In recent years, China has been advancing the trade market with the EU and has become the union’s second-largest trading partner behind the United States. For Ali Fatemi, president of the American Graduate School of Business and Economics, it will not be a surprise that China may replace the U.S. as a major trade partner for EU in the next couple of years, even in a situation that trade frictions appeared globally.
According to Eurostat data, growth in exports from the EU to China made up one-fifth of the EU's total exports growth last year, far outstripping other countries. Cumulative investment from the EU to China is just under 122 billion U.S. dollars. By the end of March, China had invested 80.6 billion U.S. dollars in Europe. That's according to Ambassador Zhang Ming from the Chinese Mission to the European Union. He noted huge potential for more bilateral investment.
Wang Jianhui, general manager at research and development department of Capital Securities, said that China will put more efforts on solving the existing problems with EU to achieve the goal, including trade balance problem, investment limits and foreign exchange issue.
“I think China will do more efforts and [make] more policy measures to rebalance the trade with EU since we still have about four or five billion U.S. dollars per month trade surplus with EU,” Wang said, explaining why he views increasing the import from EU the priority.
“Second, I think the investment’s issue. Since U.S. has the intention to put more restrictions on Chinese investment in the U.S., China would be thinking about switching some investment to EU because over there maybe they have a similar or better investment conditions right now” Wang noted.
Ali Fatem can’t agree more on that, saying it’s the exact time for bilateral trade under the pressure of U.S. tariff.
“It’s going to be a very opportune time for business, [for] people both in France and in other European countries with China, enlightened of the inappropriate gestures of U.S. President Donald Trump. And exactly, trade is going to provide much more opportunities for improvement of changing trade relations between Europe and China. In general, I think the potential is great, and the possibilities are many,” he said. Ali Fatemi added U.S. position seems to serve as an additional incentive for extension and expansion of Chinese and European trade relations.
The third problem between China and EU is forex, as Wang noted, but he also said the issue is not as serious as last year.
“I think on the foreign exchange front, the RMB devaluation could be an issue last year. But this year, looking back, RMB has already appreciated against the euro by about 1.6 percent. Acknowledging of that improvement, I think both sides will continue in cooperation on the exchange rate and also the currency swap project,” Wang pointed out.
While the issues between China and EU being solved one by one, wall between U.S. and EU is being built by more bricks. “The only situation which arises is the complication with the U.S. because the U.S. has been traditionally the major trading partner of Europe,” Ali Fatemi said.
But he also said the country’s heavy and sudden tariff won’t arouse much concern. “There may be in certain circles some apprehensions, but in general, it’s an advantage of Europe for further investment.” After all, China may replace the U.S. as a major trade partner for EU and the two economies may compensate the loss for each other by trade.
