The US has occupied the top spot for EU’s primary trade partner for a long time, until recently. European statistics office, Eurostat published a report on 15th February in which China came up as the top partner for EU in the year of 2020. While COVID-19 was ravaging the global economy, China-EU trade grew exponentially. The snapshot from the report shows how China beat US in both import and export:
As it can be seen from the data, the EU has been trading more with China as compared to rest of the world.
China Beat US In A Dramatic Trade Competition
In 2020, there was 2.2% increase in goods exported to China from EU and 5.6% increase in imports from China. On the other hand, EU’s exports to US fell by 8.2% and Imports by 13.2 percent. The UK still remain one of the biggest trading partners of EU but Brexit Trade Deal has surely affected the cost of trading. Moreover, UK cannot export some goods due to strict animal laws in the EU.
On top of all that, the pandemic disrupted the trade across the Atlantic Ocean, where the majority of the cargo and passengers travel between Western Europe, Africa, and the Americas takes place. As a result, the EU’s intimacy grew with China and China beat the US as a major EU trade partner. Last year, EU exported $245 billion USD worth of goods and imported 465.47 Billion USD in total.
So technically coronavirus helped increase EU sales in China, which were reportedly high in luxury goods and automobile industry. Whereas, the exports from China mainly attended to the strong demands for medical equipment and electronics in the EU.
China-EU Investment Agreement Criticism
Eurostat revealed this data after EU proceeded to intensify its economic relationship with China by finalizing China Comprehensive Agreement on Investment (CAI). The agreement announced on 30th December 2020, aims to open China’s restricted markets for EU companies to do business. The agreement is facing criticism and resistance from European Parliament members, who want China to first stop human rights abuses and forced labor with Uyghur Muslims in concentration camps. China has yet to agree upon two conventions by International Labor Organizations (ILO) on labor rights. If China agrees to these ILO conventions, its labor will be free to form unions and bargain collectively.
On paper, China agreed that it will approve these conventions on forced labor but denied the reason of criticism. It maintained that concentration camps do not exist and it only ran vocational training centers against religious extremism. Critics argue that the agreement also lacked measures on several points. They were concerned how to ensure China was making successful progress towards improvements for labor rights. Most EU members and China are currently not on the same page due to this sticking point. Some have even responded why they cannot accept the deal as it is.
EU wants to complete this agreement by 2022. Critics opined that this situation will never change unless China allowed independent trade unions and courts to be established, Moreover, it also has to allow civil society and media to monitor labor rights abuse.
What Is In It For China?
Whether China stops the human rights abuse or not, the investment deal will continue to flourish according to analysts. During the global trade crisis, the EU increased its trade surplus to 36.62 Billion USD in 2020 from last year’s 26.80 Billion USD. On the other hand, China came out as the first and probably only nation to report an expansion in GDP during 2020. According to records, China’s GDP grew by 2.3% in the tragic year, when businesses all over the world were falling apart and airline companies were going bankrupt.
As China beat US in becoming the major EU trade partner, it is also expected to earn opportunities for EU free-trade deals in the future. Analysts also say that China needs access to the investment markets of developed countries to further challenge the US on the technology front. It has also become a symbol for China to show the US that China is making friends in all parts of the world, including US allies.
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