China and Europe, more results through innovation partnerships

For a very long time we imagined that China and Europe were very different from one another. The effect of China’s catch-up has been startling and even though we may still often differ on cultural, political or socio-economic grounds our cities and regions face the same challenges of urbanisation and sustainable growth.

Until now, cooperation has often focused on business opportunities and single issues. A more holistic approach has often been lost due to the vast size of China and the required resources. Local and regional authorities can play an important role working at the grassroots level in pushing the changes further. This can be seen in my home city Espoo where many actors have jointly managed to co-create a flourishing ecosystem for innovation and investment.

We can achieve so much more together. I strongly believe that working more closely through systematic long-term partnerships offers exciting new possibilities on mutual learning and concrete projects to tackle our societal challenges. I also believe that regions and cities should take the lead in facilitating these connections and partnerships, as it should be a crucial role at the grassroots level in speeding up the concrete actions. The city of Espoo in Southern Finland has been a sister city with Shanghai for 20 years and the cooperation between city decision-makers, public service and business, and that between Tongji and Aalto Universities, has been very successful.

Business as usual is not enough to produce sustainable growth and well-being for the people in the 21st century. Innovation and digitalisation are the current tools when reading through China’s plans for development and modernisation. The expected annual growth rate of 6.5 % can only be sustained through encompassing modernisation of traditional industries and fully jumping on the innovation train. Moving towards the shared economy, developing big data and opening up to the world are a few of the key measures in China’s next Five Year Plan to facilitate such a transition.

The Head of the Chinese Mission to the EU, Mrs. Yang, stated in her address at our Committee of the Regions’ Plenary last June that innovation is a ‘golden key’ for structural reform. The ‘Made in China 2025’ strategy emphasises innovation-driven development, applying smart technologies and pursuing green growth. The current Chinese smart city network of 400 cities grows rapidly as fibre optic broadband will already next year cover all cities and 80% of villages. The rate of growth and expansion stands as a model for the European Union.

European local authorities have experienced how to tackle the change from an industry-based economy to a service-based economy and could be of great inspiration and help to Chinese authorities. Experimenting and scaling up the results are central for this cooperation to have the benefits quickly available for everyday life. European cities and regions can learn from the quick rollout of the new smart city network. While similarly, our Chinese counterparts can copy best practices from Europe on how to optimise the use of a functioning fibre optic network and use this to improve growth, increase innovation and make investments more effective.

The European Committee of the Regions has been pushing for more cooperation between Chinese and European cities and regions for years. Cities and regions work on real life projects and challenges, seeking to improve the quality of life for the citizens. Sustainable urbanisation and investment have been the key themes in city pairing, infrastructure development, RDI and strategic ventures between EU and Chinese stakeholders.

Digitalisation and innovation are already high on Chinese and European agendas. We all know that the question is not ‘to go or not to go digital?’ – the digital revolution is already here. The question is how to make the digital turn as beneficial and sustainable as possible. It is clear that we need to create the infrastructure to enable the modernisation of industry, education, commerce and our living environments.

5G, as well as spreading the physical infrastructure to enable connectivity, is necessary. Nevertheless, it is not enough to change everything into a digital format. Innovation is the fundamental motor behind digitalisation – and it goes far beyond apps or fibre cabling. The question we should be asking is ‘how’ instead of ‘what’. We need not only to do things more efficiently but also to think how we could do those things completely differently.

For example, eGovernment offers an exciting tool for the modernisation and simplification of public services. Easy and speedy access to information, quick responses to burning questions without hours of waiting at the city hall or queuing by the phone are just some of the advantages to the citizens from innovation in the public sphere. Estonia is a world leader in eGovernment, even introducing electronic online voting. Clearly this requires investment and currently only approximately 40% of EU citizens have access to online services. This should be addressed quickly for better services and more efficiency.

Citizens and businesses rightly call for modernised cities and regions for a better quality of life and working environments. It is the role of cities and regions to positively stimulate this innovation, through simpler regulation, positive discrimination of start-ups e.g. by giving tax-cuts, fostering the digital ecosystems and promoting innovation through dedicated programs. Forming clusters of city partnerships on both sides of the cooperation could be a way to move forward faster. Another concrete suggestion is to spread the Covenant of Mayors, the group of cities tackling climate change, to China.

I believe that the answer for many of our burning challenges lies in developing vibrant and sustainable regional ecosystems based on open and collaborative innovation. The goal does not have to be somewhere far in the future. I can personally go back to my first visit to China in 1989 when the first computer equipment shops were appearing in the streets next to the Beijing Institute of Technology and the first Apple exhibition in China was organised. These were the signs of the start of the Chinese digitalisation ecosystem.

Today, looking at incubators specifically, there are over 1,800 of them in China and many of these incubators actually started as property development companies who recognised the saturation of the industry and moved into innovation to diversify their assets. It is now up to us to nurture these new initiatives. Here I refer to my recent visit to Hangzhou where development of high-tech zones and the culture of co-creation and working together were evident and visible spreading offers to inspire EU-China cooperation opportunities.

Ecosystem-thinking is crucial to break the barriers of the public sector, business or academia. What is needed is to move towards embedding entrepreneurship. However we should not limit ourselves there; opening innovation and focusing on creating vibrant and encompassing innovation ecosystems that stand not just to benefit business or specific processes, but the sustainable urban and regional development for the benefit of all is equally as vital.

What cities and regions can do, as in all grassroots level cooperation, is focus on the everyday challenges and questions we face. We can bring a strong added value and boost a bottom-up process in global cooperation that is founded on action and entrepreneurship instead of strategies and plans. The entrepreneurial spirit and innovation capacity of European and Chinese regions and cities must be boosted, including universities and businesses being encouraged to join in on the process for cooperation to truly be successful.

This article is part of Friends of Europe’s Policy Paper ‘EU-China: New Directions, New Priorities‘ which brings together the views of Friends of Europe’s large network of scholars, policymakers and business representatives on the future of EU-China relations. These articles will provide immediate input for the EU-China Summit on 12-13 July 2016, but their value and relevance goes well beyond this year. They set the tone for EU-China relations over the next decade.



Markku Markkula

Chair of the Espoo City Planning Board President,
the European Committee of the Regions.

Markku Markkula is a long-standing member of Espoo City Council. A few months ago he was elected the President of the European Committee of the Regions. With its 350 members the CoR is one of the EU Institutions, the assembly of regional and local representatives from all 28 Member States.

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