The Global Challenges of the Knowledge Economy: China and the EU

This paper addresses some of the challenges confronting the European Union and China as they build their knowledge economies, and their on-going and possible future actions to address such challenges. Fifty years after the creation of what became the European Union, we argue that there is an urgent need to develop a new European Lisbon Agenda, preparing the EU for globalization. A new and "outward-looking" Lisbon strategy would focus on three key areas: international trade in services, internationalization of research networking, and access to brains and talent. The paper shows that the success of the Chinese economy over the past three decades can be partially attributed to its ability to absorb globally advanced technology and huge flows of foreign investment, its large pool of knowledge and talent, and its enactment of a policy framework that provides incentives to domestic and foreign firms to innovate - a strategy very much reminiscent of Europe's own internal Lisbon agenda. To move further, China needs to overcome the obstacles of regional disparities, transform its industry and deepen industry-academy linkages, which are also unavoidable tasks for the sustainable development of Europe. We contend that the scope for comparative studies of the EU and China, for mutual learning from each other's experience - even for joint initiatives - is substantial.