China-Europe Bilateral Trade and Investment Cooperation Shows Great Momentum
At a recent regular press conference of the CCPIT, the CCPIT Research Institute released the EU Business Environment Report 2022/2023. The report shows that in 2022, China-EU relations have remained stable, with a good momentum behind bilateral trade and investment cooperation. The bilateral cooperation has huge potential and brings about many opportunities.
Large cooperation space
The Report shows that bilateral economic, trade and investment cooperation between China and the EU is enjoying a good momentum. In 2022, the total bilateral trade in goods between China and the EU reached USD 847.3 billion, an increase of 2.4% year-on-year. China and the EU are each other’s second largest trading partners; Chinese enterprises have invested USD 7 billion into the EU, and the investment reserve has reached USD 102.9 billion. At present, China and the EU have jointly prepared an updated version of the “Common Classification Catalog of Sustainable Finance” to jointly build a green finance cooperation mechanism; positive progress has also been made in cooperation on major projects between the two parties. For example, China and France agreed to accelerate the implementation of the fourth round of the demonstration project list for third-party market cooperation. The cooperation on geographical indications between China and the EU has also achieved practical results, and the two sides have achieved the mutual recognition and protection of 244 geographical indication products.
Zhao Ping, Deputy Director of the CCPIT Research Institute, said that China-EU cooperation is related to global stability and the prosperity of the Eurasian continent. The economic and trade cooperation between China and the EU has a solid foundation, with complementary economic structures and broad common interests in many fields. There is still a broad space for future economic and trade cooperations between the two sides.
To be more specific, a key point is that the China-EU high-level dialog will continue to promote the stability and long-term development of bilateral economic and trade relations. Friendly cooperation follows the trend of the times. There are no geopolitical conflicts or fundamental conflicts of interest between China and the EU. The two sides have enormous cooperation potential in the fields of sustainable development, green finance, digital economy, multilateral cooperation, and global governance. Since 2022, there have been close high-level dialogs between China and the EU. Both sides have expressed the need to strengthen communication and collaboration, better jointly address global challenges such as the energy crisis, climate change, and public health, and create new growth opportunities for cooperation in areas such as green development and the digital economy through strengthened strategic connections.
Second, there are also broad prospects for China and EU to jointly build the Belt and Road. In 2022, as the world shipping and air transportation capabilities were lacking, the China-Europe Railway Express made 16,000 trips and carried approximately 1.6 million standard containers of goods, up by 9% and 10% respectively. China and the leaders of EU members such as Poland, Luxembourg and Malta have reached a consensus on the high-quality joint construction of the Belt and Road and the Air Silk Road. The Belt and Road Initiative has become a popular international public good and international cooperation platform.
In addition, there is great potential for cooperation in the fields of green development and science and technology. China and the EU share broad common interests in addressing climate change and environmental protection, and take common positions on global goals such as overall emissions reduction and maintaining a green ecology. On June 3, 2022, the IPSF (International Platform for Sustainable Finance) released an updated version of the “Common Classification Catalog of Sustainable Finance”, which was jointly prepared by the PBOC and the relevant departments of the European Commission. The updated catalog contains a total of 72 economic activities that have made significant contributions to the mitigation of climate change, which improves the global comparability and compatibility of the classification standards for sustainable finance and green activities. Strengthening the cooperation between China and the EU in the field of science and technology not only creates a solid foundation, but also provides the practical benefits for both sides.
Finally, the cooperation in third-party markets will promote winwin development. As of September 2022, China has signed third-party market cooperation agreements with EU members such as France, Italy, the Netherlands, Belgium, Spain, and Austria. Both sides have also established diversified cooperation platforms such as working groups, cooperation forums, cooperation funds, and steering committees. China and the EU complement each other in their industrial chains and the economy. Cooperation in the third-party market will further help both China and the EU fully leverage the comparative advantages of both industries and promote the deep integration of overseas markets.
Chinese companies expect the signing of the China EU Comprehensive Investment Agreement
The Report also pointed out that the decline in the business environment of the European Union in 2022 has posed significant challenges for foreign-funded enterprises. Zhao Ping pointed out that in 2022, the EU continued to add new policy tools and set more barriers to market access. Enterprises faced the dual challenges of market access and localized operation; the EU uses administrative means to restrict market behavior, which constitutes discrimination against products and enterprises from Xinjiang, China. Such behavior tends to politicize economic issues; the EU has also been making excessive regulations and the compliance costs of enterprises have increased significantly; discriminatory law enforcement has also further downplayed Chinese enterprises, expectations of the future business environment of the EU. “The survey shows that 33.04% of the enterprises surveyed believe that the business environment in the EU has deteriorated, an increase of 5.86 percentage points compared to last year. According to the Foreign Direct Investment Review Report released by the European Commission in September 2022, the failure rate of Chinese enterprises, investment project reviews reached 14.95%, which is much higher than those of the EU and other Western countries, and is also higher than the average failure rate of 10.37%.”
“The report also points out that a good business environment is the common expectation of the majority of foreign-funded enterprises, and will also be more attractive for Chinese enterprises.” According to the survey, if the EU eases its foreign investment review, 28.7% of the surveyed enterprises will expand their investment in Europe. If the EU-China Comprehensive Investment Agreement is signed and implemented, 40.87% of the surveyed Chinese enterprises will increase their investment in Europe. Zhao Ping said, “we are expecting the EU to continuously improve its business environment, and let foreign-funded enterprises play a better role in promoting EU economic growth and employment, thus creating a broader space for China-EU cooperation.”
The Report also pointed out that in response to the problems associated with the EU’s business environment, Chinese enterprises in Europe have put forward ten major recommendations, including recommending for the EU to strengthen its strategic independence and give independent recognition to China, resume the approval process of the EU-China Comprehensive Investment Agreement as soon as possible, and promote the early signing of the agreement. It is further recommended that the EU should uphold the basic principles of the WTO such as reciprocity and transparency, market access, fair competition, and being non-discriminatory, as well as conducting bilateral dialog and consultation on foreign investment reviews, foreign subsidy reviews, international procurement tools, human rights, and due diligence rules, so as to eliminate interference factors, and jointly promote the stability and development of China-EU relations.
Trade conflicts triggered by large countries intensify
The CCPIT has continued to track and analyze the economic and trade measures of 20 countries (regions) around the world, and regularly publishes global economic and trade friction index reports. On the same day, the Global Intellectual Property Protection Index Monthly Observation Report of February 2023 was released. From the perspective of the comprehensive index, according to the 2022 annual report, global economic and trade frictions intensified throughout the year, with the monthly index reaching a high level. The monthly average of the index increased by 205 points compared to the previous year.
From the perspective of the country index, the economic and trade frictions caused by major countries have intensified. The economic and trade friction index of the EU and the United States is at a high level, and the number of restrictions issued ranks second globally. The EU and the U.S. account for 25% and 18.8% of the total respectively, while China only accounts for 2.3%.
Regarding the industry index, global trade and economic frictions mainly happen in the fields of electronics, transportation equipment, light industry, mechanical equipment and other fields. Enterprises in these industries face higher operational risks.
CCPIT spokesperson Wang Linjie explained that the index presents three characteristics: first, the electronics, transportation equipment, light industry, and mechanical equipment industries are key areas of global economic and trade friction. The report shows that the global economic and trade friction index of the above-mentioned four industries has remained at a high level across all months; the global economic and trade friction index for the pharmaceutical and chemical industries has been at a high level for 11 months; and the agricultural industry has seen the high index for 7 months.
Second, the U.S., EU and Brazil are the proponents of global economic and trade fictions in many industries. The report shows that the global economic and trade friction index of the U.S. in seven industries, including
electronics, steel, chemicals, mechanical equipment, light industry, medicine, and transportation, is at a high level most months; the EU and Brazil have also seen high-level indexes in industries such as electronics, chemicals, mechanical equipment, light industry, pharmaceuticals, and transportation equipment most months.
Third, agriculture, electronics, machinery, medicine, and transportation equipment are the most protected areas in many countries (and regions). Most months, the global economic and trade friction index of agriculture is at a high level in the EU, India, Japan, Australia, Argentina, and other countries; electronics is at a high level most months in the U.S., the EU, Japan, South Korea, etc; and machinery, medicine, and transportation equipment are at high levels in the U.S., the EU and Brazil most months.