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, March 2014
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.
On 7 August 2014, the WTO Appellate Body confirmed that China's export duties and export quotas are inconsistent with China's obligations under its Accession Protocol and the GATT. China is now requested to bring its export regime into conformity with its WTO obligations.
EU imposes definitive measures on Chinese solar panels, confirms undertaking with Chinese solar panel exporters
On 2 December 2013, the Council backed the Commission’s proposals to impose definitive anti-dumping and anti-subsidy measures on imports of solar panels from China. In parallel, the Commission confirmed its Decision accepting the undertaking with Chinese solar panel exporters applied since the beginning of August.
The Council confirmed the level of the duty for those Chinese exporters of solar panels who cooperated with the investigations. The duties stay unchanged at an average of 47.7% and will apply for two years as of 6 December 2013.
The imposition of definitive measures needs to be seen in the context of the amicable solution reached with China which resulted in the undertaking. This undertaking, applied as part of the anti-dumping proceedings, is now confirmed and has been extended to the anti-subsidy proceeding. Hence, the final anti-dumping and anti-subsidy duty rates will apply only to those exports from China which do not meet the conditions set out in the undertaking. Those Chinese exporters that participate in the undertaking and that meet the conditions of the undertaking can be exempted from anti-dumping duties.
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:
- lack of transparency
- 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 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.
Moreover, the EU-China 2020 Strategic Agenda for Cooperation places this agreement at the heart of our bilateral relation with China stating that "Negotiating and concluding such a comprehensive EU-China Investment Agreement will convey both sides' joint commitment towards stronger cooperation as well as their willingness to envisage broader ambitions including, once the conditions are right, towards a deep and comprehensive FTA, as a longer term perspective".
Seven negotiation rounds have taken place since the launch. In order to support the negotiation, the European Commission has commissioned various studies, notably, a study on existing restrictions to foreign investment on the Chinese market, which was finalised in August 2014; a more recent one on whether national treatment would be a sufficient basis to ensure market access under an EU-China investment agreement as well as an ongoing project to supply the latest available data on EU-China investment exchanges.
- EU-China FDI Monitor - 3Q4Q 2014 Update: Public Version
- EU-China FDI Monitor - 1Q 2015 Update: Public Version
- EU-China FDI Monitor - 2Q 2015 Update: Public Version
Topics arising in the bilateral trade and investment relationship are discussed in a range of dialogues, from the annual EU-China Summit, to the EU-China High Level Economic and Trade Dialogue (HED) the annual Joint Committee.
The latest HED was held in Beijing on 28 September 2015.
- The EU and China signed a key partnership on 5G, our tomorrow's communication networks, press release.
- Investment Plan for Europe goes global: China announces its contribution to #investEU, press release.
This year's Joint Committee is scheduled for 7 November 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.