China was EU’s largest trade partner in 2020
China moved the US off the pedestal last year and became Europe’s top trading partner for the first time, according to the European Statistical Office..
The European Union’s exports to China rose 2.2% last year, while imports rose 5.6%. For comparison, exports to the United States fell 8.2% and imports fell 13.2%. The latest data released on Monday by Eurostat showed that China is now playing an even larger role in the economic performance of European countries..
«The reason for this is clearly because China / Asia is the only region experiencing a good V-shaped recovery.», – economist at ING Germany told CNBC on Tuesday Carsten Brzeski (Carsten Brzeski).
China, where the first cases of Covid-19 were reported, was no longer subjected to serious social restrictions again, as was the case in many European countries..
As a result, China’s economy is operating closer to pre-coronavirus levels compared to other parts of the world where restrictions continue to affect economic and social activity. China is expected to show the second highest growth rate in the world in 2021, according to forecasts of the International Monetary Fund (IMF).
«Looking ahead, it should be noted that China’s importance to European trade also presents an obvious dilemma.», – said Brzeski, adding that «Choices won’t be easy for Europe» between trade with China and US aid on the technology front.
The US and the EU entered into a confrontation with Beijing over 5G networks and practice technology transfer, which implies a government requirement to foreign companies to share their technologies in exchange for market access. At the same time, Washington and Brussels are also concerned about the human rights situation in the PRC..
«The risk is that the trade-off and balance between the two will hinder future growth», – said Brzeski.
However, the European Union seems willing to strengthen economic ties with China. In December, they signed a new investment agreement aimed at making it easier for European companies to operate in China..
A deal that seemed to have been struck in a rush even before the inauguration Joe Biden at the end of January, bans China from closing market access or introducing new discriminatory practices for manufacturing and some other service sectors.
Head of European Trade Valdis Dombrovskis said: «The current crisis gives us no choice but to work hand in hand with our global partners, including China.».
«By joining forces, we can recover faster economically and make progress in areas of mutual interest such as trade and investment.», – he said in his statement.
The agreement has yet to be approved by European lawmakers, some of whom criticize the Chinese government and do not want to sign it..