EU remains a big external challenge to China's economy

Freeman said growth in China will provide a welcoming boost to sectors in the EU such as high-end cars, luxury goods and machinery, but this will not be evenly spread across all of Europe, with the most competitive economies such as Germany likely to benefit most.

Gehnen said he expects continuation of previous year's development of bilateral trade and economic relations between China and the EU in 2013. He said Germany will expand its dominant position as China's leading industrial and technological partner in the European context.

"It is not realistic to expect that other European countries can quickly restructure their economies in a competitive position," said Gehnen.

He added that it will take years for them to fix their wrong doings in the last couple of decades in which their neglected too much the importance of a well-established industrial and technology-driven basis as fundament of a powerful economy, as Germany did.

He said the relatively high degree of corruption is China's greatest internal challenge for future economic development.

"I therefore very much welcome the clear words on this subject by the new Chinese leaders, namely Xi Jinping," said Gehnen.

"However, I believe corruption cannot be effectively fought by appeals to morality alone. In China, like in other countries, there is a need for more comprehensive set of controls and double-checks of government officials' decisions."

Gehnen also said the government should ensure that the gap between salaries in the private and public sectors is not getting to big, as such triggers illegal behavior of civil servants.

Gehnen said most crucial for a lasting strengthening of China's domestic demand, as envisaged in the current 5-years-plan, is further development of basic systems of social security. Private households will only spend a great share of their income for consumption if the can rely on collective support in cases of sickness, unemployment and retirement.

Liu Jia contributed to this story in Brussels.

Contact the writer at fujing@chinadaily.com.cn

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