In the newly-issued Joint Statement of the 21st China-EU Summit, the two sides commit to conclude an ambitious China-EU Investment Agreement by 2020 and adopt a new cooperation agenda by the next summit. At this special time of economic globalization, this statement comes with vital significance. From my perspective based on the likely situation in 2020 and vision for 2035, the framework of the new China-EU cooperation agenda will be guided by free trade, take as its goal safeguarding the rule-based multilateral trading system and focus on trade in services. With enhanced bilateral interaction, it will also promote multilateral cooperation in the economy, trade, investment, service, environmental protection, governance and sustainable development.

The years from 2020 to 2035 will be a crucial stage for China's economic transformation and upgrading, a vital period for European Union integration, and a historic window of opportunity for China-EU cooperation. The two should make the most of this window and make breakthroughs in their economic and trade cooperation.

In their joint summit statement, China and the EU pledged to conclude an ambitious China-EU Investment Agreement by 2020. At the conclusion of this agreement in 2020, they should initiate negotiations on a free trade agreement. To this end, the two sides shall start feasibility research as early as possible.

The EU will find that China is opening up further and the potential of China's domestic consumption is yet to be unleashed in China-EU cooperation. From now till 2035, the two sides need to prioritize the trade in services, strive to achieve an integrated market, promote the free flow of goods, services, capital, people and information, enhance coordination in currency, technology and macro policies and properly handle differences for greater common interests to make new breakthroughs in China-EU cooperation.

An integrated China-EU market should not be an exclusive club, but an effort guided by free trade to promote regional and multilateral cooperation. Such a market will not only expand market demand and stimulate sustained growth drivers in China and the EU, but also inject new impetus into globalization and the world's economic development.

Trade in services, an important driver for globalization and a focal point of global free trade, is where the greatest potential lies for China-EU economic and trade cooperation and where the strength comes to accelerate free trade progress with China-EU cooperation.

The EU is the world's second-largest economy in nominal terms and China is the fastest growing one in terms of the trade in services. However, trade in service only accounts for roughly 14 percent of their bilateral trade, well below the global average of 24 percent. To make the ratio of the China-EU trade in services catch up with the world's average, they should tap the potential of China's consumption upgrading and break the barriers to the trade in services.

There are many areas where China suffers huge supply shortages but in which the EU possesses notable strengths, such as medical treatment, healthcare, eldercare, education, and environmental protection, among other things. There are also several other fields where the two could deepen cooperation, including the future-oriented internet, 5G, artificial intelligence and digital trade. Hence, we suggest that the EU should step up efforts to facilitate service exports and technology cooperation with China and that China should lower added-value tax levied on imported EU services and technology. Zero tariffs or special added-value tax rates could be adopted for medical instruments for cancers and rare diseases imported from the EU. EU medical technologies and some drug standards could also be introduced to China to foster new highlights in the China-EU trade in services.

The key to unleashing the huge potential of the service trade lies in two-way opening up of the service market. China is expected to further open up its market with a focus on service industries, with measures already adopted in several fields. China and EU should identify the two-way opening up of the service market as a focus for their bilateral trade. Under the new circumstances, the EU should acknowledge China's market economy status as early as possible.

Both bilateral cooperation and multilateral progress require China and the EU to expedite their own structural reforms to break the structural and institutional barriers hindering open cooperation.

The efforts of China and the EU for open cooperation and trade and investment liberalization and facilitation at both bilateral and multilateral levels have put forward new requirements regarding EU countries' reform of the labor market and financial system as well as China's reform of the service market, urban-rural integration and market monitoring and regulation. Within the new agenda of China-EU cooperation, reform should have a more prominent position.

China takes the EU as a major partner for the Belt and Road Initiative since the EU has much experience in cross-border, regional and global connectivity and rules. The key lies in the early formulation of a list of major projects and an execution timetable for Eurasian connectivity within the Belt and Road Initiative. Efforts should be made to deliver these projects under the principle of openness, transparency and sustainable development.

Bilateral cooperation between China and the EU is important for safeguarding the multilateral system with the United Nations at its core. In particular, China and the EU are committed to defending the multilateral trade system. To promote global economic governance reform, China and the EU should expedite reform of the World Trade Organization dispute settlement mechanism, improve the WTO's transparency and market monitoring and regulation, jointly initiate new issues for discussion to encourage the inclusion of fresh elements from new regional trade agreements into the WTO, so as to build an upgraded multilateral trading system.

Looking forward, China and the EU should leverage the positive role of think tanks in their discussions on their new cooperation agenda and support the think tanks to start relevant research as soon as possible in order to seize the new historic opportunities.

The author is president of the China Institute for Reform and Development.

The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.

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