One consistent trend in the European Union (EU)-China trade relationship is that most Chinese exports to the EU are doing very well, growing at the fastest rate for several years.[1]
However, the same cannot be said about goods moving in the other direction: in volume terms, EU exports to China have been down since 2017, a period in which the Chinese economy has grown by 40 per cent.[2]&[3] While in value terms EU exports to China have grown slightly, the value of imports from China has outpaced this growth, resulting in an increased trade deficit.[4] Given that the EU has successfully increased exports to other markets, this issue seems to transcend competitiveness.[5]
Despite making up just short of two per cent of total imports from China to the EU, [6]&[7]&[8] electric vehicles (EVs) have been the focus of recent EU-China trade discussions. On 29th October, the European Commission concluded its year-long anti-subsidy investigation into EV imports from China.[9] The resulting decision—to impose countervailing duties on EVs imported from China to the EU for five years—has raised serious concern about the future of the EU-China trade relationship.
Overemphasising this relatively small fraction of trade, however, risks losing focus on the more than 98 per cent of exports from China to the EU that are not EVs.
This is not to say that the findings of the EU’s investigation are insignificant. In fact, the probe highlighted a serious structural issue in EU-China trade: the need for Europe to be able to compete with China on a level playing field. EVs are a strategic sector, meaning that despite the relatively small portion of trade they make up, it still has significant implications for Europe.
The EU has stated that it intends to continue working
with China on solutions to address the distortions that its EV probe found,
highlighting its commitment to deal with such problems through dialogue.[10] While we should take
encouragement from this, to ensure that trade can continue to flourish, we need
to address imbalances and distortions whenever and wherever we encounter them. If
they are glossed over or pushed to one side, there is a risk that other sectors
will come under threat, leading to similar trade defence actions being directed
towards China. That is a situation that nobody would benefit from.
[1] Container Trade Statistics is an organisation that provides aggregated trade volumes in twenty-foot equivalent units (TEUs) between various regions as a paid-for service. The ratios referenced here are for trade in TEUs between Greater China—including Taiwan and Hong Kong—and continental Europe, including the United Kingdom. See: <https://www.containerstatistics.com/>
[2] Ibid.
[3] GDP (current US$) – China, World Bank, viewed 7th November 2024, <https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?end=2022&locations=CN&start=1961&view=chart>
[4] International trade in goods by partner, Eurostat, June 2024, viewed 8th November 2024, <https://ec.europa.eu/eurostat/statistics-explained/index.php?title=International_trade_in_goods_by_partner#Focus_on_EU_trade_in_goods_for_selected_partners>
[5] Ibid.
[6] Fact sheet: EU-China vehicle trade, ACEA, 12th June 2024, viewed 4th November 2024, <https://www.acea.auto/fact/fact-sheet-eu-china-vehicle-trade-2024/>
[7] China-EU – international trade in goods statistics, Eurostat, February 2024, viewed 4th November 2024, <https://ec.europa.eu/eurostat/statistics-explained/index.php?title=China-EU_-_international_trade_in_goods_statistics>
[8] The total value of goods imported from China to the EU in 2023 was euro (EUR) 514.4 billion, while the total value of EV imports was EUR 9.7 billion.
[9] EU imposes duties on unfairly subsidised electric vehicles from China while discussions on price undertakings continue, European Commission, 29th October 2024, viewed 4th November 2024, <https://ec.europa.eu/commission/presscorner/detail/en/ip_24_5589>
[10] EU imposes duties on unfairly subsidised electric vehicles from China while discussions on price undertakings continue, European Commission, 29th October 2024, viewed 4th November 2024, <https://ec.europa.eu/commission/presscorner/detail/en/ip_24_5589>
Recent Comments