TRADE AND INVESTMENT IN THE RELATIONS BETWEEN THE EUROPEAN UNION AND THE PEOPLE’S REPUBLIC OF CHINA

Abstract

Services are the fastest growing component of the import-export flows of developed countries. At the same time, they are the source of many disputes because of their nature, being often intangible, and non-excludable, with high value added. This is the case for service flows between China and the European Union (EU): they are relevant but the EU is concerned about the need to ‘level the playing field’. China’s WTO accession has eased some problems, but not solved them. The most relevant EU requests concern the intellectual property rights, counterfeit and pirated goods, and technology transfer. In addition to this, China has not yet implemented all its WTO accession obligations, e.g. in the financial sector. What follows is a detailed data analysis on service flows. It will comprise of, in particular, China-EU exchanges compared to world totals. Moreover, data over time, by EU country, and by sub-sector, will be analysed. Inward FDI has been liberalized in steps; it is amongst the main export drivers. It is an important vehicle for the technological upgrading of industrial sectors. The strict conditions imposed on foreign corporations have allowed China to acquire nearly up-to-date technologies, acting as a monopsonist with many suppliers. On FDI, the EU is further stressing a lack of reciprocity. Recently, Chinese outward FDI has been growing, due to very large Chinese foreign reserves, even though investment towards the EU remains modest. Last but not least, the chapter examines relevant data relating to European FDI in China – and Chinese FDI in the EU – over time, by EU country of origin, and by sector.