trade, I think we have to be careful but not prohibitive," he said.

(Xinhua News Agency March 22, 2006)