Since the establishment of relations in 1975, China - EU cooperation has grown extensively, expanding from trade and economics to include technology, global governance, education, and so on. That fact has been reflected accordingly by the levelling of the relations status between the two over the years. In 1998, China and the EU established a long-term, stable and constructive partnership oriented towards the 21st century, which was followed by a comprehensive partnership in 2001 and then a comprehensive strategic partnership in 2003.
The publication of the China-EU 2020 Strategic Agenda for Cooperation in 2013 also has spoken volumes about the encompassing and growing nature of China. In 2014, President Xi called for China and the EU to build partnerships for peace, growth, reform and civilisation, recognising growth and development as the driving force of relations but also adding a civilisational and global dimension to China-EU relations.
Throughout the past decades, economic and trade relations have stayed the most important pillar of China-EU relations. Although it has never been friction or complaint free, the economic and trade link continues to provide both the basis and impetus for the bilateral relations. Compared with 1975, when two-way trade volume registered a mere 2.4 billion US dollars, it is a different world nowadays. Benefitting from China’s continuous reform efforts, opening-up and integration into the global economy, as well as European entrepreneurship in exploring the Chinese market, the economic link has grown immense and resilient.
In terms of volume, trade between China and the EU reached a record high of US $800 billion in 2021, China remains the largest trading partner of the EU, and the EU is China’s second largest trading partner. The bilateral trade structure has continued to improve, with trade in aerospace, biology, optoelectronics, electronics and materials growing by more than 30%. In 2021, an agreement on geographical indications between China and the EU came into force.
Two-way investment between China and the EU has exceeded $270 billion, with active investment and cooperation in finance, new energy, electric vehicles and logistics. China’s investment in Europe continues to grow against the trend.
According to a 2021 survey of the European Union Chamber of Commerce in China, 60 percent of the companies surveyed plan to expand their operations in China, and nearly half of the companies surveyed have enjoyed higher profits in China than the global average. The conclusion of the Comprehensive Agreement on Investment (CAI) is the epitome of a win-win arrangement and reflects huge potential for China-EU economic cooperation.
However, in parallel to the continued prominence of the economic and trade link in overall China-EU relations, a trend of compartmentalisation is also developing, as the growth of economic and trade relations has not prevented a cooling down of the political relations between the two. Over the past several years, the two sides have had deep disagreements on issues related to Xinjiang and Hong Kong; EU criticisms of China’s governance model have been getting harsher. Still, the publication of EU’s China document in 2019, which labeled China a systemic rival, along with economic competitor and cooperating partner, had taken China by surprise.
The pandemic confirmed this trend. China’s speedy rebound from the first wave of the virus in mid-2020 helped to cushion Europe from the much heavier economic blow it experienced. However, for the Europeans, the outbreak of the Covid pandemic seemed to confirm their suspicions regarding China, and saw China’s medical aid to others as “mask diplomacy” set to undermine their own soft power in a “battle of narratives”.
The year 2021 witnessed unusual setbacks in their bilateral relations. The exchange of sanctions and counter-sanctions between the two sides in early 2021 did not only put the CAI, a document both sides want and need, on hold, but also created a lingering sense of uneasiness regarding bilateral relations. Although China intends to prevent a repeat of the case of Lithuania, which violated the one-China principle intentionally to reap geopolitical benefits, from damaging the entirety of China-EU relations, China’s legitimate counter-measures were interpreted as “economic coercion” targeting all of the EU.