Saturday

23rd Jul 2016

Focus

China slowdown is bad news for Europe

  • "Chinese factories are filled with European equipment" (Photo: Daniel Foster)

China's economy so far this year grew slower than ever in the last three years, spelling bad news for its biggest trading partner, the European Union.

The second-biggest economy in the world grew by a mere 8.1 percent on a one-year-basis during the first quarter of 2012, the country's national statistics bureau announced on Friday (13 April), down from 8.9 percent during the last quarter of 2011 and "significantly lower than expected," Maarten-Jan Bakkum, emerging market analyst at ING, told EUobserver.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

Faced with a fragile global recovery and hesitant demand, China's famously export-driven economy has been abating for several years now. Early last month, the country's leadership lowered its 2012 growth target to 7.5 percent, down from 8 percent last year.

The new numbers, however disappointing, are still high and relatively stable. By comparison, the EU's economy grew by only 1.5 percent last year and is expected not to grind to a halt this year, while the eurozone is already in recession.

For the long term, then, these figures may not be of much significance. China is widely believed to remain a strong driver of global economic growth as its billion-strong population begins to buy products on the world market.

"We believe the economy will continue to maintain a moderately steady growth in the future," Sheng Laiyun, a spokesman for the national statistics bureau, told state press agency Xinhua.

But for the short term, experts say, the numbers are bad news for Europe, whose economy is closely interlinked with that of China. They not only confirm Europe's own fragile recovery as it imports less from China, but also indicate a future withering demand for European products.

"The news is very relevant for Europe," says Bakkum. "The little amount of good news coming from Europe comes from Germany, which is highly dependent on the export to China."

Europe's main export product group are machinery and transport equipment. "All factories in China are filled with European equipment," says Bakkum. A slump in production in China, then, would result in a slump in demand from Europe.

The European Commission, for its part, refused to comment. "We don't comment every time there is a new statistic," Olivier Bailly, a commission spokesman, told reporters in Brussels.

Investigation

ECB in ‘bail-out’ of scandal-tainted VW

The ECB has started to “bail out” Germany’s Volkswagen Group by buying its corporate bonds, but other EU-linked banks continue to shun the scandal-tainted firm.

Stakeholders' Highlights

  1. Belgrade Security ForumMigration, Security and Solidarity within Global Disorder: Academic Event Agenda for 2016
  2. GoogleHow Google Fights Piracy: Creating Value While Fighting Piracy
  3. EJC"My Visit to Israel" - Opinion by MEP Lopez Aguilar, Chair of the EP Working Group on Antisemitism
  4. World VisionChildren Migrating, Out of School and at Work as Hunger Deepens in Southern Africa
  5. European Healthy Lifestyle AllianceStand-Up (and Exercise) to Prevent Chronic Diseases
  6. Centre Maurits CoppietersLaunches a Real-time News Hub Specialised in EU Stakeholders
  7. Dialogue PlatformFethullah Gulen Calls for International Probe Into Turkey Coup Allegations
  8. GoogleEU-US Privacy Shield: Restoring Faith in Data Flows and Transatlantic Relations
  9. World VisionWorld Leaders & Youth Advocates Launch Partnership to End Violence Vs. Children
  10. Counter BalanceReport: Institutionalised Corruption in Romania's Third Largest Company
  11. Access NowEuropol Supports Encryption. We Can Relax Now… Right?
  12. GoogleLearn about Google's projects across Europe on Twitter @GoogleBrussels

Latest News

  1. Munich attack might not have been terrorism
  2. A very British (and Corbynite) coup
  3. Poland 'changing for the worse' for Muslims and refugees
  4. EU aims to lift visas on Turks despite purge
  5. ECB in ‘bail-out’ of scandal-tainted VW
  6. EU failed to learn lesson from Brexit, Poland says
  7. UK accord on EU workers 'crucial', France says
  8. EU and US take different lines on Turkey crackdown