Significant trading partner and systemic rival: China is a concern for Europe

Europe’s huge trade partner: China

Europe's huge trade partner: China

the inconvenience brought on by Covid lockdowns, many of Europe’s leading
businesses are ready to expand in the world’s second-largest economy as trade
dependence on China grows.

Collaboration is essential to both parties. Last year, the value of
products traded between China and Europe totaled €696 billion ($732 billion),
increasing roughly a quarter from the previous year.

The volume of Trade with China

to Eurostat data, China was the third-largest recipient of EU goods exports,
taking 10% of the total. China is the largest European importer,
contributing 22% of all imports in 2021.

Borges de Castro claims that the partnership is “too big to fail.” He
continued by saying that Europe wants to stay in the lucrative
Chinese market.

to Eurostat, the vast majority of products traded between the two powers are
produced goods like machinery, cars, chemicals, and other manufactured goods.

to ECCC Secretary General Adam Dunnett, “European companies have done
quite well here and the general long-term picture is very optimistic.”
Dunnett also predicted that European companies’ revenues in China would
increase over the following ten years.

Mutual dependencies

is reliant on Beijing in several areas, such as the supply of rare earth metals
needed to manufacture wind turbines and hybrid and electric automobiles. China
also produces the majority of the solar panels used in Europe.

Dunnett cautioned against overstating these dependencies.

lot of those things you can obtain elsewhere when you look at some of the
wider things that China exports to the EU, such as furniture and consumer
goods,” he said.

US Pressures to curb trade with China

Financial Times was informed on Wednesday by Benjamin Loh, CEO of the Dutch
chipmaker ASM International, that the US was “putting a lot of
pressure” on the Dutch government to adopt a similar severe approach.

could already be signs of pressure. Due to security concerns, Germany this
month halted the sale of one of its semiconductor plants to a Chinese-owned
tech business.

Chinese Investment in Europe

to a report by the research firm Rhodium Group, Chinese direct investment in
the European Union decreased last year, falling to its second-lowest level
since 2013—just behind 2020. It has decreased by over 78% since 2016.

Kratz, director at Rhodium Group, told CNN Business that due to Beijing’s
rigorous capital controls and increased scrutiny from EU regulators, “the
level of Chinese investment in Europe is now at a decade low.”

amount of EU investment in China has also increased in concentration. According
to data from Rhodium Group, the top 10 European investors in China between 2018
and 2021—including those from the United Kingdom—accounted for about 80% of all
investments made by the continent in that nation.

than one-third of all European investment in those four years was undertaken by
only four German firms: the chemical giant BASF (BASFY), the manufacturers
Volkswagen (VLKAF), BMW, and Daimler (DDAIF), as well as the three German

EU sanctions for violations of human rights

year, after EU legislators-imposed sanctions on Chinese officials for alleged
human rights violations, China responded with its own measures, postponing an
investment agreement between Beijing and Brussels.

the agreement, which was reached in principle in 2020 after years of negotiations,
was made to level the playing field for European businesses doing business in
China after they had complained that Beijing’s subsidies have disadvantaged

implicit support for Russia’s war in Ukraine was one of an “increasing list
of irritants,” according to EU diplomats, that were harming relations. As
“a partner for cooperation and dialogue, an economic competitor, and a
systemic rival,” they have characterized China.

Carousel in Covid

claims that China’s strict zero-Covid policy is the main concern for European
companies doing business there.

been the Covid carousel and [the] Covid rollercoaster for the past year, he
spoke. Something “pulls us back every time you think [it] was going to open
up,” he continued.

of protesters demonstrated against China’s harsh Covid controls over the
weekend in a rare round of street protests across the country. Since then, some
limitations have been loosened in Shanghai and other significant cities.

Pantucci, a senior associate fellow at the Royal United Services Institute, a
security research organization told CNN Business that Beijing’s rigid policy
is contributing to a further decline in foreign investment in the nation,
particularly from smaller businesses.

the fact that businesses still believe they must connect with China given its
size and potential, he claimed that small- to medium-sized businesses are
rapidly giving up.

Courtesy CNN

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