Trade topics

· Negotiations and agreements

· Trade policy

China is the EU’s second largest trading partner for goods after the United States, with bilateral trade reaching €739 billion in 2023. This represents a decline of 14% compared to 2022. China is the EU's third-largest partner for exports and the biggest for imports. The EU-China trade balance has been persistently in favour of China. In 2023, the EU deficit amounted to €292 billion. EU exports to China amounted to €223.6 billion, whereas EU imports from China amounted to €515.9 billion, indicating year-on-year decreases of 3.1% and 18% respectively.

At the European Council in June 2023, EU Member States reaffirmed the EU’s multifaceted policy approach towards China, outlined in its 2019 strategic outlook. China is simultaneously a partner, a competitor, and a systemic rival. 

However, the balance of challenges and opportunities presented by China has shifted over time. Our economic relationship is critically unbalanced, both in terms of trade flows and of investment, due to a significant asymmetry in our respective market openings. In addition, China’s economic model has brought about systemic distortions with negative spillovers to trading partners. According to the IMF, China’s use of industrial policies, notably its support to priority sectors, has an impact on trading partners. 

For the EU, ensuring reciprocity, achieving a level-playing field, and addressing asymmetries in the relationship are matters of priority. The EU remains committed to addressing these challenges through dialogue with China and underscores the importance of the WTO as the best avenue to address the root causes of the current imbalance. 

On 30 December 2020, the EU and China concluded in principle negotiations on the Comprehensive Agreement on Investment (CAI). 

· On trade in goods, the EU has long had a trade deficit with China, which reached a record level of €396 billion in 2022. 

· In 2023, the deficit decreased to €292 billion. However, it remains the EU’s second-highest bilateral deficit with China ever. In addition, imports from China have decreased in value, but they are reported to have increased in volume terms.

· In 2023, the goods that the EU most imported from China were: telecommunications equipment, electrical machinery and apparatus, and automatic data-processing machines. 

· The goods that the EU most exported to China in 2023 were: motor cars and vehicles, medicaments, and other machinery. 

· As regards trade in services, the EU has long had a trade surplus with China. In 2023, the surplus amounted to €14.1 billion. China is the EU’s fourth-biggest services trading partner after the United States, the United Kingdom and Switzerland. 

· The cumulative value of EU foreign direct investment (FDI) stocks in China since 2000 stood at €177 billion in Q1 2024. 

· EU FDI flows to China reached €6.4 billion in 2023 – a decrease of 29% compared with 2022. The top three sectors were the automotive sector, basic materials, and machinery. 

· The cumulative value of Chinese FDI stocks in the EU-27 since 2000 stood at €143 billion in Q1 2024. 

· Chinese FDI flows to the EU amounted to €4.7 billion in 2023, a decrease of 10% compared with 2022. The top three sectors were the automotive sector; health, pharmaceuticals and biotechnology; and information and communication technology. 

· While mergers and acquisitions made up the bulk of China’s investments until 2021, in 2022 and 2023 greenfield investment made up most of China’s FDI in the EU.