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28th Nov 2022

EU and China need each other, EU trade chief says

  • At war over trade? China and the EU (Photo: dolmansaxlil)

EU and Chinese firms should have equal access to each other's markets, the bloc's leading trade official said Tuesday, warning that Beijing would not be able to subsidise its industries and maintain economic growth.

"The growth model that has brought the country to the gates of prosperity will not be the one that takes them through," EU trade commissioner Karel de Gucht said, at an event organised by the EU Chamber of Commerce in China.

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But de Gucht played down recent trade "frictions" between Brussels and Beijing.

"The trade and investment relationship between China and Europe remains a fundamental source of mutual benefit," he said.

China has been the world's fastest growing economy over the past thirty years, averaging annual growth of over 10 percent.

But its economy is expected to grow by 7.5 percent in 2013, the slowest rate in nearly two decades, amid concerns about the country's financial sector and falling exports.

The commission unveiled plans to start talks on an investment agreement with China in May, in a bid to replace 26 existing bilateral agreements made by individual member states with a single rulebook.

EU trade officials are demanding better access to Chinese markets for European firms, aiming to reduce China's trade surplus worth €146 billion.

The total value of EU trade with China reached €433.8 billion in 2012, second only to EU-US trade.

However, companies from both territories remain unwilling to invest. According to the EU's statistical agency, Eurostat, in 2011 European companies invested €17.5 billion in China, while Chinese firms invested €2.8 billion in the EU, less than 3 percent of both sides' total foreign investment.

But the EU's trade relations with China have become increasingly fraught in recent month, leading some analysts to predict a possible trade war.

In August, the EU called on the World Trade Organisation (WTO) to intervene after the Chinese government imposed tariffs on steel pipes being imported from the EU, the latest salvo in a long-running trade battle between the two.

Just weeks before, the EU imposed tariffs on Chinese solar panels and related components. China is also named among the worst offenders in trade protectionism in a commission trade report published earlier this month, having put in place a total of 36 'trade restrictive measures' between June 2012 and 2013.

Meanwhile, in a resolution adopted on Tuesday (17 September) MEPs stated that trade talks could not start until China's rules on market access were on the table.

Meanwhile, goods produced in China's Laogai forced labour camps "should not benefit from investments made under the bilateral investment agreement", said MEPs on the International Trade committee.

Deputies also want the cultural sector excluded from any trade deal, repeating a precondition set out by the French government before trade talks could begin with the United States.

Although the parliament's opinion is not legally binding, their support is required before any EU trade deals can come into force.

EU governments are expected to give the green light for the talks in October.

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