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【text/observer.com xiong chaoran】 former italian prime minister mario draghi was nicknamed "super mario" for resolving the eurozone debt crisis when he was president of the european central bank in 2011. a year ago, the european commission asked him to write a report on how the eu should maintain its competitiveness in the green and digital economy amid increasing global frictions. a year later, the report, titled "the future of european competitiveness," was finally released.

according to reuters and the hong kong south china morning post on september 9, the nearly 400-page document, also known as the "draghi report," pointed out that if the eu wants to keep up with china and the united states economically, it must have more coordinated industrial policies, faster decision-making and larger investments. however, he also admitted that "the current situation is indeed worrying."

draghi said in the report that in order to ensure competition with china and the united states, the eu needs to invest 750 billion to 800 billion euros (about 5.8 trillion to 6.2 trillion yuan) each year, accounting for 5% of gdp, which is even higher than the marshall plan for rebuilding europe after world war ii, which accounted for 1% to 2% of the eu's gdp. and the eu must take action in many aspects. "either 'do it' or slowly accept the pain and torture." draghi warned that if europe wants to narrow the innovation gap with china and the united states, especially in the high-tech field, this level of funding is essential.

the south china morning post described draghi as a "highly respected" figure for the european economy. he accepted the eu's request to write a report a year ago in order to "save the european economy from being forgotten."

the report pointed out that in order to pull productivity out of the quagmire, the eu will spend up to 800 billion euros in investment, including huge joint funds, as well as subsidies and strategic protectionist trade measures, which are unacceptable to some eu member states, especially germany, the eu's largest economy.

"if europe fails to increase productivity, we will be forced to make a choice. we cannot simultaneously be a leader in new technologies, a beacon of climate responsibility and an independent player on the world stage. we will not be able to finance our social model. we will have to scale back some, or even all, of our ambitions and targets," the report reads.

draghi proposed that if the eu wants to achieve its digitalization, decarbonization goals and improve defense capabilities in line with his assessment, it needs to increase investment to about 5% of gdp as a whole, "to the levels of the late 1960s and 1970s." "this is unprecedented, by comparison, the additional investment provided by the marshall plan between 1948 and 1951 was about 1% to 2% of gdp."

the report claims that european companies are being "double squeezed" by china, with the economic demand provided by china becoming weaker and weaker, and the competitive pressure from chinese companies becoming higher and higher. in addition, the eu relies on china for key minerals, while china relies on the eu to absorb the so-called "industrial overcapacity."

at the press conference that day, draghi also talked about the competition the eu faces from china in the clean technology industry. he claimed: "of course, china can provide the cheapest way to achieve the eu's climate goals, but china-backed competition poses a threat to the development of our productive clean industries."

when asked if the report meant europe should be tougher on china, draghi said europe needs to be smarter. "trade policy must be pragmatic... you ask me, should it be soft or tough?" he added: "we can't be soft or tough in all aspects, we have to look at specific areas and decide what we want to do."

draghi said an example of so-called pragmatism was that the eu should avoid imposing tariffs on solar panels imported from china, where european industry had no chance to compete. in his report, he described the extra costs for consumers in this case as an "unnecessary burden". however, the report said that in some cases, europe should be open to using tariffs "in order to avoid creating perverse incentives that harm european industry".

"energy dependence on russia, (economic) growth and trade dependence on china, and defense dependence on the united states, all three areas are now in chaos or problems." this is the commentary given by the associated press to europe at present. reuters said that in the past 20 years, the eu's economic growth rate has been lower than that of the united states, and china is catching up rapidly. a large part of this gap is attributed to europe's low productivity. draghi also warned that if urgent action is not taken to significantly improve productivity, the global geopolitical situation and europe's prospects will become bleak.

the report mentioned that the era of thriving global trade under multilateral rules has ended, and the low-cost security of the us security umbrella is no longer guaranteed. the dependence generated in the era of free trade "has proven to be a weakness."

draghi also said that in the context of global competition to develop untapped resources and china's dominance, the 27 eu member states must work closely together in purchasing, mining and pooling key minerals, which will require the eu to develop a "real foreign economic policy" to reach trade and investment agreements based on its own resource needs.

draghi's report comes as the problems he raised, including a lack of investment, the loss of cheap energy and demographic change, are calling into question germany's economic model, which was once the growth engine of the european union. volkswagen group, europe's largest automaker and one of germany's industrial pillars, said last week it was considering closing its factories in germany for the first time.

the report also proposed proposals in a number of other areas, including energy, artificial intelligence, pharmaceuticals and space. andrew kenningham, chief economist at capital economics, believes that many of these proposals are reasonable, but many of them are unlikely to be adopted. he mentioned that former italian prime ministers enrico letta and mario monti had also proposed similar reports this year and in 2010, respectively, "but most of the proposals were not adopted."

despite this, the south china morning post pointed out that some german politicians have confirmed that the report will provide direction for european commission president ursula von der leyen to lead policy making in the next five years, which means that china and europe will face a difficult period in the coming years with economic and security issues intertwined.

on september 2, chinese foreign ministry spokesperson mao ning pointed out that china's development cannot be separated from the world, and the world's development cannot be separated from china. china attaches great importance to china-eu relations and has always believed that the correct positioning of china-eu relations should be partners rather than opponents, the mainstream tone should be cooperation rather than competition, the key value should be autonomy rather than dependence, and the development prospect should be win-win rather than confrontation.

she said that next year will mark the 50th anniversary of the establishment of diplomatic relations between china and the eu. china is willing to work with the eu to uphold the partnership, deepen strategic communication, conduct dialogue and cooperation, properly handle differences and frictions, and especially deepen people-to-people exchanges. together, we will create a marco polo in the new era, further enhance the stability, constructiveness, mutual benefit and global nature of china-eu relations, and make greater contributions to improving the well-being of our peoples and promoting world prosperity and stability.

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