Academic journal article Global Economic Observer

China-EU Trade and Economic Relations (2003-2013)

Academic journal article Global Economic Observer

China-EU Trade and Economic Relations (2003-2013)

Article excerpt

Introduction

China-EU Comprehensive Strategic Partnership (China-EU CSP) enters into a new decade, in 2013. Trade and economic relations have been among the fundamentals in China-EU relationship. The stability and healthy development of the trade and economic relations have provided the basis for furthering the bilateral relationship; at the same time the increasing trade disputes had a negative impact on China-EU relationship. Facing the next decade, it is worth summarizing the development of the China-EU trade and economic relations in the past decade, identifying the achievements, and exploring the future of the bilateral trade and economic relationship.

The bilateral trade

In 2003, both China and EU leaders agreed to promote the bilateral relationship to Comprehensive Strategic Partnership (CSP). China-EU trade has experienced a dynamic growth since then.

I. General trends in bilateral trade

China-EU bilateral trade increased substantially between 2003 and 2012. As Graph 1 is indicating, according to the Ministry of Commerce of China (MOFCOM), China's export to the EU increased 4.6 times, from USD 72.16 billion in 2003, to USD 333.99 billion in 2012, and import from the EU also increased almost 4 times, from USD 53.06 billion in 2003, to USD 212.05 billion in 2012. On the whole, the trade volume between China and the EU increased 4.3 times, from USD 125.22 billion in 2003, to USD 546.04 billion in 2012. Since 2004, the EU has been the biggest trade partner of China.

The bilateral trade also dropped twice in the past decade. As revealed by Graph 2, the first drop was influenced by the Financial Crisis. Both China's foreign trade and China-EU trade have experienced the first turbulence in more than 20 years of dynamic development.

The drop of China's foreign trade was much deeper than China-EU trade. The trade motor restarted in 2010, and the trade volume exceeded the level before the Financial Crisis. Unfortunately, the European Sovereignty Debt Crisis hit the China-EU trade development again, and the trade volume dropped again in 2012. China's foreign trade also received a negative impact from the Euro Crisis. Although the growth rate of trade slowed down, the trade volume as a whole was still increasing. It means China's multi market trade strategy has achieved remarkable progress, on the one hand, and it also means that the negative impact of the Euro Crisis to the world economy was weaker than that the Financial Crisis, on the other hand. The EU has been China's biggest export market for years, but this ended in 2012 when it was replaced by the US.

The speed of trade growth has experienced 3 times up-side-downs in the past decade. As shown in Graph 3, the fastest trade growth was registered in 2003 and 2004 when it was a "honey moon" period in the history of the China-EU relationship. The annual growth rate of the bilateral trade was more than 40%. China's export to the EU was growing by close to 50% a year, and imports from the EU increased by 85% in 2003 (!) and also by 30% in 2004. Such a high rate in trade growth has provided a fresh input into the newly announced China-EU CSP.

The time between 2005 and 2007 was the first adjustment period. After the first slowing-down in 2005 and 2006, the speed of China-EU trade growth was back again to the fast track in 2007, with 30% increase, and the import from the EU increasing by 23% in 2006 and 2007. Hit by the Financial Crisis, the growth rate slowed down again. The rate of trade growth was 20% in 2008, either in export or in import. The first negative growth rate in the latest more than 20 years turned to the surface in 2009, when the trade volume between China and the EU decreased by 15%, with export down by 20% and import by 4%. In 2010, both China's export and import to the EU were back to fast growth track, with more than 30% increase. And again hit by the Euro Crisis, trade dynamic slowed down. China had provided help to the EU by promoting import from Europe. …

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