Trade and Economic Relations with China 2014

Although China managed to sustain its previous year’s level of economic growth in 2013, its economy is headed towards further change and possible upheaval. Beijing has accordingly widened its focus, and is no longer concentrating solely on economic growth. Inflation remained stable in the country. However, falling producer prices present challenges for Chinese production. The real estate bubble and growing debt are threatening the country’s economic stability. Beijing has liberalised a number of areas, reinforcing perceptions that the country is moving towards a market economy. The EU's trade and economic relations with China, the largest trading nation in the world, are generally good, and the number of disputes reasonable. However, the EU is dissatisfied with China's reluctance to fully implement its WTO commitments and, more generally, with its protectionist measures, which hurt EU interests. For its part, Beijing is still dissatisfied with the EU's refusal to grant the country 'market economy' status. The two parties recently settled three majors trade defence cases (solar panels, wine and polysilicon), which poisoned bilateral trade relations during the last year. Negotiations for an EU-China partnership and cooperation agreement, initiated in 2007, have yet to be concluded. In January 2014, China and the EU held the first round of negotiations for a bilateral investment agreement. Beijing has also recently offered to open talks for an EUChina FTA, but Europe’s reaction has been lukewarm.