China Displaces U.S. as the EU’s Largest Trade Partner

[xizhimen]

China Displaces U.S. as the EU’s Largest Trade Partner
Published on July 14, 2021

How China Became the Largest EU Trade Partner
Historically, America has long been the EU’s top country to trade with, but in 2020, that trend came to a screeching halt.

A $26.7 billion boost for Chinese imports, in addition to a $5.3 billion increase in EU exports, has resulted in China officially becoming the EU’s largest trade partner.

This data looks at a decade of growing trade between the EU and China.

Playing Catch Up
Displacing the U.S. as a trade partner serves as yet another reminder that China is playing catch up to America’s economy. In 2020, there was an approximate $5.6 trillion gap in nominal GDP between the two nations. A decade ago, the gap was larger at $9 trillion.

The gap continues to shrink due to the differing growth rates in GDP. Between 2010-2020, U.S. nominal GDP growth was in the 1-2% range. During the same time, China’s GDP growth ranged from a high of 10.6% to a low of 6.1%.

An Economic Love Story
If you’re counting on China to run out of stuff to sell, don’t hold your breath. China is a manufacturing titan, and has become a top trading partner of 128 countries. EU imports from China grew 35% in the last decade, and overall imports were worth around $463 billion in 2020.

The EU buys much more from China than what it sells. Exports valued at $245 billion make up just over half (52%) of what it imports. As a result, the EU has a ballooning trade deficit.

Past Rivals
Challenging the U.S. for the economic throne is hardly a new endeavor. In the post-WWII era, Japan experienced a similar economic trajectory. And at the time, concerns about Japan surpassing America were alive and well. At one point, Japanese equities collectively represented some 46% of global stock market capitalization, and the value of the Imperial Palace in Tokyo was notionally worth more than all the real estate in California.

But eventually things began to subside, and a new challenger in China emerged. Today, China is experiencing similar milestones that hint at a growing economic power. Such as Beijing becoming the top city for global billionaires.

Will the 21st century mimic the 20th? Or will we witness the U.S. fall from the top of the economic food chain?

China Displaces U.S. as the EU’s Largest Trade Partner

China has spearheaded its economy towards a global superpower, and as a result, has overtaken the U.S. as the EUs top trade partner

www.visualcapitalist.com

 

[Gary]

No, China is not the EU’s top trading partner​

When you count services, not just goods, trade flows with the US are far larger.

Looking at overall trade flows, it is clear that the EU’s largest trading partner is the U.S. and not China | -/AFP via Getty Images

Daniel S. Hamilton directs the Global Europe Program at the Woodrow Wilson Center in Washington, D.C. He is the author, together with Joseph P. Quinlan, of “The Transatlantic Economy 2021”.

This week the media seized on a report by Eurostat, the European Union’s statistical agency, to declare that China surpassed the United States in 2020 to become the EU’s main trade partner. This is simply not true.

Eurostat’s report only addressed trade in goods. It shows that EU27 goods trade with China in 2020 totaled €586 billion, compared to €555 billion in EU27 with the U.S. That is a significant change from 2019, when EU27 trade with the U.S. was €617 billion, whereas EU27 goods trade with China was €561.2 billion.

Trade between countries, however, doesn’t just consist of trade in goods. It also includes trade in services, which the Eurostat report did not include. Services trade has been growing faster than goods trade. More European and American jobs depend on services than on goods, and the U.S. remains the EU’s top services trade partner.

While final numbers for trade in services are not yet available for the full year 2020, we do have data for the first three quarters of the year. Trade in services between the EU and the U.S. during that period was €296.3 billion — five times more than the trade in services between the EU and China, which totaled €53.3 billion.

If we annualize those figures to estimate the EU’s total trade in goods and services for 2020, we find that EU27-China trade in goods and services likely totaled €657 billion in 2020, while EU27-U.S. trade was €950 billion — 40 percent higher.

In short, if you look at overall trade flows and not just one kind of flow, it is clear that the EU’s largest trading partner is actually the U.S., as it has been for decades.

Two-lane highway vs. twelve-lane Autobahn ​

Just as trade is more than just flows of goods, international commerce is more than just trade. Reducing complex commercial ties to one metric — trade in goods — ignores the importance not only of services, but a host of additional economic ties that bind the EU and the U.S. in far deeper ways than those that bind either to China.

U.S. and European commercial ties with China are akin to a two-lane highway, whereas their commercial ties with each other are more like a twelve-lane Autobahn.

The highways to and from China are full of goods. They are busy, and they are crowded. Any type of accident on a two-lane highway can really snarl traffic — as we saw when supply chains were disrupted by the pandemic and by the U.S.-China tariff war.

Alongside the highway are narrow bike lanes for services. The EU and China have been busy trying to build a new lane on their highway — an investment path that they believe could unsnarl some of that traffic and add to their overall connections. Despite the EU-China Comprehensive Investment Agreement inked in December 2020, however, that investment lane remains a construction site, as opposition has arisen in some member states and in the European Parliament, which ultimately have to sign off on a final deal. Road construction on that deal is likely to continue through 2021.

The commercial highway connecting the EU with the U.S., in contrast, looks more like a twelve-lane Autobahn. Not only are there fewer speed limits and an even wider lane for goods, there are additional lanes for services, investment streams and sales of companies on each side of the Atlantic. The transatlantic digital lanes carry 75 percent of global digital content. The innovation lanes hosting research and development flows are the most intense between any two international partners. The jobs lanes provide employment for 16 million Europeans and Americans.

On each of these metrics, the ties that bind the EU to the U.S. are much thicker and far deeper than those that bind either to China. In the first three quarters of 2020, for example, U.S. companies invested $55 billion in Europe, seven times more than what Chinese firms invested in Europe. And despite the pandemic-induced recession, U.S. companies in 2020 earned $254 billion from their operations in Europe — 23 times what they earned from operations in China.

Despite the tremendous political and economic headwinds that have buffeted the transatlantic relationship in recent years, the U.S. and the EU remain each other’s most important trading partners and each other’s most significant commercial markets — bar none.

No, China is not the EU’s top trading partner

When you count services, not just goods, trade flows with the US are far larger.

www.politico.eu

 

[xizhimen]

No, China is not the EU’s top trading partner​

When you count services, not just goods, trade flows with the US are far larger.

Looking at overall trade flows, it is clear that the EU’s largest trading partner is the U.S. and not China | -/AFP via Getty Images

Daniel S. Hamilton directs the Global Europe Program at the Woodrow Wilson Center in Washington, D.C. He is the author, together with Joseph P. Quinlan, of “The Transatlantic Economy 2021”.

This week the media seized on a report by Eurostat, the European Union’s statistical agency, to declare that China surpassed the United States in 2020 to become the EU’s main trade partner. This is simply not true.

Eurostat’s report only addressed trade in goods. It shows that EU27 goods trade with China in 2020 totaled €586 billion, compared to €555 billion in EU27 with the U.S. That is a significant change from 2019, when EU27 trade with the U.S. was €617 billion, whereas EU27 goods trade with China was €561.2 billion.

Trade between countries, however, doesn’t just consist of trade in goods. It also includes trade in services, which the Eurostat report did not include. Services trade has been growing faster than goods trade. More European and American jobs depend on services than on goods, and the U.S. remains the EU’s top services trade partner.

While final numbers for trade in services are not yet available for the full year 2020, we do have data for the first three quarters of the year. Trade in services between the EU and the U.S. during that period was €296.3 billion — five times more than the trade in services between the EU and China, which totaled €53.3 billion.

If we annualize those figures to estimate the EU’s total trade in goods and services for 2020, we find that EU27-China trade in goods and services likely totaled €657 billion in 2020, while EU27-U.S. trade was €950 billion — 40 percent higher.

In short, if you look at overall trade flows and not just one kind of flow, it is clear that the EU’s largest trading partner is actually the U.S., as it has been for decades.

Two-lane highway vs. twelve-lane Autobahn ​

Just as trade is more than just flows of goods, international commerce is more than just trade. Reducing complex commercial ties to one metric — trade in goods — ignores the importance not only of services, but a host of additional economic ties that bind the EU and the U.S. in far deeper ways than those that bind either to China.

U.S. and European commercial ties with China are akin to a two-lane highway, whereas their commercial ties with each other are more like a twelve-lane Autobahn.

The highways to and from China are full of goods. They are busy, and they are crowded. Any type of accident on a two-lane highway can really snarl traffic — as we saw when supply chains were disrupted by the pandemic and by the U.S.-China tariff war.

Alongside the highway are narrow bike lanes for services. The EU and China have been busy trying to build a new lane on their highway — an investment path that they believe could unsnarl some of that traffic and add to their overall connections. Despite the EU-China Comprehensive Investment Agreement inked in December 2020, however, that investment lane remains a construction site, as opposition has arisen in some member states and in the European Parliament, which ultimately have to sign off on a final deal. Road construction on that deal is likely to continue through 2021.

The commercial highway connecting the EU with the U.S., in contrast, looks more like a twelve-lane Autobahn. Not only are there fewer speed limits and an even wider lane for goods, there are additional lanes for services, investment streams and sales of companies on each side of the Atlantic. The transatlantic digital lanes carry 75 percent of global digital content. The innovation lanes hosting research and development flows are the most intense between any two international partners. The jobs lanes provide employment for 16 million Europeans and Americans.

On each of these metrics, the ties that bind the EU to the U.S. are much thicker and far deeper than those that bind either to China. In the first three quarters of 2020, for example, U.S. companies invested $55 billion in Europe, seven times more than what Chinese firms invested in Europe. And despite the pandemic-induced recession, U.S. companies in 2020 earned $254 billion from their operations in Europe — 23 times what they earned from operations in China.

Despite the tremendous political and economic headwinds that have buffeted the transatlantic relationship in recent years, the U.S. and the EU remain each other’s most important trading partners and each other’s most significant commercial markets — bar none.

No, China is not the EU’s top trading partner

When you count services, not just goods, trade flows with the US are far larger.

www.politico.eu

It's based on international standard for gauging trade, does your country measure your volume of trade with other nations based on international standard or the standard you posted above?

 

[Gary]

It's based on international standard for gauging trade, does your country measure your volume of trade with other nations based on international standard or the standard you posted above?

Trade between countries, however, doesn’t just consist of trade in goods. It also includes trade in services, which the Eurostat report did not include. Services trade has been growing faster than goods trade. More European and American jobs depend on services than on goods, and the U.S. remains the EU’s top services trade partner.

 

[xizhimen]

Trade between countries, however, doesn’t just consist of trade in goods. It also includes trade in services, which the Eurostat report did not include. Services trade has been growing faster than goods trade. More European and American jobs depend on services than on goods, and the U.S. remains the EU’s top services trade partner.

It's based on international standard for gauging trade, does your country measure your volume of trade with other nations based on international standard or the standard you posted above??

 

[kumata]

It's based on international standard for gauging trade, does your country measure your volume of trade with other nations based on international standard or the standard you posted above??

I thought there is a universal way of measuring trades so your questions itself is vague and wrong. China is most probably measuring trade in terms of good since it;s suits the agenda while i reality it needs to be measure in terms of services too others than just goods.

The Source itself seems shady to me and author is most probably china's newly minted debt trap diplomacy champion.

 

[xizhimen]

I thought there is a universal way of measuring trades so your questions itself is vague and wrong. China is most probably measuring trade in terms of good since it;s suits the agenda while i reality it needs to be measure in terms of services too others than just goods.

The Source itself seems shady to me and author is most probably china's newly minted debt trap diplomacy champion.

Every year official data and rankings issued by the governments and international orgnizations, does India follow them or your own standard, I just go by the global standard.

 

[kumata]

Every year official data and rankings issued by the governments and international orgnizations, does India follow them or your own standard, I just go by the global standard.

We all know how Open china is when it comes to sharing their trade et all specially when it doesn't suit the propaganda. Let us leave it there as how much global standards china follows.

The quoted website do not mentions anywhere that its source of data is govt sources. It merely put those numbers quoting a random website as it;s source.

I just had a look at author and knew straightway where this came from.

Just a curious Q- When the whole world was under lock down and consumption was at low, How can china claim to increase it;s exports of good. strangely, Chinese numbers are almost static wrt to new Chinese virus cases.

 

[xizhimen]

We all know how Open china is when it comes to sharing their trade et all specially when it doesn't suit the propaganda. Let us leave it there as how much global standards china follows.

The quoted website do not mentions anywhere that its source of data is govt sources. It merely put those numbers quoting a random website as it;s source.

I just had a look at author and knew straightway where this came from.

Just a curious Q- When the whole world was under lock down and consumption was at low, How can china claim to increase it;s exports of good. strangely, Chinese numbers are almost static wrt to new Chinese virus cases.

Try to find the source that you believe is reliable or just dimissed all of them as lies and Chinese propaganda. Be my guest.

china becomes eu top trading partner - Google Search

 

[kumata]

Try to find the source that you believe is reliable or just dimissed all of them as lies and Chinese propaganda. Be my guest.

china becomes eu top trading partner - Google Search

Well,

Facts remains facts. I too can google thousand articles saying that US is biggest trading partner for EU.

Rest, all these numbers are for goods Trade only. US does no manufacturing per se so what are we bragging here. US is service oriented economy. Include services in your calculations and than we can talk.

 

[xizhimen]

Well,

Facts remains facts. I too can google thousand articles saying that US is biggest trading partner for EU.

Rest, all these numbers are for goods Trade only. US does no manufacturing per se so what are we bragging here. US is service oriented economy. Include services in your calculations and than we can talk.

PLease do, I really like to see how many actually you can find.

It's just a news reported based on international standard, why are you so upset and have to argue to deny it?

 

[kumata]

PLease do, I really like to see how many actually you can find.

It's just a news reported based on international standard, why are you so upset and have to argue to deny it?

I am also searching for those "international standards" .

what made u think that i am upset & arguing . I am just trying to set record straight. Forums are for debates and that what i am doing.

Between, I know communists are good at propaganda & i hate propaganda.

 

[xizhimen]

I am also searching for those "international standards" .

what made u think that i am upset & arguing . I am just trying to set record straight. Forums are for debates and that what i am doing.

Between, I know communists are good at propaganda & i hate propaganda.

China is nowhere near in propaganda, besides, it's not from Chinese media, check again.

 

[kumata]

China is nowhere near in propaganda, besides, it's not from Chinese media, check again.

Last post on this . Propaganda and china are synonymous to each other.

 

[xizhimen]

Last post on this . Propaganda and china are synonymous to each other.

India and False Propaganda are the same word.