Countries and regions
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 a comprehensive EU-China Investment Agreement. 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.
- 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.
- Fact sheet: Facts and figures on EU-China trade, October 2013
EU-China "trade in goods" statistics
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EU-China "trade in services" statistics
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Foreign direct investment
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EU and China
China's export restrictions on raw materials
Chinese export restrictions on raw materials - such as for example rare earths – are identified as a major trade obstacle:
- China imposes a set of export restrictions, including export quotas, export duties and additional requirements that limit the access to rare earths for companies outside China.
- These measures significantly distort the market and favor Chinese industry.
The EU considers that the Chinese restrictions are in violation of general WTO rules.
Anti-dumping anti-subsidy investigation: solar panel imports from China
Following claims by the industry association EU Pro Sun that solar panels (and their key components) imported from China enter the European market at prices below market value, on 6 September 2012 and 6 November respectively, the European Commission launched an anti-dumping investigation and subsequently an anti-subsidy investigation:
- In terms of import value affected, this is the most significant anti-dumping complaint that the European Commission has received.
- The Commission is legally obliged to open an anti-dumping investigation if it receives a valid complaint from an EU industry association that provides evidence that exporting producers from one or more countries are dumping a particular product into the EU and causing injury to the EU industry.
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 decision to launch negotiations on a bilateral investment agreement as soon as possible 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
- Rules and requirements for trading with China
- The EU is present on the ground in China
- Trade relations are part of the EU's overall political and economic relations with China
- China is a member of the World Trade Organisation
- The EU and China have referred a number of issues to the WTO Dispute Settlement Body
- The European Union Chamber of Commerce in China (EUCCC) urges China's new leaders to open up markets
- The EU supports China's trade reform and sustainable development agenda via the EU China Trade Project (EUCTP)
- The EU also supports European SMEs to export to and invest in China and also offers SMEs specific advice on IPR issues
- 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 a comprehensive EU-China investment agreement.