China has overtaken the United States as the largest trading partner of the European Union in 2020. While there was a fall in EU’s trading with most of its major trading partners during the pandemic hit year, China on the other hand increased its trade with the economic bloc.
In 2020, the total value of the China-EU mutual trade was $709bn which was much higher compared to that between the EU and the US at $671bn worth of imports and exports from the US.
There was increase in demand for goods from the EU in China in the later half of the year with the Chinese economy recovering from the strong pandemic hit that it experienced in the first quarter of last year. There was an increase in demand for European cars and luxury goods in China which is the only major economy that registered a growth in 2020.
On the other hand, strong demand for medical equipment and electronics fuelled a growth in exports from China into the EU.
“In the year 2020, China was the main partner for the EU. This result was due to an increase of imports (+5.6%) and exports (+2.2%),” according to Eurostat, the EU’s statistical office. These numbers were similar to those published by China in January which noted a growth of 5.3 per cent in trade between the two trading partners at $696.4bn in 2020.
However according to Eurostat figures, the trade deficit of the EU with China increased in 2020 to $219bn from $199bn a year earlier.
The statistics showed a significant drop in mutual trade of the EU with its trading partners the US and the United Kingdom in 2020 even though these countries continued to remain the largest export markets of the economic bloc.
“Trade with the United States recorded a significant drop in both imports (-13.2%) and exports (-8.2%),” the data agency said.
With the EU and the US imposing tariffs on each other’s goods as a part of a series of tit-for-tat trade disputes, with new tariffs on steel and products such as French Cognac or American Harley-Davidson motorcycles, the mutual trade between the transatlantic trading partners was hit hard. The trade volume between the US and the EU in 2020 was at $671bn compared to $746bn in the previous year.
Whether the new US administration under Joe Biden will re-evaluate the US approach to trade with Europe is not yet clear.
On the other hand, there are serious attempts between the EU and China to further strengthen their trade and economic ties as both the countries are attempting to ratify an investment deal which would ensure better access to the Chinese market for European companies.
According to analysts, global trade in 2021 would stage a turnaround after a dismal 2020 because of the Covid-19 pandemic.
According to research firm IHS Markit, following an estimated contraction of about 13.5 per cent in the real value of global trade in 2020, it is estimated to grow by 7.6 per cent in the current year $16.4tn.
(Adapted from BBC.com)