The European Union, China and the USA are the world’s three largest trading partners.

The EU is committed to open trading relations with China. China is expected to conform to fair trade practices, to respect intellectual property rights, and to meet its obligations as a member of the World Trade Organization (WTO).

On 30 December 2020, the EU and China concluded in principle the negotiations on the Comprehensive Agreement on Investment (CAI). The agreement grants EU investors a greater level of access to China’s market. The CAI has not yet been ratified. It has therefore not yet entered into force.

Trade picture

• On trade in goods, the EU currently has a trade deficit with China.
• On trade in services, the EU currently has a trade surplus with China.
• Trade statistics on the EU’s relations with China

The EU and China

When China joined the WTO in 2001, China agreed to reform and to liberalise significant parts of its economy. While China has made progress and continues to liberalise various non-sensitive industries, problems remain:

• A lack of transparency;
• Industrial policies and non-tariff measures that discriminate against foreign companies;
• strong government intervention in the economy. This means that state-owned firms are in a dominant position with unequal access to subsidies and to cheap financing, and;
• poor enforcement of intellectual property rights.

The EU’s engagement with China on trade is guided by the 2019 EU Strategic Outlook, which promotes reciprocity, a level playing field and fair competition.

The strategy includes a strong focus on improving market access opportunities. It also refers to problems of over-capacity. It calls for ambitious engagement from China at multilateral levels. 

Investment

The EU-China Investment Agreement is central to the EU’s long-term bilateral relations with China. Negotiations for the Investment Agreement began in 2013. On 30 December 2020, the EU and China concluded in principle the negotiations on the Comprehensive Agreement on Investment (CAI). The agreement grants EU investors a greater level of access to China’s market.

In the agreement, China commits to ensuring fairer treatment for EU companies in China, allowing them to compete on a more level playing field. These commitments cover state-owned enterprises, transparency of subsidies, and rules against forced technology transfer. The rules negotiated in the CAI set a high benchmark in terms of transparency, a level playing field, market access commitments and sustainable development. The EU's work on planned autonomous measures in areas such as subsidies or due diligence continues as a matter of priority.

China has agreed to provisions on sustainable development, including commitments on climate and forced labour.

Both sides agreed to continue negotiations on investment protection and investment dispute settlement, to be completed within two years of the signature of the agreement.
 For more information:

• EU press release on CAI
• Agreement in principle
• Timeline and other documents
• The latest available data on investment between the EU and China.

The EU and China discuss policies and issues regarding trade and investment in a range of dialogues:

• Annual EU-China Summit: presidential-level exchange on enhancing policy coordination on a number of issues, including trade;
• EU-China High Level Economic and Trade Dialogue (HED): an EU vice-president and the Chinese Vice Premier meet to discuss issues accompanied by EU commissioners and Chinese ministers;
• Joint Committee on Trade: annual ministerial-level meeting;
• Trade and Investment Policy Dialogue: meeting at director-general level, and;
• Economic and Trade Working Group (ETWG): expert level discussions.

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