China–European Union relations
Relations between the European Union and the People's Republic of China or Sino–European relations are bilateral relations that were established in 1975 between the PRC and the European Community. According to the European External Action Service, the EU and China relations aim for cooperation in the areas of "peace, prosperity, sustainable development and people-to-people exchanges." The EU is the PRC's largest trading partner, and the PRC and the ROC are the EU's second and fifteenth largest trade partners after the United States, while the EU has put an arms embargo and numerous anti-dumping measures against the PRC in place.
In the jointly adopted EU-China 2020 Strategic Agenda for Cooperation of 2013, the EU reaffirmed its respect for China's sovereignty and territorial integrity, while the PRC reaffirmed its support to EU integration. An annual EU-China Summit is held each year to discuss political and economic relations as well as global and regional issues. Starting in March 2019, the European Union has referred to China as a "systemic rival".
Agreements
Relations are governed by the 1985 EU-China Trade and Cooperation Agreement. Since 2007, negotiations have been underway to upgrade this to a new European Union Association Agreement and there are already 24 sectoral dialogues and agreements from environmental protection to education.The EU-China Comprehensive Agreement on Investment has been under negotiation since 2014. DG Trade Phil Hogan in the Von der Leyen Commission promised during his September 2019 confirmation hearings that he would seek to complete the negotiations by the end of 2020.
History
Prior to the existence of the European Community, many European states had relations with the Qing dynasty as far as the 19th century.In 1979, just after the first direct elections to the European Parliament, the later institution established the Delegation for relations with the People's Republic of China.
After the end of the Cold War, relations with Europe were not as high a priority for China as its relations with the US, Japan and other Asian powers. However interest in closer relations started to rise as economic contacts increased and interest in a multipolar system grew. Although initially imposing an arms embargo on China after Tiananmen, European leaders eased off China's isolation. China's growing economy became the focus for many European visitors and in turn Chinese businessmen began to make frequent trips to Europe. Europe's interest in China led to the EU becoming unusually active with China during the 1990s with high-level exchanges. EU-Chinese trade increased faster than the Chinese economy itself, tripling in ten years from US$14.3 billion in 1985 to US$45.6 billion in 1994.
However political and security co-operation was hampered with China seeing little chance of headway there. Europe was leading the desire for NATO expansion and intervention in Kosovo, which China opposed as it saw them as extending US influence. However, by 2001 China moderated its anti-US stance in the hopes that Europe would cancel its arms embargo but pressure from the US led to the embargo remaining in place. Due to this, China saw the EU as being too weak, divided and dependent on the US to be a significant power. Even in the economic sphere, China was angered at protectionist measures against its exports to Europe and the EU's opposition to giving China the status of market economy in order to join the WTO.
However, economic cooperation continued, with the EU's "New Asia Strategy", the first Asia–Europe Meeting in 1996, the 1998 EU-China summit and frequent policy documents desiring closer partnerships with China. Although the 1997 Asian financial crisis dampened investors enthusiasm, China weathered the crisis well and continued to be a major focus of EU trade. Chinese leaders were anxious to return the European interest and made high level visits throughout the 1990s, visits that were accompanied by major EU sales to China. Trade in 1993 saw a 63% increase from the previous year. China became Europe's fourth largest trading partner at this time. Even following the financial crisis in 1997, EU-Chinese trade increased by 15% in 1998.
France was leading the EU's desire for closer ties in order to establish a multipolar world and was the first, along with Russia, to establish strategic partnerships with China. Relations between the European Union and China have experienced a cool down after China canceled the EU-China yearly summit in November 2008. This was apparently caused due to French President Sarkozy's plans to meet with the Dalai Lama.
The EU-China 2020 Strategic Agenda for Cooperation, adopted in 2013, calls for cooperation in the areas of "peace, prosperity, sustainable development and people-to-people exchanges." In 2016, the EU adopted the "Joint Communication on elements for a new EU strategy on China" as its strategy on China.
On the 16th of October 2018, the European Union Naval Force and the Chinese People's Liberation Army Navy held for the first time ever a joint military exercise. The exercise took place at a Chinese military base in Djibouti and was completed successfully. Rear Admiral Alfonso Perez De Nanclares said that preparations for future exercises with the Chinese Navy are currently taking place.
China sent medical aid and supplies to EU countries affected by the COVID-19 pandemic. EU foreign policy chief Josep Borrell warned that there is "a geo-political component including a struggle for influence through spinning and the ‘politics of generosity’." Borrell also said that "China is aggressively pushing the message that, unlike the US, it is a responsible and reliable partner."
Trade
The EU is China's largest trading partner, and China is the EU's second largest trade partner after the United States. Most of this trade is in industrial and manufactured goods. Between 2009 and 2010 alone EU exports to China increased by 38% and China's exports to the EU increased by 31%.| Direction of trade | Goods | Services | FDI |
| EU-China | €136.2 billion | €22.3 billion | €7.1 billion |
| China-EU | €292.1 billion | €16.3 billion | €0.7 billion |
Trade in goods
In 2016, the EU-China bilateral trade in goods were €514.8 billion. Machinery and vehicles dominate both exports and imports. The top five exports of China are computers, broadcasting equipment, telephones, office machine parts and integrated circuits. China's top five imports are crude petroleum, integrated circuits, iron ore, gold and cars.For what concerns the EU imports of AMA/NAMA product groups the part for industrial products counts for a value of €343.725 million and gets the impressive percentage of 98.1%. The same applies for exports to China where industrial products keep the highest ranking in the list and count for €159,620 million.
Trade in services
Trade of services play an important role in all modern economies. A resilient tertiary service sector, as well as an increased availability of services, may boost economic growth and enhance industrial performance. In an increasingly localised world, services such as finance, insurance, transport, logistics and communications deliver key intermediate inputs and thereby provide crucial support to the rest of the economy.The European Union representing its 28 Member States and China are both members of the World Trade Organisation and participate in the ongoing discussions about the Trade in Services Agreement. The volume of trade in services of all participating countries corresponds to 70% of the world's total volume. TiSA is an important tool to increase the share of services trade by tackling the existing barriers. With TiSA new opportunities for service providers will be offered while fostering growth, jobs and prosperity at all participating Members.
According to the latest statistical information from Eurostat, the EU trade in services balance with China in 2015 present a surplus of €10.3 billion due to a surge of exports.
Smart and Secure Trade Lanes (SSTL) project
The SSTL project was launched in 2006 as a pilot project between the European Union and China as the first Asian country. The participating EU member states at the time were the Netherlands and the United Kingdom. As from 2010 other EU member states joined: Belgium, France, Germany, Italy, Poland and Spain. This project tests safety and security related recommendations of the World Customs Organisation Framework of Standards applied to containers, facilitating the "Customs-to-Customs" data exchange, risk management cooperation, mutual recognition of customs controls and trade partnership programmes. The 120 trade lanes involving 200 economic operators between 16 maritime ports will undoubtedly facilitate trade between China and EU participating countries as loading and unloading of containers will require less controls and intervention of Customs authorities.There have been some disputes, such as the dispute over textile imports into the EU. China and the EU are increasingly seeking cooperation, for example China joined the Galileo project investing €230 million and has been buying Airbus planes in return for a construction plant to be built in China; in 2006 China placed an order for 150 planes during a visit by French President Jacques Chirac. Also, despite the arms embargo, a leaked US diplomatic cable suggested that in 2003 the EU sold China €400 million of "defence exports" and later, other military grade submarine and radar technology.
Science and technology
China and the EU launched their first science and technology cooperation program in 1983. They also drafted an Agreement on Scientific and Technological Cooperation in 1998 which was renewed in 2004 with the aim of linking research organisations, industry, universities and individual researchers in specific projects supported by the EU budget.The current cooperation of the EU and China in the area of science and technology has been made available by the Horizon 2020 program. The Horizon 2020 initiative by the European Commission addresses the following areas: food, agriculture and biotechnology ; sustainable urbanization; energy; aeronautics; and other areas including ICT, water, health, society, polar research, sme instrument, and space.
Debt purchases
During the European debt crisis, several European countries required the EU and International Monetary Fund bailouts. China assisted Europe by buying billions of euros' worth of junk Eurozone bonds; in particular from Greece, Ireland, Italy, Portugal and Spain. Some analysts suggested China was buying political influence in the EU but China maintains they are building strong trade ties and supporting the European economy so that trade issues can move ahead more smoothly.Conflicts
Trade conflicts
Textiles conflict
There is a dispute over textile imports into the EU with domestic European manufactures losing out to cheaper Chinese imported goods. The EU and China have finally reached an agreement ending the 'conflict of textiles', which poisoned their relations for several weeks. Both parties have finally found a deal that appears to end the dispute between Beijing and Brussels. Under the terms of the agreement, China agreed, in exchange for the release of 80 million items held in European ports, only half of these are deducted from its export quotas for 2006.EU anti-dumping measures
The EU has put in place numerous anti-dumping measures to protect its market from cheap products from China, especially steel.Arms embargo
The EU arms embargo on China was imposed by the EU on China in response to its suppression of the Tiananmen Square protests of 1989. China stated its position that the embargo be removed, describing it "very puzzling" and amounting to "political discrimination". In January 2010, China again requested that the embargo be removed.Internal EU divisions
A leaked US cable indicated the internal divisions in the EU on the ban during negotiations in 2004. France viewed the ban as anachronistic and refused to consider attaching reforms in China as a condition, stating that "China would not accept human rights conditionality." Austria, Belgium, Czechia, Greece, Italy and the UK were all broadly in the French camp. Germany, Denmark, the Netherlands and Sweden wished to attach a lifting of the ban to "specific Chinese steps on human rights." All agreed in principle that if certain conditions were met then the ban should be lifted. Various EU heads of state have objected to the embargo or supported its continued existence. German Chancellor Angela Merkel has previously indicated her opposition to a lifting of the embargo, whereas her predecessor, Gerhard Schröder, had been in favour.The European Parliament has been consistently against removing the embargo. However, High Representative Catherine Ashton put forward plans for lifting the embargo in 2010, arguing that "The current arms embargo is a major impediment for developing stronger EU-China co-operation on foreign policy and security matters." Chinese ambassador to the EU Song Zhe agreed, noting that "it doesn't make any sense to maintain the embargo."
Outside pressure
The United States, which also has an arms embargo on China, states that lifting the embargo will create a technology transfer that will increase the capabilities of the Chinese army. The US has been influential in keeping the EU ban in place. The US sees China as a potential military threat and has pressured the EU in keeping it in place. In 2011 the Chinese EU ambassador suggested that in the future "the EU should make decisions on its own."Similarly, Japan is equally as against any attempt to remove arms restrictions to China. Japan's government, particularly right-wing members of the cabinet, indicate that any such move will alter the balance of power in Southeast Asia strongly in favour of China at Japan's expense. China described Japan's position as provocative. Meanwhile, Japan stated that the EU's proposal to lift the embargo in 2010 was a mistake in which caused great concern to Japan.