Category: Green Finance

EU-China Comprehensive Agreement on Investment: Stakes for a constructive balance of power

By Philippe Coste, Pierre-Noël Giraud, Stéphane Gompertz, Henri de Grossouvre, Fatima Hadj, Brice Lalonde, François Loos, François Quentin, Joël Ruet, Raphaël Schoentgen, Alex Wang, avec Clarisse Comte et Claire Thomas.

After seven years of negotiations, the European Union and China reached an investment agreement on December 30, 2020. While Beijing sees in it the promotion of a “high degree of openness”, the EU aspires through this treaty to establish the long sought after “equality of market conditions”.

To carry out this project, a balance between the strategic interests of each side and common objectives on which to agree remains to be found… just as it remains to find avenues for concrete action.

Find the analysis note in French :2021-03-Issue-Brief-UE-CHINETélécharger

• This treaty provides for the intensification of economic and trade relations between the EU and China. It guarantees EU investors greater access to China and also helps to create more balanced conditions of competition.

• Areas of collaboration are proposed here, in various fileds : political (place of China in international organizations, global governance), legal (international standards, ESG), industrial (mobility, decarbonisation, role of SMEs), economic, environmental, scientific , technological (energy transition, carbon capture, hydrogen, nuclear, new energies), financial (coordinated introduction of carbon prices) and cultural.

• For the EU, it is above all a matter of asserting its strategic interests in a coordinated manner with the member countries during the ratification process.

The long-term issues of technological sovereignty, of competition between blocs, all possible causes of “stop and go” in bilateral relations must be seriously dealt with.

Despite the identified obstacles, maintaining an open but precise dialogue between the EU and China is essential. The European Union must continue its transformation and ensure respect for its increase in diplomatic power both within the EU and in its relationship with China: beyond state-to-state relations, it is up to the EU in as a community to negotiate the terms of a new bilateral relationship with China. It is in this way that it will confirm its status as a “balancing power”.

China “Two Sessions” : the Bridge Tank co-organizes the Think Tank & Media Forum on Global Economic Development

A Forum on Global Economic Development on the occasion of the Two Sessions in Beijing

Together with its Chinese partners, the China International Publishing Group and the China Institute for Innovation & Development Strategy, as well as the Prospective & Innovation Foundation, the Bridge Tank co-organized on March 8 a hybrid Forum on the sidelines of the Two Sessions.

On this occasion, Joël Ruet spoke alongside Wei Jianguo, former vice-minister of Commerce in China and vice-chairman of the China Center for International Economic Exchanges, Cai Jiming, deputy at the People’s National Assembly and director of the Central Committee of the China Association for Promoting Democracy, and Zhang Yuyan, member of the 13th National Committee of the Chinese People’s Political Consultative Conference and director of the Institute of World Economics and Politics.

Jean-Pierre Raffarin, former Prime Minister of France, opened this webinar alongside four Chinese vice-ministers and the deputy speaker of the House of Representative of Argentina. For almost three hours, representatives of more than ten countries, ranging from Russia to India, from Brazil to South Africa, explored new avenues of thoughts, in particular in favor of multilateral cooperation, global economic recovery supported by innovation and reform of global economic governance. The role of international think tanks in building platforms for dialogue was highlighted, and presented as an essential strength in building a community on a humanity scale.

Chinese media articles China Today, China.org, China Institute for Innovation and Development Strategy covered this event in particular.

Opening of the Forum by Jean-Pierre Raffarin: against the temptation of isolationism, an international cooperation based on innovation

In his remarks, the former French Prime Minister said that sharing of experiences and mutual understanding were essential to achieve peaceful development, a common goal for all countries. As a global crisis exacerbates the need for a coordinated response to global challenges, he stressed the dangers of a temptation to unilateralism and protectionism. Emphasizing the role of innovation, he argued that each country should actively conduct international cooperation while safeguarding its own sovereignty. He mentioned in particular the fight against climate change, referring to the joint efforts of France and China, a strong signal in favor of a global consensus for green development.

From crisis to opportunity for renewal, according to Chinese speakers Wei Jianguo, Zhang Yuyan and Cai Jiming

Former vice-minister of Commerce Wei Jianguo said China’s “dual circulation”, a pillar of the 14th Five-Year Plan launched at the same time, will bring new opportunities for global economic development. According to him, beyond the crisis it is going through, the world is entering a new era of globalization, where China must play a crucial role.

But experts have set it against a less optimistic scenario, warning of current systemic risks threatening the global economy, such as inflation, the symptoms of which – sharply rising commodity prices – are already visible. Inflation and climate change therefore emerged as two challenges of common interest to be tackled together.

Zhang Yuyan called for renewed international cooperation, which involves working together on the issue of global governance. Indeed, discussions remain to be conducted, and this responsibility falls to the great world powers, which must find the right balance between strategic autonomy and common interests.

Cai Jiming emphasized the importance of building a fair and sustainable world trading system, based on the notion of comparative interest in the international division of labor, firmly opposing isolationist tendencies that threaten the balance of world trade.

China’s commitment in Global Security and Sino-European Cooperation : Joël Ruet’s Intervention

Joël Ruet, chairman of the Bridge Tank, said China must adopt more multilateral ways to clarify its position in the security issue and create a stable external environment. Speakers also agreed on the idea that China should play a role commensurate with its economic weight in global governance.

He referred to the pre-investment Agreement concluded between China and the EU, symbol of the opportunities that can emerge from a crisis, while warning of two priorities that should not be overlooked. Indeed, he targeted two areas where Sino-European cooperation is fundamental : the environment, where the ambitious words of the heads of state must be implemented through acts in the perspective of the COP26, and industrial cooperation, that the European and Chinese industries and businesses see as very promising.

The take of The Bridge Tank on the 2021 Two Sessions – “Dual circulation”, high-quality development, disappointing environmental objectives…

 

The Two Sessions designates the two annual plenary meetings of the National People’s Congress and the National Committee of the Chinese People’s Political Consultative Conference. After a year of pandemic which had postponed this meeting in May 2020, the Chinese leaders were keen this year to launch it on March 5, as if to embody the exemplary resilience of the country and the regained normality of the regime’s institutions. Plus, it is marked by the launch of the 14th Five-Year Plan 2021-2025 and the 100 years anniversary of the Chinese Communist Party. 

Among the highlights of this event, Prime Minister Li Keqiang has set a growth target of 6% for 2021. This moderate figure shows that the priority will be less focused on an attractive GDP – the IMF is banking on an 8% recovery – than on stable growth in a context of uncertainty, and on three pillars: “reform, innovation, and high quality development”. Also, the budget allocated to research and development will increase by more than 7% per year over the next five years, to achieve breakthroughs in future technologies and allow China to gain strategic autonomy. Another priority of the regime is to upgrade the supply chain and to promote domestic consumption, especially in the automotive and household appliances sector.

In fact, both the Two Sessions and the 14th Five-Year Plan have as a common thread the development paradigm of “dual circulation”. This notion denotes a two-pronged development strategy that requires both internal and external market support to stimulate long-term consumption patterns. The domestic cycle is particularly emphasized while it is complemented by an international cycle, with foreign trade and investments abroad. This objective of betting on the huge Chinese domestic market is rooted in a desire to hedge against external shocks, in the context of rising diplomatic tensions and instability in the world economy.

Li Keqiang also stopped on the environmental issue: he called for the promotion of the greening of lifestyles and production. For example, one of the targets for 2021 is to achieve a rate of 70% for the use of clean energy for heating. The 14th Plan calls for China to reduce its energy consumption per unit of GDP by 13.5% and CO2 emissions by 18%. Yet the experts say that the objectives mentioned do not represent a real acceleration to achieve the carbon neutrality expected in 2060, for lack of concrete means. For example, the Double Assembly as well as the 14th Five-Year Plan introduced the idea of ​​a “cap on CO2 emissions”, without actually setting one. While it is encouraging that a component dealing with climate change is for the first time adopted in a national-level plan, these initial environmental indications are therefore often perceived as ambiguous, even disappointing.

Minister Edmond Alphandéry exchanges with Bridge Tank experts about carbon pricing

Edmond Alphandéry, former French Minister of the Economy and Chairman of the Task Force on Carbon Pricing, gave a long explanation of his vision of the place and importance of carbon pricing in the ecological transition, and highlighted the decisiveness of this measure in order to achieve the objective of carbon neutrality, within the framework of the Paris agreement.

Carbon pricing: an essential tool for the ecological transition

Minister Alphandery began by reminding us of the scale of the challenge posed by global warming and the complexity of the issues at stake : given that we emit 40 billion tons of CO2 each year, he explained that if we reasonably assume that the price of a ton of CO2 should be set at around 100€ (according to the main evaluations), then a carbon pricing system would cost €4,000 billion each year, which amounts to Germany’s Gross National Product (GNP).

In this context, the former minister sees carbon pricing as central to the fight against global warming. His explanation is simple: when carbon has a price, all economic agents (households, companies, the State) are encouraged to reduce their emissions, or even to stop them or to find alternatives, in order to reduce their expenses.
The speaker specified that there are two solutions currently applicable and applied in order to put a price on carbon. The first is a carbon tax, which is simple and effective, but politically difficult to implement and whose adjustment is complex. The second is the introduction of a carbon market, where emission permits are issued according to the total volume of emissions desired. Permits are bought by market participants in proportion of what they emit, and their price is defined by supply and demand.
According to the chairman of the Task Force on Carbon Pricing, the tautological advantage of the carbon market is that it is a market, and that it therefore encourages innovation and the adoption of virtuous behaviour by agents in order to resell their permits (see the example of Tesla in the United States). However, it has the disadvantage of being characterised by a high volatility of carbon pricing.
It is this last reason that prompted the former minister to chair the Task Force on Carbon Pricing in order to promote among decision-makers a targeting of the price of carbon rather than volumes, as is currently the case. On the European carbon market, for example, he said that this would give stability to a carbon price that had collapsed during the subprime crisis, and also increase visibility.

Against the threat of climate change, China must adopt and extend carbon pricing

Edmond Alphandéry then spoke about the role of China, whose place he considered to be unavoidable regarding these issues. The country’s emissions are indeed higher than those of the United States and Europe combined. In this respect, he pointed out that the Chinese government is aware of the importance of the issues at stake and has already promoted a number of ecological transition measures. For instance, he stated that there is already a carbon pricing system in China, even if the price remains largely insufficient for now and is limited to the energy sector.
The former minister also stated that, in his view, there is a real Chinese will to carry out reforms. He particularly welcomed the initiatives and discussions that are taking place between various European and Chinese personalities, discussions in which he himself took part, in order to defend a convergence of the carbon prices of the two powers.
For Edmond Alphandéry, if such a reform was promoted, it would be no less than a revolution in the fight against global warming.

In conclusion, the panelist made a proposal to the Chinese authorities regarding their major strategic programme that is the BRI. As the government increases energy investments, especially aimed at thermal power plants, Edmond Alphandéry would consider it relevant and effective to introduce an internal carbon price in the companies and industries financed by Chinese funds. This would simulate a carbon price and thus encourage decarbonisation, while sending a strong message to the international community by underlining the importance that China attaches to reducing greenhouse gas emissions.
Edmond Alphandéry said he would be ready to support such an initiative immediately.

Alphandery was one of the main speakers at the Bridge Tank forum on EU-China cooperation post-Covid-19.
He participated in a panel moderated by Philippe Coste, former French ambassador, on greening investment in the European Union (EU) and China, and on the challenges of the Belt & Road Initiative (BRI). The forum took place at the Palais Brongniart in Paris on 15 October 2020. Other speakers in this session were Pierre-Noël Giraud, Professor of Economics at the Ecole des Mines de Paris, Djellil Bouzidi, member of the Haute Autorité de la Statistique and of the Bridge Tank’s Board, and Song Luzheng from Fudan University.

5 years after the Paris Agreement: companies and levers for climate action in a world in crisis

The Society for Encouraging National Industry, founded in 1801 with the official support of Napoleon, organised a webinar entitled “5 years after the Paris Agreement: companies and levers for climate action in a world in crisis”. This event took place on the 16th of December 2020, for the COP21’s fifth anniversary.

During the plenary session, introduction speeches were made by Olivier Mousson, president of the Society for Encouraging National Industry, Sylvianne Villaudière, vice-president of the Society Jean-Pierre Cordier, president of the Society’s International Commission, and Joël Ruet. 

During his introduction of the “Finance and Climate, which leverage” panel, Joël Ruet argued that key factors in the success of the COP21 summit was the Moroccan commitment to convince African countries and the United Nations’ Group of 77 to sign the Paris Agreement. He highlighted the role of the support of Southern countries for this agreement, especially as it was supposed to support them in their ecological transition. Most of the investments that lead to global growth will soon mostly be directed at Southern countries, and we must ensure that these investments are sustainable and support agriculture, social measures and innovation (notably through technological know-how transfers). Financial products should be developed for middle-sized projects, as they already exist for small and large projects. Europe needs to follow and to be followed by the rest of the world if it wants to achieve its goal efficiently. It is also key that the European Union plays a role in the norms of the analysis of raw data. Southern countries must have access to the same kind of negative interest rates as the ones in the North to be able to develop fairly. 

Among the other keynote speakers were Bertrand Badré, former Managing Director and Chief Financial Officer of the World Bank, Emmanuel Mourey, President of the Banque Postale Asset Management’s board, Christian Brodhag, Lecturer at Les Mines School (Saint-Etienne) and former inter-ministerial delegate for Sustainable Development, Anne Girault, Professor of the ABC Association, and Monica de Virgiliis, president of Chapter Zero France.

T20 handover between Saudi Arabia and Italy

The T20 presidency handover between Saudi Arabia and Italy took place on the 30th of November 2020. The Argentinian, Japanese and Saudi chairs of the former presidencies attended this important event, to highlight the continuity of the works and research of the T20. The Bridge Tank has been a member of the T20 since 2016, and will participate to the Italian presidency’s works in 2021.

On the occasion of this handover, a debate was organised on themes such as the lesson from the past presidencies, the challenges and priorities for the Italian presidency, and the coming challenges for multilateralism. Among the keynote speakers of this debate were Pietro Benaéssi, Sherpa of the G20 for Italy, Fahad M. Alturki, Chair of the T20 for Saudi Arabia, Paolo Magri, Chair of the T20 for Italy, Julia Pomares and Gustavo Martinez, chairs of the T20 for Argentina, Naoyuki Yoshino, chair of the T20 for Japan, and Ettore Greco and Antonio Villafranca, coordinators of the T20 for Italy. This debate was chaired by James McGann, Director of the Think Tanks and Civil Societies Program of the Lauder Institute of the University of Pennsylvania.

2020 Horasis Asia Meeting

During the annual Horasis Asia Meeting, which gathered 400 of the regions and the world’s most senior leaders from business and government, the speakers exchanged about the overcoming of the profound economic, political and social disruptions caused by COVID-19. This event took place on the 30th of November 2020.

Joël Ruet moderated one of the panels, entitled “ESG Investing in Asia Post-COVID”. Among the keynote speakers of this session were Ara Brutian, Director and Head of Digital Innovation for Sustainalytics, Rajiv Lall, managing director and vice-chairman of Infrastructure Development Finance Company, Kai Dai, CEO of Young Sustainable Impact Greater China and Chairman of the Kylin Prime Group, and Arun Sharma, President of Grovepike Associates. It was highlighted during this panel that data structuring and norms were at the centre of the post-COVID investments, and it was also underlined that this COVID crisis had to be considered as an opportunity for investment. The United States’ return to Asia, in terms of investments, was also noted. Voluntary disclosure and engagement was defined to be a key component of the future of finance, especially with the rising generational issues..

Debate between Rajiv Kumar and Yoginder Alagh on “Agricultural policies in the COVID phase”

Rajiv Kumar, vice-Chairman and executive head of NITI Aayog, discussed with Yoginder Alagh, former Indian Minister of Power and member of the Bridge Tank’s board. NITI Aayog replaced the Planning Commission in 2015 and is chaired by Narendra Modi, the Indian Prime Minister.

This dialogue was organised by the World Bank and constituted the introductory statements of the webinar entitled “Agricultural Policy in the COVID phase”. It took place on the 24th of November 2020.

International Finance Forum 2020

Edmond Alphandéry, former French Minister of Economy and former President of EDF, took part in the International Finance Forum 2020 Annual Meeting in the name of the task force he chairs, Carbon Pricing in Europe. The Bridge Tank’s team, who contributed to this task force’s work, also attended this event. This forum allowed experts to discuss how to set up a common agenda between Europe and China regarding carbon pricing. This event took place on the 21st of November 2020.

Participation of the Bridge Tank to the T20 Summit of the G20

Joseph Stiglitz, Nobel Economics Prize Laureate and Chief Economist at the Roosevelt Institute, Ellen Johnson Sirleaf, Nobel Peace Prize Laureate and former President of the Republic of Liberia, Ban Ki-moon, former Secretary General of the United Nations, H. R. H. Prince Turki Al Faisal, Chairman of the King Faisal Foundation’s Centre for Research and Islamic Studies, H. H. Prince Faisal bin Farhan Al Saud, Saudi Arabia’s Minister of Foreign Affairs, Nouriel Roubini, CEO of Roubini Macro Associates, H. E. Fahad Al Mubarak, Saudi Arabia’s G20 Sherpa, H. E. Bandar Hajjar, President of the Islamic Development Bank, and Helle Thorning-Schmidt, former Prime Minister of Denmark and former CEO of Save the Children, were among the keynote speakers of the T20 Summit. This event was held between the 31st of October and the 1st of November 2020. It gathered over 70 world-leading thinkers, civil society organisations and international institutions, to exchange about climate and environment, women and youth, multilateralism, economic development and finance, sustainable resources, as well as technology and digitalisation. 

This summit was concluding the T20’s research, divided into 11 task forces. The Bridge Tank particularly took part in the work of the second of these task forces, focusing on climate change and environment.

Theme: Overlay by Kaira
Copyright 2020 - The Bridge Tank