The EU's Trade Relationship with China

The European Union and China are two of the biggest traders in the world. Their bilateral trade continued to increase substantially in 2008. Our imports from China increased by 6,5% and the exports by 9%; it has nearly doubled between 2004 and 2008.

BILATERAL TRADE RELATIONS

China is the single most important challenge for EU trade policy. China has re-emerged as the world's fourth economy and third exporter, but also an increasingly important political power. EU-China trade has increased dramatically in recent years. China is now the EU's 2nd trading partner behind the USA and the biggest source of imports. The EU is China's biggest trading partner. In 2008 the EU and China launched a new strategic mechanism for driving trade and economic policy. The EU's open market has been a large contributor to China's export-led growth. The EU has also benefited from the growth of the Chinese market and the EU is committed to open trading relations with China. However it pushes China hard to trade fairly, respect intellectual property rights and meet its WTO obligations.

Trade in goods

EU goods exports to China 2008: €78.4 billion

EU goods imports from China 2008: €247.6 billion

EU's imports from China are mainly industrial goods: machinery & transport equipment and miscellaneous manufactured articles. EU's exports to China are also concentrated on industrial products: machinery & transport equipment, miscellaneous manufactured goods and chemicals.

Trade in services

EU services exports to China 2008: €20.1 billion

EU services imports from China 2008: €14.4 billion

Foreign Direct Investment

EU inward investment to China 2008: €4.5 billion

China inward investment to EU 2008: €0.1 billion

High Level Economic and Trade Dialogue (HED)

The High Level Economic and Trade Dialogue was launched in Beijing in April 2008. The HED strengthens the dialogue between the European Commission and the State Council of China, at Vice-Premier level. It deals with issues of strategic importance to EU-China trade and economic relations and provides impetus to progress concretely in sectoral dialogues. This dialogue provides a tool to address issues of mutual concern in the areas of investment, market access and intellectual property rights protection, as well as other issues related to trade. The second meeting of the HED took place in Brussels 7-8 May 2009.

Partnership and Competition

In 2006 the European Commission adopted a major policy strategy (Partnership and Competition) on China that pledged the EU to accepting tough Chinese competition while pushing China to trade fairly. Part of this strategy is the ongoing negotiations on a comprehensive Partnership and Cooperation Agreement (PCA) that started in January 2007. These will provide the opportunity to further improve the framework for bilateral trade and investment relations and also include the upgrading of the 1985 EC-China Trade and Economic Cooperation Agreement.

China in the World Trade Organisation

The EU was a strong supporter of China's accession to the WTO, arguing that a WTO without China was not truly universal in scope. For China, formal accession to the WTO in December 2001 symbolised an important step of its integration into the global economic order. The commitments made by China in the context of accession to the WTO secured improved access for EU firms to China's market. Import tariffs and other non-tariff barriers were sharply and permanently reduced. While China has made good progress in implementing its WTO commitments, there are still outstanding problems. The EU also uses the regular Trade Policy Review of China in the WTO to raise a number of concerns regarding China's trade policy. These include inadequate protection of intellectual property rights, the maintenance of industrial policies which may discriminate against foreign companies especially in sectors like automobiles and barriers to market access in a number of services sectors including construction, banking, telecommunications, and express postal services). Access to raw materials has also been identified as a major trade obstacle as well.

Source: European Commission