China should prepare for US-EU pact

US president Barack Obama called last week for talks on a free trade agreement between the US and the 27 member nations in the European Union (EU), a move which may mark the first step toward the largest trade deal in history.

With many concerned about the risks that such a trade pact could pose to China, a major trade partner with both economies, the country should take precautions now to protect itself.

First, China should strengthen trade ties with other Asian countries, especially nearby Japan and South Korea, in order to minimize its reliance on trade with Western nations.

Second, the quality of China's exports should be improved so that locally made products can become competitive not just in terms of price but also in terms of innovation.

Also, domestic firms should be encouraged to invest in businesses tied to developed Western nations so that local companies can benefit from the lowering trade barriers between the US and EU member states.

The author is He Weiwen, co-director of the China-US/EU Study Center at the China Association of International Trade.

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