China

China is the EU’s second largest trading partner for goods after the United States, with bilateral trade reaching €739 billion in 2023. This represents a decline of 14% compared to 2022. China is the EU's third-largest partner for exports and the biggest for imports. The EU-China trade balance has been persistently in favour of China. In 2023, the EU deficit amounted to €292 billion. EU exports to China amounted to €223.6 billion, whereas EU imports from China amounted to €515.9 billion, indicating year-on-year decreases of 3.1% and 18% respectively.

At the European Council in June 2023, EU Member States reaffirmed the EU’s multifaceted policy approach towards China, outlined in its 2019 strategic outlook. China is simultaneously a partner, a competitor, and a systemic rival. 

However, the balance of challenges and opportunities presented by China has shifted over time. Our economic relationship is critically unbalanced, both in terms of trade flows and of investment, due to a significant asymmetry in our respective market openings. In addition, China’s economic model has brought about systemic distortions with negative spillovers to trading partners. According to the IMF, China’s use of industrial policies, notably its support to priority sectors, has an impact on trading partners. 

For the EU, ensuring reciprocity, achieving a level-playing field, and addressing asymmetries in the relationship are matters of priority. The EU remains committed to addressing these challenges through dialogue with China and underscores the importance of the WTO as the best avenue to address the root causes of the current imbalance. 

On 30 December 2020, the EU and China concluded in principle negotiations on the Comprehensive Agreement on Investment (CAI). 

Trade picture

• In the trade of goods, the EU has long had a trade deficit with China. The deficit amounted to €305 billion in 2024, surpassing the €297 billion deficit of 2023, but nonetheless lower than the record trade deficit of €396 billion reached in 2022.
• In 2024, EU imports of manufactured goods accounted for 97% of total imports from China, with primary goods comprising just 2%. The most imported manufactured goods were machinery and vehicles (55%), followed by other manufactured goods (34%), and chemicals (8%).
• In 2024, EU exports of manufactured goods constituted 88% of total exports to China, with primary goods making up 11%. The most exported manufactured goods were machinery and vehicles (51%), followed by other manufactured goods (20%), and chemicals (17%).
• Regarding trade in services, the EU has long maintained a trade surplus with China. In 2023, the surplus amounted to €15.7 billion. China is the EU's fourth-largest services trading partner, after the United States, the United Kingdom, and Switzerland.
• The cumulative value of EU foreign direct investment (FDI) flows into China since 2000 stood at €185 billion as of Q4 2024, with the total for 2024 reaching €10.1 billion.
• EU investment in China in 2024 mostly centred on the automotive, basic materials, and information and communication technology sectors.
• The cumulative value of Chinese foreign direct investment (FDI) stocks in the EU-27 since 2000 stood at €188 billion in 2024, with FDI increasing by €11.9 billion annually since 2009.
• Chinese FDI flows to the EU amounted to €9.4 billion in 2024 (versus €5.2 billion in 2023). The top three areas were the automotive sector, entertainment, media and education, and consumer products and services.
• Chinese FDI into the EU is no longer dominated by mergers and acquisitions but by greenfield investments in most cases.
• In Q1 2025, EU FDI into China maintained its momentum, with investments totalling €3.06 billion, marking the strongest first-quarter performance since 2022.

The EU and China

The EU sees China as a partner for cooperation, an economic competitor, and a systemic rival. Recently, EU-China relations have become increasingly complex. 

In recent years, the EU has conveyed its growing concerns regarding systemic imbalances that characterise the Chinese economy. China’s distortive industrial policies and practices – in particular with regard to widespread support for the manufacturing sector – create overcapacity in China, with negative externalities for a wide range of WTO members.

Another area of concern is China’s drive towards import substitution and self-sufficiency. While the EU welcomes efforts by the Chinese authorities to attract foreign direct investment, EU companies continue to face discrimination in the Chinese market, and it remains difficult for European businesses in China to compete due to the lack of a level playing field. Moreover, despite the Chinese government’s stated ambition to pursue a high-level opening of its market and build mutually beneficial trade partnerships, China still remains largely closed in many important sectors. 

Many European companies feel that the business environment in China has become more politicised over the years. Economic challenges have increased, while regulatory obstacles have remained largely unchanged, which has further negatively impacted the business outlook. A complex and non-transparent legal framework on cybersecurity, combined with restrictive rules on cross-border data flows subject to broadly applied security approvals, insufficient enforcement of intellectual property rights and requirements leading to technology transfer, and a broad concept of national security all further affect the business environment. 

The EU is committed to de-risking, not decoupling from China. This entails reducing critical dependencies and vulnerabilities, including in EU supply chains, and diversifying where necessary. 

At the same time, recognising the importance of maintaining open communication channels, the EU continues to pursue cooperation with China at both bilateral and multilateral level. The EU and China discuss policies and issues regarding trade and investment in a range of dialogues, of which the most important are:

• The Annual EU-China Summit: Presidential-level exchange to enhance policy coordination on the most important issues, including trade, and;
• The EU-China High Level Economic and Trade Dialogue (HLED): a Vice-President of the European Commission and the Chinese Vice Premier meet to discuss issues. They are accompanied, if needed, by EU commissioners and Chinese ministers. 

At global level, the EU is committed to working to reform the World Trade Organisation to respond to the challenges of the Green and Digital Transitions, while promoting a global level playing field. The EU calls on China to play a part commensurate to its economic weight to help achieve these reform objectives.

Trading with China

• Importing into the EU from China
  • EU trade defence measures on imports from China
• Exporting from the EU to China
  • Trade defence measures in force in China
• Trade relations are part of the EU's overall political and economic relations with China
• China is a member of the World Trade Organization
• EU-China trade issues referred to the WTO Dispute Settlement Body by the EU against China and by others, including China against the EU
• The European Union Chamber of Commerce in China (EUCCC) celebrates European companies’ success in China, but also urges China's leaders not to turn inward
• The EU supports European SMEs in exporting to and investing in China, and also offers SMEs specific advice on IPR issues