30 March - 5 April, 2014
The number of Chinese students in the EU and students from EU coun-tries in China has exceeded 270,000. These figures show that China-Europe friendship and cooperation have pro- vided our peoples a greater variety of goods, more jobs and better educa-tional opportunities.I hope that my visit will deepen the win-win relations between China and Europe so that our friendship and cooperation will deliver more benefits to the Chinese and Euro-pean peoples.Today, both China and Europe are at an important stage of develop-ment. A strategic decision was made at the Third Plenum of the 18th Cen-tral Committee of the Communist Party of China to comprehensively deepen China’s reforms, and over 330 implementing steps covering 15 sectors have been introduced or are in the works. The 1.3 billion Chinese people are endeavoring to realize the Chinese Dream of great national renewal. Europe is also on a path of reform and development. With mas-sive structural reform introduced by the EU and strenuous efforts made by the European people, the spring of recovery is dispersing the winter chill in the European economy. The new era presents new op-portunities for China and Europe to boost their friendship and coopera-tion. China and Europe share com-mon interests in pursuing develop-ment, and China will continue to view Europe as a strategic partner and support European integration. We believe that the European people will also support the Chinese people in pursuing a development model suited to China’s national conditions. The Strategic Agenda 2020 for China-EU Cooperation was released last November. China will work with the EU to turn this blueprint into reality. In pursuing this strategic agenda, the two sides will step up cooperation and exchanges in trade, investment, finance, high technology, new energy and new type of urbani-zation. This endeavor will enable our friendship and cooperation to spur the development of both sides and bring more tangible benefits to the two peoples.The new era adds new strategic dimensions to China-Europe friend-ship and cooperation. Together, Chi-na and the EU account for a quarter of the world’s population and one third of the global economy. Amidst the deepening of economic globali-zation, the growing trend towards multi-polarity and extensive IT appli-cation, China-EU relations have gone beyond the bilateral context and ac-quired increasing global and strategic significance. China and Europe are two ma- jor forces for upholding world peace. China is the largest contributor of peacekeepers among the Permanent Members of the UN Security Council, and the EU is the largest aid provider in the world. We have engaged in effec-tive cooperation on the Iranian nuclear issue, the Middle East and anti-piracy. Let us join hands and work with all peace-loving people in the world to en-sure peace on our planet. China and Europe are two markets that promote common de- velopment. As the largest developing country, China contributes close to 30% of world economic growth. As the largest economy, the EU’s GDP has reached US$16.7 trillion. We should jointly pursue win-win coop-eration, open markets and foster an open world economy so as to create good momentum and ensure strong, sustainable and balanced growth of the global economy. China and Europe are two civilizations that promote human progress. For several thousand years, China and Europe, the birthplaces of the Eastern and Western cultures shining with brilliance, have enriched each other through interactions. We should uphold the diversity of civili-zations and advance global trend of inclusiveness, mutual learning and interaction between civilizations to promote progress of all civilizations.In the new era, more equal dia-logue and exchanges are called for to boost China-Europe friendship and cooperation. Given their different national conditions and stages of de- velopment, we do not expect China and Europe to see eye to eye on all issues. The time we live in is both a time of cooperation and a time of distinctive dynamism. It is a time of both unprecedented opportunities and challenges unmet before.“The wise seeks common ground while the unwise clings to differenc-es”. China and Europe should respect each other, treat each other as equals, seek common ground while shelv-ing differences, and pursue win-win cooperation. By doing so, we will en-hance our dialogue and engagement, maximize common interests, share opportunities and jointly meet chal-lenges.Rapids and rocks can never stop a river from flowing into the sea. Likewise, I believe that no issues or differences can stop our friendship and cooperation from growing.Belgium, where the EU head-quarters are located, is known as the “heart of Europe”. The more strongly the heart beats, the more energy it will create for China-Europe coop-eration.China-Europe friendship and co-operation is the choice made by the times and by the 1.8 billion Chinese and Europeans. This choice is il-lustrated by Xing Hui and Hao Hao, two cute pandas who have travelled half way across the world to Belgium from the “land of abundance” in Chi-na and settled down in the Pairi Daizi Zoo. Their names, meaning light and goodness, demonstrate our confi-dence in and best wishes for China-Europe friendship and cooperation.I am convinced that China-Europe relations will have an even brighter future and make life even better for all of us.
Resolution mechanism, a major step but not the end of the story
By Christos Kissas, Phd
“Today’s political agreement on the single resolution mechanism completes our banking union,”
declared the Eu-ropean Commission’s President, José Manuel Barroso. So, is the banking union complete? Not quite, but a step has been takeneven though, it took lengthy negotiations among the main European member states, and finally a political compromise to reach an agreement.But let’s take things from the start. The so-called “banking union” is an idea that was born out of the euro-zone crisis in 2012, and aimed at creating a centralized system for su-pervising EU’s too-big-to-fail banks. Its ultimate purpose is to prevent soverign debt crises from evolving into banking crises and vice versa. This system has three key compo-nents: a monitoring mechanism, a resolution mechanism, and a bank deposits guarantee scheme. After intense debate, the monitoring was assigned to the European Central Bank (ECB), butat Germany’s in-sistenceonly for “systemic” banks, thus excluding all the Landesbanken, which Germans wouldn’t want to see audited by an external authority. Un-der this arrangement, smaller banks, that aren’t a threat to the euro system, will continue to be supervised by the local central banks of the member states. Finally, the Single Supervisory Mechanism or SSM (in pure bureau-cratic language) was created.The second component is the the resolution authority, or Single Reso-lution Mechanism (SRM). The idea behind a Europe-wide authority is to avoid situations such the one that prevailed in Spain, where the local central bank long covered the bank-ing system’s bad debts in order to avoid taking resolution decisions. Here again, Germany started by be-ing opposed to the idea, claiming that a single authority would be impos-sible under current EU treaties, and proposed the creation of national resolution funds, each using its own funds for bank resolution and restruc-turing instead. Another thorny issue was that of decision-taking inside the authority; how would a member state be protected from an external deci-sion to spend money from its budget in order to restructure one of its banks? A pure veto option, supported by several member states, would have undermined the very concept of the single resolution authority. Other solutions, such as giving the affected state’s vote more weight, or exercising some form of control on the author-ity’s board, were deemed unsatis-factory. Finally, a compromise was reached whereby ‘recommendations’ on whether to close down a bankrupt bank and how to share costs of such closing will be presented by a single resolution board, while the European Commission will have the final say-ing. In some limited cases, the mem- ber state concerned will be able to oppose the decision.The resolution authority will be backed by a common fund of 55 bil-lion euro that will be built up over eight years. The common fund will replace the national resolution funds, which will ultimately merge. This fund will have permission to tap the markets, but (at Germany’s request) will not get any government guaran-tees, neither will it be authorized to seek financing from the European Sta- bility Mechanism (ESM)another emergency fund set up to finance euro-zone governments in distress. All in all, the adoption of the single resolution mechanism is a positive step towards common banking super- vision. However, being a multilateral compromise, this system has several limitations that might render it inop-erative. The scope of the mechanism is only limited to ‘systemic’ and ‘cross- border’ banks and does not apply to all banks operating within the EU, as the Commission and the Parliament had initially planned. The common resolution fund is too small to face a major bank restructuring (remember, Dexia cost around double the fund’s assets), and the time frame for its creation is too longeight years, al-though European Commission nego-ciators consider this a success against the initially planned ten year period). Finally, the decision mechanisms are too complicated, and full of tightrope walking; nobody can tell if all this is going to work in practice, or if it’ll end in deadlocks. Apart from the supervision and reso-lutiom mechanisms, there is a third key component for the banking un-ion to be complete: the common deposit guarantee scheme. Without such an EU-wide deposits insurance program, the whole supervision pro- ject cannot work. Let’s not forget, the ambitions are quite highto avoid new bank bailouts with the taxpay-ers’ money. We’re not quite there yet.
Christo Kissas, PhD www.christoskissas.com(Continued from Page 01)
Friendship and Cooperation Bring Better Life To Both China and Europe