By LI GANG

CHINA-Europe interaction is gathering pace around the tenth anniversary of the comprehensive strategic partnership between China and the EU. Dutch Prime Minister Mark Rutte visited China in November 2013. A week later, Chinese President Xi Jinping and Premier Li Keqiang met with President of the European Council Herman Van Rompuy and European Commission President Jose Manuel Barroso at the 16th meeting of Chinese and European Union leaders. Shortly after, Li Keqiang attended a meeting of China and Central and Eastern European (CEE) leaders in Romanian capital Bucharest. And early last December, British Prime Minister David Cameron and Chancellor of the Exchequer George Osborne visited China. Relations between China and Europe thus become warmer as cooperation in all aspects grows.

Status Quo and Features of

China-EU Relations

The comprehensive partnership between China and the EU was upgraded in 2003 to a comprehensive strategic partnership. A review of this relationship over the past decade shows that it has, on the whole, been strengthened and expanded, especially in the fields of economy and trade. Certain differences, however, remain with regard to values and such issues as human rights and Tibet.

In 2012, total bilateral trade between the EU and China reached €433.87 billion – 12.5 percent of the EU’s total foreign trade, according to Eurostat (Statistical Office of the European Communities) statistics. The EU has been China’s biggest trade partner for nine consecutive years, and China is the EU’s second largest trade partner after the U.S. In 2000, the value of EU exports to China was €25.86 billion. This figure has since surged 4.6-fold to €143.87 billion in 2012. China has thus become the EU’s fastest growing export market. Between 2000 and 2012, EU imports from China grew to €300 billion. “Made in China” products are now commonplace in European households.

China is the world’s largest developing country and exporter, while the EU is the world’s largest developed economy. Each has a huge trade volume. But as their economic ties grow, disputes will inevitably occur. The debt crisis in Europe is a main factor in recent trade frictions.

The crisis has left many EU countries mired in unprecedented recession, evident in dwindling consumption, scaled-back investment and high unemployment. The situation has once again raised the specter of protectionism, in the form of further trade remedy investigations into Chinese exports to the EU.

In 2012, the EU initiated 13 anti-dumping investigations, four concerning Chinese exports, and six anti-subsidy investigations, three involving Chinese exports, according to European Commission statistics. Tension remained constant in 2013. From June 6 to August 6, the European Commission imposed an 11.8 percent punitive duty on China’s solar products. As the total volume stands at US $22 billion, this move by the EU was potentially the most costly ever for China. Fortunately the two sides reached a settlement, so avoiding a rise in the duty on Chinese solar panels, cells and wafers to 47.6 percent. A pending trade war was thus defused, but the prospect of future spats remains.

From 2008 to 2011, EU net direct investment in China maintained an upward trend. That in 2008 was €5.95 billion, accounting for 0.06 percent of the EU’s total foreign direct investment. By 2011 this figure had almost doubled, having risen to 2.4 percent of EU foreign direct investment.

Chinese corporations’ investments in the bloc have been gathering strength over past years, having ballooned by a factor of five, year-on-year, in 2009, doubled in 2010 and increased 26.8 percent in 2011. The reverse flow has also maintained a healthy momentum. In the first 10 months of 2013, EU investment in China rose 23 percent over the corresponding period of 2012. But there is still room for more growth on both sides. Only two percent of EU’s direct outbound investment goes to China’s mainland, compared with 30 percent to the U.S., according to Karel De Gucht, European Commission Commissioner for Trade. Similarly, only one percent of China’s foreign direct investment heads for Europe, while 20 percent lands in the U.S.