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By Antti Kuosmanen

At the time when Finland has taken over the EU Presidency as of July 1, EU-China relations have grown very important for both sides. The relationship is described as a "strategic partnership." Why is that?

First of all, we trade a lot with each other. China is the EU's second biggest and the EU China's biggest trading partner. According to European statistics, Chinese exports to the EU in 2005 were some € 158 billion (US$199 billion), while EU exports to China were worth some € 52 billion (US$65.5 billion). These figures reveal a lot about the amount of trade and its structure.

Second, European companies are a major investor group in China. A large part of foreign investments in China, around € 118 billion(US$148.7 billion) by 2004, comes from European companies. As with trade, these figures say a lot about the importance of China as a part of the world economy, and also about its integration into it.

Third, human exchanges between the two have become very active. Over 50,000 EU citizens reside in China, and almost 3 million trips were made in 2005 from the EU to China. The number of Chinese trips to the EU in 2005 was about 674,000. Perhaps more significantly, some 170,000 Chinese students studied in the EU.

Formal relations between the EU and China date back to 1975, when diplomatic relations were established, and the treaty basis is from 1985 when a bilateral trade and investment agreement was concluded. Since then an extensive network of sectoral agreements and different dialogue arrangements has arisen, comprising political issues such as human rights and some 20 economic, trade, investment and technology-related fields.

The figures are impressive in themselves, but their real significance is in what they reflect. Indeed, they reflect the spectacular growth of China's economy and the transformation of its society. At the same time, new and very serious challenges have also emerged the need to secure energy supplies and prevent the degradation of the environment, redress deepening social disparities, and deal with all the challenges and responsibilities resulting from an unprecedented exposure to the outside world.

So, based on this strategic partnership, what can we expect in terms of EU-China relations during the Finnish EU Presidency in the latter part of this year? In terms of events, the ninth EU-China Summit will be held on September 9 in Helsinki. In this same context, we will organize a high-level Business Summit bringing together top business leaders from the EU and China. The Europe-Asia Meeting (ASEM) and a business dialogue, celebrating the 10th anniversary of this institution, will also be organized. Add to that the expected high-level participation from the Chinese side, and Finland will have a massive concentration of high-level events concerning China in September.

Happy as we are to receive these high-level guests, it is the substance that should determine success. We hope to bring the partnership forward in various fields. Indeed, the scope of our co-operation does not fit well any more within the scope of the 1985 Agreement, so we are willing, as the Chinese side originally proposed, to expand it to conclude a wide-ranging horizontal Framework Agreement. After preparatory work, we hope to announce the launching of official negotiations on such an agreement.

In addition to this, we hope to be able to see progress in various fields such as sustainable development related to clean energy, environmental issues such as climate change, development policy issues, fighting illegal immigration, civil aviation, and many others. There are also various issues in the field of international relations in which our dialogue should continue and intensify, or where we negotiate with each other. The former comprises issues like East Asian security in general, the Democratic People's Republic of Korea, and Iran. The latter relates first and foremost to the World Trade Organization, since China's contribution to the conclusion of the Doha round is essential.

We know that there are a couple of issues that are high on the agenda in China and the EU's views on these are of special interest to the Chinese. One of them is Taiwan. There is no change in the EU's one-China policy, but as part of that policy, we continue to emphasize that no party should aggravate the situation by unilaterally changing the status quo.

Another issue is the EU's arms embargo towards China. We believe that the embargo is out of date and should be repealed and replaced by the EU's own Code of Conduct for arms sales. However, it seems that it is difficult to reach a solution on lifting the arms embargo very quickly.

The last issue I want to discuss is the so-called market economy status. There are some technical criteria to meet, and the fact is that China does not meet them all, although it has made progress to that effect. There is also a larger issue of market access related to this, and we hope that we can find a mutually acceptable solution to the market economy status issue in negotiations between the European Commission and the Chinese Government as soon as possible if not during our presidency, then after it.

All in all, the EU and China have become important partners in the last decades and should be even more so when Finland passes the presidency to Germany at the end of this year.

The author is Finland's ambassador to China.

(China Daily July 18, 2006)