In the 1980s, Deng Xiaoping’s economic reforms and opening-up policies enabled China to industrialise through investment and export-led growth.

After Beijing’s Third Plenum, the new grand strategy by President Xi Jinping and Premier Li Keqiang allows China to move toward a post-industrial society and consumption-led growth, along with increasing regional integration.

Since last September, trade tensions over solar panels have clouded bilateral relations between the two sides.

Staff workers check photovoltaic products at an energy company in Lianyungang, East China's Zhejiang Province, August 27, 2012.  [Xinhua Photo]

After the post-Iraq honeymoon period in bilateral ties, Brussels has been reluctant to end the arms embargo on China. The bilateral friction also includes Brussels' measures against Chinese textile exports in 2005 and the latest anti-dumping and anti-subsidy investigations against China's solar panels.

While strategic partnerships will be the main focus of the China-EU summit starting in Beijing on 21 November, both sides hope to eventually sign an investment agreement aiming to reduce simmering trade tensions.

The key question is whether Brussels can take full advantage of the Chinese reform wave that was officially launched in the just-concluded Third Plenary Session of the eighteenth CPC Central Committee.

Series of economic and strategic reforms

In the past few months, China’s new leadership, President Xi Jinping and Premier Li Keqiang have provided glimpses of economic reforms, which have now been officially launched.

Based on the “383 Plan,” they comprise tripartite reforms, focus on eight sectors and involve three reform packages.

The tripartite reforms cover the market, government and companies. In each case, the goal is to reduce the government’s role in the economy. The eight core sectors comprise finance, taxation, state assets, social welfare, land, foreign investment, innovation and good governance.

In turn, the reform packages seek to relax control over market access, launch social security and allow sales of collectively-owned rural land. The household registration system ("hukou"), which continues to discourage migration, will be phased out by easier access to urban hukou for third-tier cities.

Most new reforms, which will be spearheaded by a central leading team, are likely to be phased into policy over the next five to 10 years.

Broader and deeper potential for Sino-EU cooperation

All of these Chinese reforms, sectors and packages offer new opportunities for EU-Chinese co-operation, particularly for European multinationals in the mainland.

Overall, the tripartite reforms reflect the stated wishes of the pan-European institutions, most European governments and all European multinationals. Most importantly, the sectoral reforms will offer new opportunities to a broad array of old and new European players.

The mainland’s shift toward consumption-led growth has the potential to attract European consumer industry giants, in addition to the current high-tech leaders.

China’s efforts to accelerate innovation are likely to increase the European interest in joint R&D ventures, just as they reflect Chinese multinationals’ rising interest in European innovation hubs.

China’s massive urbanization plans are likely to attract European infrastructure, construction and real estate players, particularly in third and fourth tier cities.

Meanwhile the hukou reforms may lessen Brussels’ criticism over Chinese migrant conditions, which have been fuelled by human rights perspectives.

While the expected privatisation of China’s state-owned enterprises will not proceed as fast as Brussels might want, the direction of the mainland’s state assets reforms will gain support in Europe as well.

Since early fall, the new leadership’s economic reforms have been fuelled by Shanghai’s free-trade zone.

The FTZ has evolved along with financial reforms, which will offer new opportunities to European banks and financial intermediaries.

Most importantly, China is opening doors to foreign investors and financial institutions.