The European Union and China are two of the biggest traders in the world. China is now the EU's 2nd trading partner behind the United States and the EU is China's biggest trading partner.
The EU is committed to open trading relations with China. However, the EU wants to ensure that China trades fairly, respects intellectual property rights and meets its WTO obligations.
At the 16th EU-China Summit held on 21 November 2013 both sides announced the launch of negotiations of the Comprehensive EU –China Agreement on Investment. The Agreement will provide for progressive liberalisation of investment and the elimination of restrictions for investors to each other's market. It will provide a simpler and more secure legal framework to investors of both sides by securing predictable long-term access to EU and Chinese markets respectively and providing for strong protection to investors and their investments. Currently five rounds of negotiations have been completed and a sixth round is under preparation.
• EU-China trade has increased dramatically in recent years. China is the EU's biggest source of imports by far, and has also become one of the EU's fastest growing export markets. The EU has also become China’s biggest source of imports. China and Europe now trade well over €1 billion a day.
• EU imports from China are dominated by industrial and consumer goods: machinery and equipment, footwear and clothing, furniture and lamps, and toys. EU exports to China are concentrated on machinery and equipment, motor vehicles, aircraft, and chemicals.
• Bilateral trade in services, however, only amounts to 1/10 of total trade in goods, and the EU's exports of services only amount to 20% of EU's exports of goods.
• As a result, the EU records a significant trade deficit with China. This is in part a reflection of global and Asian value chains, but in part also due to remaining market access barriers in China.
• Investment flows also show vast untapped potential, especially when taking into account the size of our respective economies. China accounts for just 2-3% of overall European investments abroad, whereas Chinese investments in Europe are rising, but from an even lower base.
Trade in goods
- EU goods exports to China 2014: € 165 billion (+11,3%).
- EU goods imports from China 2014 € 302,5 billion (+8%),
EU imports from China are dominated by industrial and consumer goods: office and telecommunication equipment, shoes and textiles, iron and steel. EU exports to China are concentrated on machinery and equipment, motor vehicles, aircraft, and chemicals.
* 2013 figures not yet available
Trade in services
- EU services exports to China 2013: €32.2 billion
- EU services imports from China 2013: €20 billion
Foreign Direct Investment
EU inward investment to China 2013: € 8.2 billion
China inward investment to EU 2013: €4.2 billion
EU and China
China is one of the world's largest economies and an important trading partner for the EU. China is also an increasingly important political power.
China's accession to the WTO in December 2001 was a major step. It required China to take bold reforms and liberalise important parts of its economy. Both China and the wider WTO membership have benefited greatly from China's integration into the global economic order.
Yet while China has made good progress in implementing its WTO commitments, there are still outstanding problems.
The EU's concerns include:
• industrial policies and non-tariff measures in China which may discriminate against foreign companies
• a strong degree of government intervention in the economy, resulting in a dominant position of state-owned enterprises, and unequal access to subsidies and cheap financing
• inadequate protection and enforcement of intellectual property rights in China
However, while there are many challenges, China's market and rapid development also continues to offer huge opportunities, with significant potential for further expanding trade and investment and strengthening of the relations.
The recent launch of the negotiations on a bilateral investment agreement is an important forward-looking initiative that aims to promote bilateral investment by providing transparency, legal certainty, and market access to investors from both sides.
Topics arising in the bilateral trade and investment relationship are discussed in a range of dialogues, including the annual Joint Committee and the EU-China High Level Economic and Trade Dialogue (HED). The last Joint Committee was held on 24 October 2013 in Brussels.
Obviously, at high levels of trade irritants occur, and the EU remains firm on the need for China to comply with its international commitments. But this should not stand in the way of both sides developing a long-term vision of cooperation. Moreover, the EU and China have demonstrated willingness and ability to diffuse tensions through dialogue and cooperation.
Trading with China
• The EU supports China's trade reform and sustainable development agenda via the EU China Trade Project (EUCTP)
• At their 16th Summit held on 21 November 2013, EU and China adopted the EU-China 2020 Strategic Agenda for Cooperation . This agenda includes key initiatives in the area of trade and investment policy, notably the negotiation of the Comprehensive EU –China Agreement on Investment.