General

Currently, the global political and economic landscape is undergoing significant changes. Against the specific backdrop of a significant decline in world trade growth and new challenges faced by regional integration and economic globalization, we need to grasp the overall trend and take practical actions to deepen China Europe economic and trade cooperation, and unleash the enormous potential and dividends of China Europe trade cooperation.

The complementarity of economic and trade between China and Europe will be significantly enhanced

From the practice of the past few years, it can be seen that the complementarity between China and Europe in economic and trade is not weakening, but increasing. In the next five years, with the accelerated release of service-oriented consumption demand from Chinese residents, the complementarity between the Chinese and European economies will be significantly enhanced.

The scale of trade between China and Europe has steadily increased. According to data released by the European Bureau of Statistics, China has become the second largest trading partner, the largest source of imports, and the third largest export market of the European Union, accounting for 15.4%, 20.8%, and 9.0% respectively. From 2019 to 2022, the trade volume of goods between China and Europe increased from 559.6 billion euros to 856.3 billion euros, with an average annual growth rate of 15.23%, with a growth rate of 22.8% in 2022. In the five years before the epidemic (2014-2019), the EU's service exports to China increased by 15.4% annually; In 2021, the EU's service exports to China reached 59.1 billion euros, exceeding the 2019 level of 52.47 billion euros, a year-on-year increase of 24.7%.

Bilateral investment between China and Europe has seen rapid growth. In 2022, the EU's investment in China increased by 92.2% year-on-year, with Germany's investment in China increasing by 52.9%. According to EU data, China's direct investment in Europe reached 9 billion euros in 2021, a year-on-year increase of 38.5%, with a significant increase compared to 2020; However, due to issues such as resistance to additional investment reviews in Europe, China's investment level in Europe is lower than in 2019.

The complementarity between China and Europe in economic and trade is not gradually weakening, but constantly increasing. The transformation of China's economic structure will enhance the complementarity of the Chinese and European markets. For example, the transformation of China's industrial structure, consumption structure, technology structure, trade structure, urban-rural structure, and energy structure in the next 10 years can provide huge market space for investment cooperation between China and Europe. Taking consumption as an example, in the next 5-10 years, China will enter a service-oriented consumer society. It is expected that by 2025, the proportion of service-oriented consumption expenditure by urban and rural residents will increase from 43.16% in 2022 to around 50%. The release of China's service-oriented consumption potential will bring greater complementarity to the China Europe market. In addition, China's ongoing industrial transformation and upgrading, especially the trend of integrating productive services with high-end manufacturing, will bring huge space for economic and trade cooperation between China and Europe.

Further Economic and Trade Cooperation between China and Europe Can Make Progress

China Europe economic and trade cooperation has both space and challenges in various aspects. Relevant parties need to comply with the trend of increasing economic and trade complementarity, eliminate non economic factors that interfere with China Europe economic and trade cooperation, use market forces to break certain political obstacles, provide necessary conditions for China Europe trade cooperation, and enable both sides to achieve the necessary level of economic and trade cooperation as soon as possible.

Development is the foundation for solving problems. The International Monetary Fund predicts that the economic growth rate of the eurozone will decrease to 0.7% in 2023, while the European Central Bank predicts that the CPI of the eurozone will be 5.3%. Quickly restoring economic growth, reducing inflation, and stabilizing the financial situation have become major tasks facing the European Union. Whether in the short or medium to long term, increasing trade cooperation between China and Europe will inject important impetus into the economic growth of the eurozone, and thus lay an important foundation for the EU to solve other problems. If the China Europe Investment Agreement can be approved by the EU as soon as possible, it will provide significant opportunities for the EU to expand into the Chinese service market.

Break through non economic barriers with market forces. Building an open world economy, maintaining the global multilateral trading system, and adhering to trade liberalization and investment facilitation require joint cooperation between China and Europe. China and Europe should strengthen practical cooperation in areas such as economy and trade, science and technology, energy, and climate change, including dialogue and coordination in multilateral institutions. For example, for the European Union, the review norms of the EU Foreign Investment Review Framework Regulation should be clarified as soon as possible, the scope of sensitive investment definition should be clearly defined, and the review norms and standards of different member states should be unified; Avoid generalizing the concept of strategic security and reduce the time and compliance costs for Chinese companies investing in Europe. For China, we should continue to expand the opening up of the service industry market, promote the integration of rules, regulations, management, and standards with the EU service sector, and reduce regulatory differences. In addition, cooperation mechanisms can be established at the enterprise level to jointly provide risk management, compliance guidance, policy guidance, and information services for two-way investment by enterprises.

Expand interest integration through cooperation in energy green transformation. Both China and Europe face the challenges of short-term supply guarantee and long-term emission reduction in the energy sector. China holds nearly one-third of the world's renewable energy technology patents and is a world leader in key minerals, industrial processes, component production, and assembly necessary for green supply chains. The EU leads the world in low-carbon technology research fields such as smart grid, hydrogen energy network, carbon capture and storage, and the establishment of safe, recyclable and sustainable battery value chain. Both sides can pragmatically carry out investment cooperation, dialogue and coordination in areas such as clean energy technology, infrastructure construction, and talent cultivation, using green cooperation as a breakthrough to expand interest integration, and achieve a higher level of trade cooperation between China and Europe under the new situation.