Today, Valdis Dombrovskis, European Commission Executive Vice-President, and He Lifeng, Vice Premier of the State Council, co-chaired the 10th EU-China High-level Economic and Trade Dialogue (HED). The HED is the primary platform for discussing economic, financial, trade, and investment cooperation between the EU and China. Both sides discussed the macro-economic situation in the EU, China, and globally during the meeting.
Executive Vice-President Dombrovskis highlighted the impact of Russia’s unprovoked attack on Ukraine on global economic growth prospects and food and energy security. Market access and supply chain issues were also discussed, with Executive Vice-President Dombrovskis calling for progress on EU concerns regarding access to the Chinese market. Additionally, he emphasized the need to rebalance the EU-China economic and trade relationship based on transparency, predictability, and reciprocity. The meeting also explored potential ways to enhance multilateral cooperation.
EU-China high-level bilateral dialogues
Recently, the HED was established due to an agreement between President Ursula von der Leyen and President Xi Jinping to restart high-level bilateral dialogues between the EU and China. This new development was part of a broader four-day visit to the People’s Republic of China by the Executive Vice-President, which included meetings with high-level Chinese officials and European businesses to discuss macroeconomic, financial, trade, and investment issues. The Dialogue serves as a crucial platform to discuss a wide range of geopolitical topics and specific concerns.
The EU and China are significant trading partners, with bilateral trade in goods reaching a record level of €857 billion in 2022, representing a 23% YoY increase. EU exports to China increased by 3.1% to €230 billion, while imports from China increased by 32% to €626 billion. This resulted in a record bilateral deficit of €396 billion, a 58% increase from 2021.
In 2022, China was the EU’s second-largest trading partner for goods after the US. It was also the third-largest export destination, representing 9% of total EU exports, following the US and the UK. China was the largest source of imports, accounting for 21% of total imports, which exceeded the combined share of the second-largest (the US, 12%) and the UK (7%).
Key topics
During the HED, the EU expressed concerns about the business environment for EU exporters and investors in China. Access to the Chinese market for European businesses, particularly in agrifood exports, medical devices, cosmetics, and infant formula, was a key topic raised by Executive Vice-President Dombrovskis. The EU and China agreed to restart discussions on alcoholic beverage exports and to exchange technical information on export controls to clarify each other’s measures.
Additionally, the EU welcomed the agreement between Commission Vice-President Věra Jourová and Vice-Premier of the State Council Zhang Guoqing on 18 September 2023 in Beijing to ensure more accessible cross-border non-personal data flows. Implementing the Geographical Indications Agreement was also viewed as a positive step forward in Intellectual Property Rights.
Transparent and predictable supply chains, particularly for critical raw materials, were discussed, and both sides agreed to continue discussions on a possible EU-China transparency mechanism for supply chains for raw materials. The EU underlined the importance of refraining from weaponizing supply chains and defended open and fair trade based on global trade rules, a level playing field, and fair competition, rejecting protectionism.
The two sides also addressed sectoral issues, such as easing approvals for EU cosmetics makers and improving market access for European medical devices. Furthermore, during discussions on the global economic outlook and macroeconomic policies, the EU encouraged China to undertake market-driven structural reforms to rebalance its economy towards a more sustainable long-term financial growth path.
The parties agreed to set up a new EU-China Working Group on Financial Regulation to work on critical areas, including mutually opening up investment opportunities in financial markets for financial institutions, continuing cooperation in Sustainable Finance and Fintech, and improving rules on ICT infrastructure for the financial sector.
Finally, the EU and China discussed their cooperation on shared global challenges, including Russia’s war of aggression against Ukraine. The EU called on China to play a constructive role in ensuring lasting peace and mitigating the economic consequences of the war. They also exchanged views on enhancing multilateral cooperation, including engagement in debt relief efforts in the G20 framework and coordination in the World Trade Organisation. They also discussed the 13th WTO Ministerial Conference in February 2024.
