Inter-connectedness between the EU and China has experienced a remarkable pace of growth. In view of closer cooperation to face common challenges, the EU and China work together on numerous economic and financial matters.
The European Union and China are two of the biggest trading partners in the world. The EU is committed to open trading relations with China and wants to ensure that China trades fairly, respects intellectual property rights, and meets its obligations as a member of the World Trade Organisation (WTO).
Beyond bilateral trade and investment relations, the EU engages China on trade and investment matters also at the multilateral level, notably at the WTO.
The EU is also active in helping European small and medium enterprises (SMEs) interested in the Chinese market, notably providing assistance through the EU SME Centre and the China IPR SME Helpdesk.
Economy & Finance
Inter-connectedness between the EU and China has experienced a remarkable pace of growth. Increased interdependence demands closer cooperation to face common challenges, such as ensuring sustainable and inclusive growth, making financial systems more stable and robust, and addressing the economic and social consequences of an aging population. For this reason, the EU and China work together on a large number of economic and financial matters, ranging from prevention of regulatory arbitrages between financial jurisdictions, promotion of sound financial innovation and supervision, and synergies in addressing structural issues.
The EU promotes reciprocal understanding between the EU and China of our respective economic and financial market developments. This helps to manage the EU and China's impact on each other's economies and finding common solutions.
One specific area of cooperation is sustainable or green finance, given the EU and China’s commitments to achieve their respective climate and carbon neutrality goals. The EU and China are founding members of the International Platform on Sustainable Finance (IPSF), launched by the European Commission in October 2019. Within IPSF, the EU and China co-chair the Working Group on Taxonomies, which compares existing taxonomies for environmentally sustainable investments. In addition, they cooperate with the existing IPSF members in other areas, such as sustainable disclosures.
EU-China cooperation requires close and regular contact, and is formalised through the following annual dialogues:
- High-level Economic and Trade Dialogue, chaired by a Vice President on the EU side and a Vice-Premier on the Chinese side.
- Economic and Financial Dialogue between the European Commission and the European Central Bank, on one side, and the Chinese Ministry of Finance, the People's Bank of China and the Chinese financial market regulators, on the other.
- Macroeconomic Dialogue between the European Commission and the National Development and Reform Commission of China.
The European Investment Bank and China
The European Investment Bank (EIB) is the finance arm of the European Union (EU). Owned by the Member States, it is the biggest multilateral financial institution in the world and one of the largest providers of climate finance. Headquartered in Luxembourg, the EIB is now represented in 23 Member States and 28 countries outside the EU. In China, as in many other cases, the EU Delegation hosts an EIB Office.
EIB’s recent work in China is guided by the EU-China 2020 Strategic Agenda for Cooperation and other joint statements on climate cooperation. The latest climate statement came from the 21st EU-China summit, held in 2019 in Brussels. EIB has made climate action a priority in China. The aim is that all the lending in China supports the climate and the environment. EIB has invested more than €3 billion in China till 2020, which has mobilised €9 billion to improve forestry, energy, transportation and other sectors. It’s estimated that energy projects financed by EIB reduced carbon emissions by 3.4 million tonnes a year and created nearly 1700 permanent jobs. Forestry projects created about 800,000 hectares of forests, reduced about 2.5 million tonnes of greenhouse gas emissions per year and created 120000 full-time jobs. The EIB’s 25th-anniversary report on China highlights how the partnership has supported many major climate and environmental projects. We also cooperated with the Green Finance Committee of China Society for Finance and Banking on the need for a common language in Green Finance (Phase I Report and Phase II Report).
The European Union and China are two of the biggest trading partners in the world. As of 2021, China is the EU's second trading partner, behind the United States, and the EU is China's biggest trading partner. Therefore, the EU and China hold major stakes in one another's sustainable growth and prosperity.
The EU is committed to open trading relations with China and wants to ensure that China trades fairly, respects intellectual property rights, and meets its obligations as a member of the World Trade Organisation (WTO).
EU's trade policy towards China is set out in the EU-China 2020 Strategic Agenda for Cooperation and in the EU-China Strategy of 2016, later updated by the 'EU-China – A Strategic Outlook' communication of March 2019.
EU-China trade and economic priorities reiterated at the 21st EU-China Summit in 2019, include:
- Investment negotiations.
- WTO work.
- Negotiations of an agreement on Geographical Indications.
- Quest for reciprocity, ensuring a level playing field.
- Tackling overcapacity.
- Increased market access.
All these priorities seek at the same time to support genuine reform and opening up of the Chinese economy. These are key conditions to keep trade and economic relationships that are mutually healthy and prosperous, as well as to hold China responsible for maintaining the rules-based multilateral system.
The EU and China established a range of regular dialogues to discuss issues that arise in the bilateral trade and investment relationship.
Trade between the EU and China has been thriving despite the absence of a formal framework. There is, however, potential to tap, particularly in the field of investment. For this reason, the EU and China have engaged in negotiations on a Comprehensive Agreement on Investment. On 30 December 2020, the EU and China reached an agreement in principle on this agreement, which needs to be ratified by both sides before it can enter into force.
Beyond bilateral trade and investment relations, the EU engages China on trade and investment matters also at the multilateral level, notably at the WTO. The priorities here are to make progress on WTO reform, and that China joins the Government Procurement Agreement, as committed in its WTO accession.
On 30 December 2020, the EU and China reached an agreement in principle on a Comprehensive Agreement on Investment. The agreement needs to be ratified by both sides before it can enter into force. This agreement would improve market access conditions for EU companies in China, helping to rebalance current asymmetries in market openness between EU and China. It would also level the playing field for EU companies operating in China, and promote sustainable development.
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Enforcement of Intellectual Property (‘IP’) rights is a priority of EU’s trade strategy for China and a key condition for the development of bilateral trade and investment. The EU has established a dedicated cooperation channel with China: the IP Key program. IP Key China is directed by the European Commission and implemented by the European Union Intellectual Property Office (EUIPO).
The European Union Intellectual Property Office also has a dedicated IP attaché in Beijing.
The EU is also active in helping European small and medium enterprises (SMEs) interested in the Chinese market, namely by providing assistance through the EU SME Centre and the China IPR SME Helpdesk.
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The EU and China are major global players in agriculture.
In 2020, EU exports of agri-food to China reached a record level of EUR 17.693 million, corresponding to 9.71% of total EU agri-food exports. In that year, China was the 3rd destination of EU agri-food exports.
On the imports side, the EU bought agri-food products from China worth roughly EUR 56.1 billion, accounting for 4.25 % of total EU agri-food imports.
The main channels for EU-China government cooperation are:
- EU-China Dialogue on Agriculture - Since 2006, the EU and China hold annual meetings in the framework of the EU-China Dialogue on Agriculture. This dialogue is part of the EU-China High-level Economic and Trade Dialogue (HED), where both parts discuss topics of mutual interest, including agricultural policies (e.g. sustainable agriculture, rural development), agricultural trade and market access, agricultural research and innovation, cooperation in agriculture in international bodies (WTO, FAO).
- Other bilateral negotiations - The EU and China accomplished a major milestone in November 2019, by concluding negotiations on the Agreement between the European Union and the government of the People’s Republic of China on cooperation on, and protection of, geographical indications (GIs). The conclusions of these negotiations on the EU-CN GI Agreement represent an important deliverable of the EU-CN Summit of April 2019. The EU-CN GI Agreement has entered into force in March 2021.
Customs Cooperation and Fight Against Fraud
Customs cooperation with China with a view to preventing, detecting and combating breaches of customs legislation is based on:
- The EU-China Agreement on co-operation and mutual administrative assistance in customs matters, 2004.
- The EU-China 2018-2020 Strategic Framework on Customs Cooperation.
- The Strategic Administrative Cooperation Arrangement between the General Administration of Customs of the People's Republic of China and OLAF on Cooperation in Combatting Customs Fraud, 2018.
The operational cooperation framework is underpinned by an action plan, whose implementation is overseen by several steering groups established under the Joint Customs Cooperation Committee (JCCC).
This action plan contributes to:
- Enhancing supply chain security and facilitation for reliable traders.
- Upgrading cooperation on mutual recognition of Authorised Economic Operators (AEO).
- Implementing the Smart and Secure Trade Lanes (SSTL) project.
- Strengthening enforcement of intellectual property rights (IPR).
- Fighting against fraud.
- Developing statistical cooperation.
- Establishing customs cooperation in cross-border e-commerce.
Carrying out horizontal actions such as:
- Enhancing policy exchanges.
- Developing information technology (IT) cooperation.
- Cooperation in the multilateral framework.
The European Anti-Fraud Office (OLAF) investigates matters relating to fraud, corruption and other illegal activities affecting both EU expenditure and EU revenue. In particular, OLAF is responsible for investigating customs fraud (for instance, false declarations of origin, undervaluation or misdescription of goods imported into the EU with the purpose of evading EU customs duties). OLAF carries out such investigations in close cooperation with national customs authorities, both inside and outside the EU. Due to the sheer size of EU-China bilateral trade, China is understandably a key partner in this regard. In addition to its investigations concerning cases of revenue fraud, OLAF also coordinates or participates in large-scale Joint Customs Operations (JCOs) involving EU and international operational partners, including China.
Antitrust and Merger Control.