ABSTRACT
Introduction Leading European politicians have for some time pointed to the apparently inexorable economic rise of China as a major challenge to Europe. If the future of European incomes, jobs and well-being depends on ‘competitiveness’, then the rise of a new and growing source of cheap exports, and a magnetic new competitor in the search for mobile capital, is surely a challenge indeed – or even a major threat. In 2005, Peter Mandelson, speaking in Beijing, ran through the usual ritualistic numbers associated with the Chinese boom: a third of world growth since the year 2000 has come from China. China’s foreign exchange reserves are 17 times larger than the UK’s. Of China’s three million graduates each year, 250,000 are engineers. Within 15 years, China will consume more than Saudi Arabia’s current entire oil production. In ten years, there will be 160 million cars on Chinese roads. China already consumes around a third of world steel and its own production of steel increases each year by the equivalent of half the total Japanese steel output. Chinese economic growth has averaged around 9 per cent for 28 years. But his point was to insist that:
The truth is Europe can compete in the new world, but it involves a process of restructuring and adjustment in which there will inevitably be losers as well as winners within the EU itself. But it was always thus, given that economic dynamism, technological change and human creativity are the source of Europe’s high levels of prosperity.
