EU-China cooperation on regional policy

Summary

Although the European Union and China are different in terms of area, population, economic, social, political and cultural development, both of them have to face similar challenge – the significant regional disparities and unbalanced regional development. Based on this the EU-China cooperation on regional policy has been launched and there is huge potential to develop mutual learning initiatives to allow their regions developed. The main aim of this paper is to outline the trends in evolution and perspectives of EU-China cooperation on regional policy.

Keywords

China ; Cooperation ; Cohesion Policy ; Dialogue ; European Union ; Regional development ; Regional inequalities ; Regional policy

Introduction

During the past 30 years China has been one of the countries in the world with the most rapid economic growth and the longest period of sustained high growth. However, economic growth has not stopped the growing regional inequalities and unbalanced development not only between provinces but also between areas within provinces. Also the European Union (EU) has faced substantial disparities at national and regional level especially since new Member States have joined the EU in the years 2004 and 2007. Regional policies therefore play a significant role in reducing the regional disparities and promoting a coordinated and harmonious regional development. The EU has rich experience in formulation and implementation of regional policy which can be shared with China and also Chinas experience is relevant for EUs regional policy. This fact has opened a scope for bilateral cooperation and activities that have started in 2006.

The main aim of this paper is to outline the trends in evolution and perspectives of EU-China cooperation on regional policy. The paper firstly describes and compares the development of regional disparities and regional policy in the EU and China. Consequently, the paper presents the main aspects of EU-China cooperation on regional policy, its results, and future perspectives including the difficulties of regional policy implementation.

In the paper, the research methods of description and analysis-synthesis were utilised. The official documents, studies and reports of European Commission and the Chinese National Development and Reform Commission Chinese including academic research papers were used as main sources of information.

Regional development and Cohesion Policy in the European Union

The Cohesion Policy is one of the most important and the most debated EU policies. The elimination of the economic, social and territorial disparities among countries and regions with the support of regional development is considered the primary objective of the EUs development activities. Through the Cohesion Policy, the EU aims to reduce the regional inequalities and support lagging states and their regions to catch up with the rest of the EU members. The EU Cohesion Policy represents a solidarity which is provided by more prosperous states (regions) to the less developed. In the context of European approach, the level of disparities is regarded as a measure of cohesion . The support of cohesion (economic, social and territorial) has been emphasised in the European legislative documents of the primary law since 1980. However, the exact definition of the term cohesion has not been clearly defined. According to Molle (2007) , the cohesion can be expressed by a level of differences among states, regions or groups that are politically and socially tolerable in EU.

In the area of the EU Cohesion Policy, the EU shares competences with the Member States (at national, regional and local level). At the EU level, the Directorate-General for Regional and Urban Policy (DG Regio) of the European Commission (EC) founded in the year 1968, is responsible for the European actions with regard to economic and social development of the least developed regions. ¹ The policy is implemented by national and regional bodies in partnership with the EC. The policy framework is established for 7 years period. The current period of regional policy covers the years 2014–2020.

The EC works with the Member States and the regions to draw up Partnership Agreements and Operational Programmes (multi-annual development programmes) which outline countrys strategy, its investment priorities and development needs. The operational programmes are implemented by the Member States and their regions. Priorities of operational programmes are realised by the individual projects which are managed by the selected Managing Authorities in the Member States. The EC commits the funds, pays the certified expenditure to each country and monitors each programme. Both the EC and the Member States submit reports throughout the programming period.

As the implementation level of the EU Cohesion Policy, NUTS 2 regions are seen. The EU uses NUTS (nomenclature of territorial units for statistics) classification of the European territory that was set up for the purpose of the collection, development and harmonisation of the EU regional statistics. Three levels of the NUTS classification are layed down according to minimum and maximum of population. The NUTS subdivides each Member State into a whole number of regions at NUTS 1 level (3–7 million populations). NUTS 1 is then subdivided into regions at NUTS level 2 (800 thousands-3 million population), and these regions are divided at NUTS level 3 (150–800 thousands population). The current NUTS nomenclature is valid from 1. 1. 2015 and lists 98 regions at NUTS 1, 276 regions at NUTS 2 and 1342 regions at NUTS 3 level.

Regional inequalities in the EU

Despite the fact that the EU is one of the wealthiest parts of the world, it faces the problem of large internal inequalities. In terms of Gross domestic product (GDP) per capita (in PPS, % of EU average, EU27 = 100), Luxembourg is more than five times richer than Bulgaria (year 2013). At the regional level, the difference is much bigger: the richest region is Inner London with 325% GDP per capita while the poorest region is Severozapaden in Bulgaria with 30% GDP per capita.

We can identify several distinct periods concerning the evolution of regional inequalities and convergence in the European countries.² In the period 1950–1975 convergence tendencies can be observed when disparities in regional GDP narrowed (Bachtler and Turok, 2004 ). In the 1970s and late 1980s, when regions of six countries which suffered low GDP per capita and high unemployment, entered the Community, the regional disparities increased in comparison with 1950s and 1960s. By contrast, the 1990s was characterised by fast catching-up process. Between the years 1995 and 2004, the regions with low GDP per capita achieved relatively strong economic growth and regions converged. The number of regions with GDP per capita below 75% fell from 78 to 70 and the number of those below 50% declined from 39 to 32 (European Commission, 2008 , p. 3). In the year 2004, ten new countries joined the EU. This historic enlargement brought a 20% increase in the EUs population, but only a 5% increase in the EUs GDP. Economic and social disparities have significantly deepened. Overall, in the period 2004–2007 the EU enjoyed a sustained period of economic growth, rising of income, employment rate and diminishing of poverty and social exclusion and regional disparities were shrinking. The situation has been dramatically changed since the economic and debt crisis hit the EU states. The crisis has had a major impact on regions and cities across the EU. The positive tendencies in the narrowing of regional disparities have stopped. The public debt, unemployment rate and poverty and social exclusion have rapidly increased in most of parts of the EU (European Commission, 2010 , European Commission, 2014a  and Minarčíková, 2015 ). The crisis exposed structural weaknesses in Europes economy. Analysis of regional disparities according to changes in GDP per capita between 2000 and 2011 confirms that, in the long run, convergence is mostly a result of the least developed regions catching up rather than growth declining in the more developed ones (European Commission, 2014a ). Regional differences have still remained wide particularly between the Western and the Central and Eastern Member States and between the core and periphery regions of the EU.

History of EU Cohesion Policy: overview

The origins of EU regional policy can be traced back to the Treaty of Rome in 1957, which mentions the need to strengthen the unity and harmonious development by reducing the differences among regions and backwardness of the less-favoured regions. In 1958 and 1962 the European Social Fund (ESF) and the European Agricultural Guidance and Guarantee Fund (EAGGF) were established as Structural Funds (SF). The enlargement of Community and the economic situation in 1970s led to the foundation of the European Regional Development Fund (ERDF) and the creation of European regional policy. The principles for the EU Cohesion Policy were laid by the adoption of the Single European Act in 1986 and in 1988 when the SF were integrated into an overarching Cohesion Policy. This reform introduced key principles of policy such as focusing on the poorest and most backward regions, multi-annual programming, and strategic orientation of investments and the involvement of regional and local partners. The budget of the SF achieved 64 billion ECU and it represented double annual resources over the period 1989–1993.

Economic and social cohesion was a key objective identified in the EU Treaty on European Union (Maastricht Treaty) which came into force on 1. 11. 1993. Treaty introduces the Cohesion Fund, the Committee of the Regions and the principle of subsidiarity. An important role of EU Cohesion Policy was confirmed by the Amsterdam Treaty (1997) which revises the Maastricht Treaty. An important milestone for further tendency of Cohesion Policy is the Treaty of Lisbon (2009), which formally introduced the concept of territorial cohesion as an additional dimension of economic and social cohesion. In the period 1994–1999, the resources for the SF were doubled to equal a third of the EU budget. In the period 2000–2006, the major theme was a move towards simplification of EU Cohesion Policy in the context of enlargement. The priorities were targeted to reflect the Lisbon Strategys goals: growth, jobs and innovation. The budget for policy achieved 213 billion Euro and an additional allocation of 22 billion Euro was provided for the new Member States for the period 2004–2006. In the period 2007–2013, EU Cohesion Policy went through a further simplification and had three priority objectives: Convergence (the convergence of the least-developed Member States and regions defined by GDP per capita of less than 75% of the EU average), Regional competitiveness and employment (covers all other EU regions with the aim of strengthening regions’ competitiveness, attractiveness and employment) and European territorial cooperation (support of cross-border, transnational and interregional cooperation). The 30% of the budget was earmarked for environmental infrastructure and measures to combat climate change, and 25% was given for research and innovation. In 2007–2013, policy became the largest policy with 347 billion Euro that is 35.7% of the EU budget and 0.38% of the total EUs GDP. The 81.5% of total allocation were spent for the regions under Convergence objective (European Commission, 2008  and European Commission, 2014b ).

The EU Cohesion Policy 2014–2020

Priorities

In the period 2014–2020, EU Cohesion Policy is strongly focused on: results (clearer and measurable targets for better accountability), simplification (e.g. one set of rules for five Funds), conditions (introduction of specific preconditions before funds), urban dimension and social inclusion (a minimum amount of ERDF earmarked for integrated projects in cities and of ESF to support marginalised communities). The policy has set 11 thematic objectives³ to support a growth and to help deliver the goals of Europe 2020 Strategy for smart, sustainable and inclusive growth throughout the EU. The policy pursues two objectives in the period 2014–2020: Investment for growth and jobs and European territorial cooperation. The financial resources for the Investment for growth and jobs is allocated to three types of regions⁴ , defined on the basis of their GDP per capita (PPS, % of EU average, EU27 = 100) (European Commission, 2015c ).

Funding

The main financial instruments of EU Cohesion Policy in the period 2014–2020 are the EU Structural and Investment Funds (ESIF).⁵ The total allocation of the SF is 351.8 billion Euro (out of a total 1082 billion Euro that is EU budget for framework 2014–2020). For less developed European countries and regions, 182.2 billion Euros is concentrated in order to help them to catch up.

Regional development and regional policy in China

In China, regional policy is delivered through multi-level governance that involves central government, provinces, counties, townships and villages. The key role in regional policy and regional development plays The Department of Regional Economy under the Chinese National Development and Reform Commission (NDRC). NDRC ⁶ is responsible for drafting regional economic development plans and recommending major regional economic development policies, see NDRC (2015) . Within implementation of regional policy, Chinas classification of regions is continually being adjusted with changes in economic development stages. There are a few definitions of the regions in academic and official literature, which are also sometimes inconsistent. Generally, China distinguish three zones: the eastern region, central region and western region.⁷ Since the adoption of strategies to develop the west region, revitalise the old industrial bases in the north-east and promote the rise of the central regions, classification of regions with four regional categories has been determined: the coastal regions, the north-eastern regions, the central regions and the western regions. China has also classified several special regions and development zones (European Commission, 2011 , p. 7).

Chinas regional inequalities

The question of regional development and regional inequalities in China is an important area of academic research and interest of government policy. However, there is a different opinion on the trends and underlying forces of regional inequality, and there is a debate over regional policy in Mao and in post Mao China, see e.g. Wei (2002) , Fan (1997) , Zheng and Chen (2007) , Zhao (1996) , Zha (1992) , Lai and Lai (1991) .

Overall, inequalities at the level of regions and provinces have increased. In 1980–1990, the inter-provincial disparities measured by GDP narrowed because of slow growth of traditional industrial provinces such as Beijing, Shanghai and Liaoning and rapid growth of southern coastal provinces. During 1990–2004, with the deepening reform,⁸ disparities between coastal and eastern provinces increased due to the fact that eastern provinces achieved high economic growth (the average annual growth rate of the eastern region was the highest 11.59%, followed by the central region 9.71% and the western 9.33%) (Fan, 2006 ).

The regional differences in GDP growth rates appeared to have slowed down in the 2000–2004 but this was not sufficient to reverse the widening regional and provincial gap. In 2004–2010, central and western provinces expanded thanks to the implementation of national coordination strategies for western regional development. “In 2008 the international financial crisis mainly affected the export-oriented central areas, contributing to a significant decline in disparities” (Dunford and Liu, 2015 , p. 71). The growth rates of the eastern, central, western and north-eastern regions in the year 2009 increased by 10.7%, 11.6%, 13.4% and 12.6% respectively on a year-to-year basis, with the western region ranking the highest of all. Overall, the relative disparities in regional economic growth were reduced, which suggests a noticeable effect has been made by the regional development strategy on controlling the growing regional disparities. The absolute regional disparities still grew. The disparity in GDP per capita between the eastern and the western regions increased from RMB 14.885 to RMB 22.129 during 2005–2009. The absolute disparity in GDP per capita between Shanghai City and Guizhou Province increased from RMB 46.422 to RMB 64.300 during the period 2005–2008 (Lu and Deng, 2013 , Fan, 2006 , Fan, 2009  and Dunford and Liu, 2015 ).

As shown in Table 1 , GDP per capita in the eastern region is more than 1.5 times higher than in inland western region in the year 2013. At the provincial level, the difference is even larger. GDP per capita in the richer city/province Tianjin is more than 4 times larger than in province Guizhou. How to control the growing absolute regional development disparities is still an arduous and long-term major issue in the process of modernisation.

Table 1. Area, population and gross domestic product in four regions (year 2013).

Indicator	Area of land (10,000 km2 )		Population (10,000 persons)		Gross domestic product (100 million yuan)		Gross domestic product per capita (yuan)
Provinces	Absolute	Percentage of national total	Absolute	Percentage of national total	Absolute	Percentage of national total	Absolute
China	960.00	–	136,072.00	–	568,845.21	–	41,907.59
Eastern	91.64	9.55	51,818.93	38.24	322,258.89	51.15	62,405.07
Central	102.75	10.70	36,084.70	26.63	127,305.63	20.21	35,357.07
Western	686.74	71.54	36,636.93	27.03	126,002.78	20.00	34,491.01
Northeastern	78.79	8.21	10,976.30	8.10	54,442.04	8.64	49,606.23

Source : CSY (2014) , own processing, 2015.

History of regional policy: overview

The demographic and geographic size of China has led to the fact that regional policy is influenced by complex interlinked socioeconomic, political, ethnic, territorial and historical factors (Yeoh, 2008 ). An understanding of the historical background and evolution of Chinas regional policy is key issue to analysis of its present implementation and development potential. The different regional development strategies in given time period have led to different orientations and effects of regional policy implementation.

According to Démurger et al. (2002) or EC (European Commission, 2011 ), strategy of regional development in China can be divided in three stages. The first stage from 1949 to 1978 is known as Balanced Development (or the stage of planned economy) and the main objective was to reach an absolutely balanced development. In this period the principles of the Soviet development strategy and Maos principle of regional economic self-sufficiency were applied. The development strategy focused on inland regions. Within the Third Five-Year Plan 1966–1970 (FYP) 71% of states investment was allocated in the interior provinces (Sichuan, Hubei, Gansu, Shaanxi, Henan, and Guizhou). The poor investments into the interior provinces were a violation of the comparative advantage principle. From 1972 to 1978, China reduced the discrimination of the coastal provinces ⁹ and increased its economic interaction with the capitalist economies. The second stage from 1979 to 1991 is called Unbalanced Development (the stage after the reform and opening-up policy) and major objective was a preferential development of regions with special advantages. In this period, China implemented the Open Door Policy (attracting foreign direct investment and promoting foreign trade in targeted areas), decentralised the agricultural production and fiscal system and deregulated the prices. In this period, Deng Xiaoping realised the development strategy “getting rich first”, which meant the central government simply encouraged eastern regions to “get rich first” before the less efficient central and western regions and argued that rapid growth of coastal provinces would allow diffusion of wealth and stimulate the prosperity of the whole country. Within this ladder-step theory, government implemented policies such as the “coastal development strategy” that focused development in the eastern region. Regional policy is then free to advocate comparative advantage, regional specialisation, regional division of labour and export-led economic growth. However, Chinas reforms were marked by tensions between central and local governments, between plans and markets, and between the domestic and international political economies. Reforms have also been troubled by problems of corruption, dysfunctional state-owned enterprises, rising income inequality, regional conflicts, and environmental degradation. Regional conflicts prompted many to consider regional inequality as the root of Chinas regional problems and an important issue of government policy. This has led to severe criticism of uneven regional development policy ( Wei, 2002 ). The third stage from 1992 to the present is known as Coordinated Development (the stage after the initial establishment of the socialist market economy system) and it aims to promote the development of underdeveloped regions and reduce regional disparities. It was not until the Ninth FYP (1996–2000) which perceives polarisation as a serious threat to Chinas prosperity, stability and unity, and places reducing regional inequality as a top policy priority ( Wei, 2002 , Kamiński, 2009  and Fan, 2006 ). The Ninth FYP plan deflected the ladder-step theory and emphasised the narrowing of the regional inequalities (e.g. the state promised to increase investment in the central and western regions and urgued the transfer of processing and labour intensive production from coastal to inland provinces). The need to decrease the differences in development between regions was stressed also in the following FYP. In Eleventh FYP (2006–2010), three chapters have been devoted to regional development, which puts an emphasis on optimal use of potential of central and western provinces, as well as former industrial centres of North-East China. Moreover, according to the carrying capacity of the natural environment and current scales of population concentration and economic development, plan determined the zones of limited economic development, namely optimised, prioritised, limited development and banned exploitation (Fan, 2006 ).

Chinese regional policy 2011–2015

Priorities

Chinas regional policy primarily aims to contain the regional development disparities within an acceptable and reasonable range¹⁰ , to equalise basic public services, to fully exert regional comparative advantages, to effective promote comprehensive competitiveness, and to coordinate the regional economic society and resource environment. The NDRC is currently implementing Twelfth FYP (2011–2015). The important goals in this plan are sustainable growth, industrial upgrading-moving up to value chain, domestic consumption, reducing disparities (development of the western regions), scientific development, environmental protection and energy efficiency. Moreover, in 2014 China set out three priority strategies of “the Silk Road Economic Belt” and “21st century Maritime Silk Road” coordinated development of Beijing, Tianjin and Hebei and the Yantzge River Economic Belt (KPMG, 2015 ).

Funding

Regional development is supported by financial and taxation policies. The main tools are: transfer payments (tax rebates, settlement subsidies or solutions, and other subsidies) tax preferences and financial assistance . The direct government investment policy is an important financial and taxation policy, it mainly includes special financial funds to support regional development and the central local government budgetary and extra-budgetary investments. Special funds are mainly used to support the economic and social development of the elderly, children, border regions and poor regions, including national anti-poverty funds, financial anti-poverty funds and ethnic minority development funds. Chinese government budgetary investments are mainly used in economic and social areas where the market cannot effectively allocate resources and government support is needed, including public welfare and public infrastructure investment projects, projects to protect and improve the ecological environment, projects to promote the economic and social development of underdeveloped regions, and projects to promote technological progress and high-tech industrialisation, and the financing forms include direct government investments, investment subsidies and financial discounts. Policy banks and policy-based loans are another important financial tool in China to support regional development. Currently, there are three policy banks, namely the State Development Bank of China, the Agricultural Development Bank of China and the Export-Import Bank of China. Chinese policy banks take coordinated regional development more into consideration for credit allocation than commercial banks, and also provide more financing for government projects on underdeveloped regional development ( European Commission, 2011 , p. 9–10).

EU-China Dialogues on regional policy

Chinas central government has become conscious of strong commitment and challenges in its regional development strategies. Since the middle of the 1990s Chinese have been more and more interested in the European model of social and economic development (Kamiński, 2009 ). EU-China Dialogue on regional policy was confirmed in Beijing on 15 May 2005, on the background of 7th EU-China Summit in December 2004 where balanced development and regional policy were identified as key areas. One year later, on 15 May 2006, a Memorandum of Understanding on regional policy cooperation was signed between the European Commission and NDRC to exchange and share information and best practices on experiences in cohesion policy (European Commission, 2011 , p. 3). At least once a year, EU-China holds a high level dialogue and seminars which are held alternately in China and in the EU Member State.

EU-China High Level Dialogue and seminar on regional policy from 2006 to 2015

During 15–16 May 2006, First EU-China High Level Dialogue and Seminar on regional policy took place in Beijing. In October 2006, a road map for co-operation in regional policy was agreed in terms of further cooperation. Second EU-China High Level Dialogue Seminar took place in Brussels in October 2007. Although its main objective was to exchange experiences in the area of regional policy, apart from experts’ dialogue some political statements were also made - both parties confirmed once more their strong will for cooperation ( Kamiński, 2009 ). During 21–25 July 2008 the EU experts visited the Chongqing, Guangzhou, Dongguan and Zhuhai and discussed with the local development and high-tech zone managements the problems such as integration of urban and rural development, differences between urban development of the eastern and western regions, Chinas counterpart assistance mechanism, development of private enterprises, etc. Later in November 2008, Third EU-China High Level Dialogue and Seminar was focused on coordinated urban-rural development and Chinese researchers visited to Europe, namely Belgium and UK to debate the formulation and implementation of regional policies. Between the years 2008–2010, the Joint Study on regional policies in China and the EU was carried out with the participation of 22 experts on both sides. This study aimed to deliver European experiences on practical aspects of policy-making and regional development to Chinese experts. Fourth EU-China High Level Dialogue and Seminar took place in Brussels in October 2009 and the main topic was regional innovation, industrial cluster and regional cooperation. Fifth EU-China High Level Dialogue and Seminar was held in Shanghai in October 2010 and its subject was regional management, regional innovation and urban sustainable development. In 2010, the European Commission launched CETREGIO (Chinese European Training Series on Regional Policy) . CETREGIO provides Chinese regional experts with a source of reference when setting their own regional development policies. Moreover, the programme aims to strengthen linkages between European and Chinese regions that can be used for further development of bilateral cooperation. Training consists of two-week information sessions in at least three EUs Member States covering lectures and field visits to best practices in selected focus areas. Sixth EU-China High-level Dialogue and Seminar in Brussels in October 2011 concentrated on issue of regional disparities and the multi-level governance and coordination of regional policy in the EU and China (e.g. it also highlighted the similarities between Chinas “block area” approach and the EUs convergence objective). Seventh EU-China High-level Dialogue and Seminar on regional policy in Guangzhou in December 2012 was focused on urban development and urban-rural balancing (e.g. improving of living conditions of all urban dwellers, implementing the local infrastructures, promoting the development of medium-size cities, avoiding excessive migration from rural areas to the cities especially of the skilled and able, etc.). Eighth EU-China High-level Seminar on regional policy took place in Brussels in October 2013 (Eighth EU-China High-level Dialogue took part in November 2013 in Beijing). 80 participants attended from China and Europe and they focused on interregional cooperation and regional innovation systems. Regional innovation systems have an important role in economic and innovation policy. In this area several projects and exchanges have been organised to promote regional innovation strategies and regional clusters. ¹¹ The training and research programmes implemented within the dialogue have involved the vast majority of EU countries and all Chinese provinces and these activities have had an important impact in the elaboration and implementation of the 11th and 12th FYP (European Commission, 2015a ). In the year 2013 also the activities with CETREGIO programme have continued in the year 2013.¹²Ninth EU-China High-level Seminar was held in Chengdu in November 2014 (Ninth EU-China Dialogue was in Brussel in 2015). This meeting was focused on regional innovation and sustainable urban development. It was discussed the coordinated industrial development and environmental protection in Chengdu and the future cooperation between European countries and Chengdu will be centred on the areas of high-tech industry and environmental conservation. Tenth EU-China High Level Seminar took place in June 2015 in Brussels on the background of the 40th anniversary of the establishment of formal diplomatic relations between the EU and China. The main theme of the seminar was world cities cooperation on regional innovation and development. To comprehensively deepen EU-China regional policy cooperation, the Joint Statement was signed.

Results of EU-China cooperation in regional policy

Both sides emphasise great importance to the issue of balanced development of regions. Over the past decade China developed a series of major regional plans and policy systems to advance coordinated, integrated and common development of different regions and urban and rural areas. During this period the EU successful experience in regional policy has provided good reference to China. On the other hand, the EU has also made achievements in Cohesion Policy. It gained experiences on narrowing regional disparities, and facilitated integration. Since the EU and China signed the Memorandum of Understanding in 2006, tenth high-level dialogues and seminars on regional policy have been successfully held. Since the beginning CETREGIO Programme, over 220 Chinese government officials and scholars from 31 provinces, cities and autonomous regions have shared experiences with and visited good practices in more than 45 regions of 17 European Union member states; while about 100 government officials, scholars and business representatives from European Union member states visited China for mutual exchanges. The information and training sessions have covered a wide range of regional development issues including regional policy legislation; statistical information systems; innovation and clusters; territorial cohesion; urban-rural linkages; and sustainable urban development.

Chinas regional development policy has contributed to developing the western and central area as well as to revitalising old industrial areas. Both sides have recognised important contributions made by local government to cooperation. The first EU-China Regional Policy Cooperation Pilot Area between Guangzhou Development District and Upper Austria in Austria was founded. Cooperation between Tianjin, Chengdu and Wuhan with Lazio Region of Italy, Lower Silesia of Poland as well as other European regions has also made clear progress. Pilot areas on both sides led to close exchanges and Memorandum of Understanding signed between governments and businesses for multilevel cooperation, which promoted regional cooperation in such fields as economy and trade, technology, education and culture played an important role in developing bilateral and multi-lateral cooperation relations. In 2015 Lyon, Birmingham, Dublin, Barcelona and Amsterdam of the EU side and Shantou City of Guangdong province of the Chinese side were also included in the list of pilot demonstration project (European Commission, 2015a , p. 31). As a result of EU-China cooperation poverty was reduced and since 2012, there is special support to 11 poverty areas.

Perspectives of EU-China cooperation in regional policy

There are many areas in which EU can be an inspiration for Chinese regional development policy. The key challenges of future Chinese regional development include (European Commission, 2015b ):

• Promotion of the rapid development of urbanisation and coordinated development of urban and rural interaction. The EU has achieved a balanced development of urban and rural areas, especially based on effective coordination mechanisms. These are valuable references to China since the key issue for China is to ensure the access to public services especially social security and education. Also tailor made programmes for urban-rural cooperation at local level need to be developed. The development of functional zones is crucial in order to avoid negative competition among cities.
• Creation of stable financial basis for regional policy. China should gradually establish a form of coordinated regional development funds under the concept (project) management allocation mechanism. It should also strengthen consultation and enhance the participation of local governments, to attract social capital to participate in the project construction, the formation of the use of funds, project management and supervision of the work of policy implementation mechanisms. Some Chinese officials proposed the establishment of a joint EU-China fund to develop common projects like regional added value chains.
• Deepening regional cooperation. It is necessary to promote cross-border and inter-municipal cooperation which includes areas such as infrastructure, environmental protection and industrial or innovation parks. The potential for China to promote greater regional cooperation is huge, especially from the Yangtze River or between Beijing, Tianjin and the Bohai Sea. Also from Shandong and Henan border regions to the Yangtze River as well as with Gannanand western Fujian. China should increase its efforts to strengthen guidance and coordination to break administrative barriers and the monopoly interests. It should promote the establishment of coordination mechanism, benefit distribution mechanisms to strengthen planning guidance and top facilitate integrated space development.
• Improvement of regional policy implementation, analysis and monitoring. Compared to the EU, China is weak in this area. China should strengthen the regional economy assessment system, the policy planning and the inspection, evaluation, supervision and implementation of work. Moreover, China should strengthen regional economic analysis, to establish an effective data to support quantitative analysis.
• Extension of the regional cooperation with the EU. There is a scope to strengthen exchanges between local levels and create long-term partnerships (including non-governmental organisations, civil society organisations and enterprises). Twinning programmes between European and Chinese regions should be developed in order to deepen exchange experiences on issues of economic development.

On the other hand, besides many possibilities of EU-China cooperation, there is some limitation in transferability of European concept in the Chinese regional policy. The scale of the EU engagement is far too small to make a difference in a country as large as China (in January 2015 the population of the EU-28 was estimated at 508.2 million in comparison with China population of 1.36 billion). Also the EU financial assistance is dispersed between several initiatives and there are small consequences for the social and economic cohesion of the country. Further, Chinese administration is not well-prepared for effective absorption of the EU funds. The European rules of programmes and projects management severely differ from the common practice in China (e.g. in China, regional development is only one of many duties of NDRC but in EU there is special body responsible for regional policy). Political and legal systems are diametrically opposite, which makes experiences sharing process rather complicated. The thing is that, although it was quite reasonable for China to adopt the best mechanisms of the EU regional policy, it would be a tall order, unless fundamental changes in Chinese law and political system occur (e.g. principle of partnership, transparency, subsidiarity) (Kamiński, 2009 ). Compared with the classification of regions in Europe, disparities in political, economic and administrative systems have a greater impact on the classification of regions in China. Regarding Chinas classification of regions, the spatial range of each unit is too large and needs to be improved in the future classification of regions (European Commission, 2011 , p. 7).

Conclusions

Although the EU and Chinese regional development can hardly be compared in some aspect and there are limitations in transferability of European setting into Chinese regional policy, EU and China took note of some similarities of challenges in regional development and the dialogue on regional policy has become one of the most successful aspects of cooperation in the overall EU-China policy dialogue. China was the first non-EU country to sign a regional policy dialogue with the EU. Since 2006, significant progress has been achieved in the cooperations of regions and cities. This success is a good platform for further regional economic cooperation. Both sides agree to strengthen EU-China cooperation on regional policy in a longer term perspective, subject to availability of funding, jointly designing a multi-annual development road map, and strengthening ties with relevant agencies and public institutions for better communication and cooperation. It includes ongoing strengthening of the cooperation and exchanges on regional policy; deepening the joint study; strengthening cooperation among regions and expanding the scope of pilot areas and practical cooperation; encourage the innovation cooperation platform (establish a mechanism for knowledge sharing in specific areas between cities of both sides); strengthening the capacity building and exchanges of personnel. Chinese side also stated that NDRC learns from the European Union while developing its regional policy. Also European participants expressed that the EU can learn from the rapid development and flexibility of the Chinese economy.

Conflict of interest

The author declares that there is no conflict of interest.

Acknowledgements

This paper is created within the frame of project registration number CZ.1.07/2.3.00/20.0296 supported by the Education for Competitiveness Operational Programme . All support is greatly acknowledged and appreciated.

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Notes

1. The DG Regio is responsible for three EU funds: the European Regional Development Fund (ERDF), the Cohesion Fund, ISPA and also for the Solidarity Fund.

2. There is the controversy debate about the EU regions if they are experiencing convergent or divergent growth.

3. See European Commission (2015c) .

4. Less developed regions, whose GDP per capita is less than 75 % of the average GDP of the EU-27; transition regions, whose GDP per capita is between 75 % and 90 % of the average GDP of the EU-27; more developed regions, whose GDP per capita is above 90 % of the average GDP of the EU-27.

5. The European Regional Development Fund, the European Social Fund, European Agricultural Fund for Rural Development, European Maritime and Fisheries Fund, the Cohesion Fund.

6. The NDRC is a macroeconomic management agency under the Chinese State Council, which has broad administrative and planning control over the Chinese economy and its main task is to formulate and implement strategies of national economic and social development, annual plans, medium and long-term development plans and to coordinate economic and social development. The NDRC has 33 functional departments/bureaus/offices with wide range of responsibilities from industry, transportation to fiscal and financial affairs, energy and rural economy. See NDRC (NDRC, 2015 ).

7. Eastern region includes 11 provinces and municipalities: Beijing, Fujian, Guangdong, Hainan, Hebei, Jiangsu, Liaoning, Shandong, Shanghai, Tianjin, and Zhejiang. The central region includes the 8 provinces: Anhui, Heilongjiang, Henan, Hubei, Hunan, Jiangxi, Jilin and Shaanxi. The western region includes the 12 provinces and municipalities: Chongqing, Gansu, Guangxi, Guizhou, Inner Mongolia, Ningxia, Qinghai, Shaanxi, Sichuan, Tibet, Xinjiang, and Yunnan. According the four regions classification provinces of Heilongjiang, Jilin and Liaoning are included into northeast region.

8. The positive effects of opening-up policy in central and western regions were much lower than those in eastern regions and regional disparities were actually exacerbated sharply from the early 1990s (Lu and Deng, 2013 ).

9. The coastal region includes Beijing, Liaoning, Tianjin, Hebei, Shandong, Jiangsu, Shanghai, Zhejiang, Fujian, Guangdong and Guangxi.

10. “Reasonable” means a range within which the rapid economic growth of a few regions should not be achieved at the expense of the economic interests of some others. The lower limit of this range is a general economic growth of all the regions, as well as the elimination of economic decline of any regions. The upper limit is that the disparity in per capita GDP stops growing or grows at a slower rate.

11. For example the European programme the Interreg IVC promotes exchange and networks of co-operation between regional and other public authorities across the entire EU territory and neighbouring countries. Since 2003 programme has compiled a large database of best practices in Europe that can be used for the exchange with China. It was proposed to make the Interregs system of indicators, tools and databases available to Chinese policy makers in order to contribute to a sustainable development in China.

12. The three sessions in Europe consisted of study tours in different European Union countries (six in total), including lectures, interactive workshops and field visits to best practices of regional and urban development. The activities opened spaces for mutual exchange and learning. The first workshop in China consisted of a five-days training for Chinese and European experts dealing with integrated territorial rural-urban development. The second activity took place in three Chinese cities (Wuhan, Beijing and Tianjin) in order to create synergies with the EU-China Sustainable Urbanisation Partnership Forum. The main aim of the activities in Europe and China was to decentralise cooperation and establish direct working relations between Chinese and European regions. During the training sessions, participants elaborated their own reflections about EU regional policy as an inspiration for Chinese regional development policy (European Commission, 2015b ).