China in the world

    * China has now become the biggest exporter in the global economy ahead of Germany and the US. China accounts for about 11 % of world trade in goods.

    * China is the first major economy to rebound effectively from the crisis. In the first part of 2010, China’s growth rates compare with levels before the crisis. China is on track to overtake Japan and become the world's second largest national economy in 2010.
 
    * More than half of China's exports are currently produced by foreign invested enterprises (processing trade). Neighbouring Asian companies in Japan, Taiwan, Hong-Kong and South Korea play a major role in this process. The role of European enterprises in China’s processing trade regime is limited, but the majority of finished consumer goods is exported to the EU.
 
EU-China trade

    * Bilateral trade in goods was €296 billion and €31 billion in services in 2009.

    * Europe's imports from China grew by 16.5% on average per year during 2004-2008. This growth rate reversed in 2009 with a 13% drop recorded due to the crisis. Nevertheless, the EU still imported €215 billion worth of goods in 2009 from China. China thus remains Europe's biggest source of manufactured imports.

     * China is Europe's fastest growing export market. Europe exported €81.7 billion worth of goods to China in 2009 - up by 4% compared to 2008.

    * Exports from the EU to China grew by approximately 60% or €30 billion between 2005 and 2009. Through better market access, European exporters should be well placed to sell more of their quality products on the rapidly expanding Chinese consumer market.

     * Europe runs a surplus on trade in services with China of €5.0 billion in 2009 (up from €4.9 billion in 2008). This is about 27 times smaller than its trade deficit for goods.

     * Europe's total trade deficit (including services) in 2009 was €128 billion euros. The trade deficit is focussed in office and telecom equipment, textiles, and iron and steel. The trade deficit reflects a huge shift within the economies of Asia to focus production in China. Although imports from China have surged, to the detriment of developing Asia and notably Japan, Asia's share of total EU imports has remained rather stable over the last decade. But the deficit still reflects the considerable problems EU businesses have accessing the Chinese market.

 EU-China investment

     * European companies invested €5.3 billion in China in 2009 (up from €4.7 billion in 2008). This is about 2-3% of overall European foreign direct investment.

    * China invested €0.3 billion in 2009 (compared to a net disinvestment of €1.8 billion in Europe in 2008).

 Current issues in EU-China trade

Barriers to trade in China are estimated to cost EU businesses €21 billion in lost trade opportunities every year, according to a study in 2007 financed by the European Commission. That is one-fourth of current EU exports to China.

Intellectual property rights

Intellectual property rights infringement remains a huge problem for European businesses in China. Almost 54% of all counterfeit goods seized at European borders in 2008 came from China. Seven in ten European businesses operating in China say that they have been the victim of IPR violations. In 2007, European manufacturers estimated that IPR theft cost them 20% of their potential revenues in China.

IPR protection is an important issue for Europe. Rates of counterfeiting European products were reported to be around 5-10% of turnover of EU companies in China.

Trade defence instruments

The EU uses trade defence instruments following strict and non-political procedures, and to a lesser extent than other major economies. This restrictive policy is best illustrated by the fact that the use of trade defence instruments covers only about 1% of total imports from China

As of May 2010, the EU had 52 anti-dumping measures in force against Chinese imports.

Market restrictions

European services companies continue to find it difficult to break into the Chinese market often they have to deal with red tape and cumbersome procedures.

China maintains investment and ownership caps in many sectors such as banking, construction and telecommunications, although China has signed agreements to open its market. As an example, of the 22 000 telecoms licenses it has granted since 2001 only 14 have gone to foreign companies. Foreign law firms in China are still not allowed to employ Chinese lawyers and are not permitted to participate in bar exams to gain Chinese qualifications.

In the area of procurement it is difficult to access for European companies as so called ‘indigenous innovation” schemes close significant parts of the market to European companies.