China–EU Trade Relations: A View from Brussels

Abstract

China’s trading relationship with the EU and Western economies has evolved dramatically since Deng Xiaoping initiated reforms in China more than 30 years ago, from a situation in which almost nothing was traded to the establishment of a major trading relationship with the EU as well as the US. It is now the EU’s first source of imports and its fastest growing export market, and is widely predicted to become soon the EU’s first trading partner altogether. The WTO accession was seen as historic and the result of strong political will in China and its key trading partners. It did generate expectations that China would follow a path of further reforms and progress towards a rules based economy firmly anchored in the multilateral system. Against this background, to understand better the foundations and the evolution of the economic relationship between China and the EU, including some of the difficulties and misunderstandings that have emerged over the past years, we first examine the rationale for China’s economic objectives and the contradictions in the EU and China’s attitudes and policies towards each other. We then review China’s economic policies, especially those that have a major influence on the business climate in China, and pause on the possible emergence of a ‘rule of law with Chinese characteristics’, before offering thoughts on convergence and conflicts between Western and Chinese interests.