Brussels, 25 September 2023
European Commission Executive Vice-President, Valdis Dombrovskis, and Vice Premier of the State Council, He Lifeng, co-chaired today the 10th EU-China High-level Economic and Trade Dialogue (HED). The HED is the main platform for the EU and China to discuss economic and financial matters, as well as trade and investment cooperation.
Specifically, the two sides discussed the macro-economic situation in the EU, China and globally. Executive Vice-President Dombrovskis emphasised in particular the impact of Russia’s unprovoked attack on Ukraine on global economic growth prospects, as well as on food and energy security. The two sides discussed market access and supply chain issues, where Executive Vice-President Dombrovskis called for progress on EU concerns on access to the Chinese market, and for rebalancing the EU–China economic and trade relationship on the basis of transparency, predictability and reciprocity, as well as potential ways for enhancing multilateral cooperation.
Key topics
On trade and investment, the EU reiterated during the HED its concerns about the overall state of the business environment for EU exporters and investors in China. Executive Vice-President Dombrovskis notably raised the issue of access to the Chinese market for European businesses, notably in the areas of agrifood exports, medical devices, cosmetics, and baby formula. The EU and China also committed to restart discussions on alcoholic beverage exports. The two sides confirmed the agreement to exchange information on export controls at technical level, in order to provide a platform to clarify each other’s measures.
In particular, the EU welcomes the agreement reached between Commission Vice-President Věra Jourová and Vice-Premier of the State Council Zhang Guoqing on 18 September 2023 in Beijing, to ensure easier cross-border flows of non-personal data. In the field of Intellectual Property Rights, the good progress in the implementation of the Geographical Indications Agreement was seen as a positive step forward.
The importance of transparent and predictable supply chains was also discussed, in particular for critical raw materials. Both sides agreed to continue discussions on a possible China-EU transparency mechanism of supply chains for raw materials. More widely, the EU explained its de-risking strategy and underlined the importance of refraining from weaponising supply chains. The EU does not want to decouple from China. The EU defends open and fair trade, based on global trade rules, a level playing field and fair competion, and rejects protectionism.
The two sides already addressed a number of specific sectoral issues, such as easing approvals for EU makers of cosmetics. EU cosmetic makers have faced increasingly cumbersome labelling and licencing agreements and the EU welcomes the establishment of a new working group to address these issues. The EU also hopes to pursue discussions on improving market access for European medical devices. Eliminating barriers is a matter of mutual benefit and would directly improve the welfare also of Chinese citizens, giving them access to the best healthcare technologies. The Chinese authorities commited to clearing the backlog of applications for licences of infant formula, which the EU welcomes.
During discussions on the global economic outlook and macroeconomic policies, the EU encouraged China to undertake market-driven structural reforms to rebalance its economy towards a more sustainable long term economic growth path. A rebalancing will not only benefit the Chinese economy by reducing its domestic imbalances and inequality, but would also be beneficial for the EU and the global economy as a whole, as it would contribute to more resilient, balanced and sustainable global growth. In this respect, the EU looks forward to the resumption of the Macroeconomic and Economic and Financial Dialogues in the coming months.
The two sides agreed to set up a new EU-China Working Group on Financial Regulation to work on key areas including mutually opening up investment opportunities in financial markets for financial institutions; ensuring continued cooperation in Sustainable Finance and Fintech; and improving rules on ICT infrastructure for the financial sector, which is vital for our operators to ensure compatibility. It will look at regulation for foreign financial institutions, including on the possibility to share financial data cross border.
The parties also discussed cooperation on common global challenges. Russia’s war of aggression against Ukraine has had a severe impact on the global economy, triggering a humanitarian crisis and aggravating food and energy security challenges. In this context, Executive Vice-President Dombrovskis called on China to play a constructive role in ensuring lasting peace and mitigating the economic consequences of the war. He thanked China for its work on nuclear non-proliferation.
Finally, the EU and China discussed possible ways of enhancing multilateral cooperation, including engagement on debt relief efforts in the G20 framework, and coordination in the World Trade Organization (WTO). They also exchanged views on the preparations and expectations for the 13th WTO Ministerial Conference in February 2024.
Background
It followed the agreement between President von der Leyen and President Xi to reactivate the high-level bilateral dialogues between the EU and China. It was part of a broader four day visit of the Executive Vice-President to the People’s Republic of China, encompassing several meetings with the high-level Chinese officials and European businesses on macroeconomic, financial and trade and investment issues. The Dialogue is an important forum to discuss broader geopolitical topics as well as drilling down into specific subjects and concerns. In addition, the Executive Vice-President gave public speeches at the Bund Summit and at Tsinghua University.
The EU and China are major trading partners: in 2022, bilateral trade in goods increased by 23% year-on-year to the record level of €857 billion. EU exports to China grew by 3.1% to €230 billion, while EU imports from China were up 32% to €626 billion. As a result, the EU bilateral deficit also reached a record high of €396 billion – a 58% increase from 2021.
In 2022, China was the EU’s second-largest trading partner for goods, after the US. It was the EU’s third-largest export destination after the US and the UK, representing 9% of total EU exports. With 21% of total imports, China was the EU’s largest source of imports, exceeding the combined share of the second-largest (the US, 12%) and the UK (7%).
For More Information
Quote(s)
The European Union and China are key trading partners and our economies are deeply integrated. But our relations face headwinds, notably China’s position vis-à-vis Russia’s aggression against Ukraine, market access issues, and wider trade and investment challenges. This is why discussing issues openly at today’s High Level Dialogue was vital. Our relationship needs rebalancing to be mutually beneficial, based on transparency, fairness, predictability and reciprocity. I am glad that we made progress in addressing some market access issues, agreeing to exchange information on export controls, create a new working group on financial services, and resume our macroeconomic dialogues. These are meaningful steps at a time when European companies, which have a major footprint in China, are facing increasing difficulties. The EU will continue engaging with China on these issues.
Source – EU Commission