Overview

• In 2016, China was the largest exporter of goods in the world with a share of 17 % of world exportsand the third largest importer with a share of 12 % of world imports.
• Among the EU's trading partners, China was the largest partner for EU imports, and the second largest partner for EU exports in 2017.
• EU trade balance with China continues to be in deficit, peaking at 180 EUR billion in 2015 before dropping to 176 billion in 2017.
• Manufactured goods dominate both the exports of goods from the EU to China and imports from China to the EU, accounting for 85 % of the total exports and 97 % of total imports.
• Among EU Member States, the Netherlands is the largest importer (EUR 83 billion) from China while Germany is the largest exporter (EUR 87 billion) to China
• The largest trade deficit with China is held by the Netherlands (EUR 71 billion) while Germany has the largest trade surplus (EUR 15 billion)

EU and China in world trade in goods

Figure 1 shows that the five largest exporters account for almost half of world exports. The largest is China (17 %) followed by the EU (16 %), the United States (12 %), Japan (5 %) and Hong Kong (4 %). The same five also account for almost half of world imports but in different order. Here China is third with 12 % and is preceded by the United States (18 %) and the EU (15 %), while Japan (5 %) and Hong Kong (4 %) complete the top 5.

Figure 1: The position of China among the world's largest traders, 2016
Source: Eurostat (ext_lt_introle)

Figure 2 focuses on the evolution of trade in the EU and China over the period 2007-2016. China's exports grew more rapidly than those of the EU especially between 2009 and 2015 when they peaked at 130 % over the 2007 level. Growth of China's imports is very close to the growth of its exports and considerably larger than growth of EU imports. The cover ratio (exports divided by imports ) for China was 128 % in 2007, indicating a substantial trade in goods surplus. The ratio dropped to 109 % in 2011 but then started growing, reaching a peak of 135 % in 2015 before falling to 132 % in 2016.

Figure 2: Evolution of trade of the EU-28 and China (2007 = 100) and cover ratio (%), 2007-2016
Source: Eurostat (ext_lt_introle)

EU deficit with China remains substantial

Figure 3 shows that in 2017, China had a share of 11 % in extra-EU exports (EUR 198 billion) making it the second largest partner behind the United States (20 %, EUR 376 billion). In extra-EU imports China was the largest partner with a share of 20 % (EUR 375 billion) in front of the United States (14 %, EUR 255 billion).

Figure 3: The position of China among the EU's main partners, 2017
Source: Eurostat (ext_lt_maineu)

The EU continuously had a trade deficit with China from 2008 to 2017 (Figure 4). In this time span, trade between the two economies hit a low in 2009 due to falling imports, but quickly recovered. There were some fluctuations in the trade balance which was below EUR 140 billion in 2009, 2013 and 2014, but above EUR 170 billion in 2008, 2010 and from 2015 onwards. In 2017 it was EUR 176 billion.

Figure 4: Imports, exports and trade balance between the EU and China, 2008-2017 (EUR billion)
Source: Eurostat (ext_lt_maineu)

Manufactured goods dominate trade with China

When breaking down imports and exports by SITC groups, the main categories driving the exports to and imports from China are 'Machinery and vehicles’, 'Other manufactured goods’ and 'Chemicals' (Figure 5). Together these manufactured goods made up 85 % of the EU exports and 97 % of imports in 2017 (see Figure 5). In exports from the EU to China, 'Machinery and vehicles' (54 %) was around three times as large as 'Other manufactured goods' (18 %) while in imports from China 'Machinery and vehicles' (52 %) was much closer to 'Other manufactured goods’ (40 %).

Figure 5: EU-28 exports to and imports from China by product group, 2008 and 2017 (EUR billion)
Source: Eurostat DS-018995

Figure 6 shows the evolution of EU imports and exports by SITC group since 2008. In 2017 the EU hastrade surpluses in 'Chemicals', 'Food & drink, 'Raw materials', 'Energy' and 'Other goods'. However these were dwarfed by the large trade deficits in 'Other manufactured goods' and 'Machinery and vehicles’.

Figure 6: EU-28 trade with China by product group, 2008-2017 (EUR billion) 
Source: Eurostat DS-018995

Most traded goods: telecommunications equipment

Figure 7 gives more details about the goods exchanged between the EU and China, showing the top 20 traded goods in more detail (by SITC level 3). Those top 20 goods covered around 52 % of total traded goods in 2017. Eleven of the products among the top 20 belong to the ‘Machinery and transport equipment’ group, eight to 'Other manufactured goods' and one to 'Chemicals'. 'Telecommunications equipment' was the most traded product followed by 'automatic data processing machines' and 'motor cars and vehicles'.

Another interesting way to look at data is to investigate the export/import ratio of traded goods, in order to better identify the direction taken by flows and specialisation between the two areas. These ratios can be found in the right margin of Figure 8. For the top product, the ratio is 5 meaning that EU exports to China cover only 5 % of EU imports from China. Thirteen of the top 20 products have a ratio below 100 of which eight are below 10. Among the top 20 products the highest values are found for 'motor cars and vehicles', 'aircraft' and 'medicaments'. The only top 20 products where there were comparable flows in both directions were electrical apparatus for 'electrical circuits' and 'electronic tubes' with ratios of 82 and 126 respectively.

Figure 7: Most traded goods with China, top 20 of SITC level 3 products, 2017 (EUR billion)
Source: Eurostat DS-018995

Germany trading most with China

Table 8a shows Member States' imports from China and the share of the partner China in national extra-EU imports. Table 8b provides similar information but concerning Member States' exports to China.

There were six Member States whose imports from China in 2017 were higher than EUR 20 billion: the Netherlands, Germany, the United Kingdom, Italy, France and Spain. Together they accounted for just over three quarters of all imports from China. Imports from China as a share of total extra-EU imports were higher than 10 % for all countries except Lithuania (9.6 %) , Luxembourg (9.3 %) and Malta (8.7 %). The share was highest in the Czech Republic (33.9 %) and the Netherlands (30.4 %).

Table 8a: Imports from China by Member State, 2017
Source: Eurostat DS-018995

There were five Member States whose exports to China in 2017 were higher than EUR 10 billion: Germany, the United Kingdom, France, Italy and the Netherlands. Together they accounted for just over three quarters of all exports to China. The shares for China in total extra-EU exports were lower than they were for imports for all Member States except Luxembourg and Finland. They were above 10 % only in Germany (16.4 %), Finland (14.2 %), Denmark (11.5 %), Slovakia (11.3 %) and Sweden (11.0 %).

Table 8b: Exports to China by Member State, 2017
Source: Eurostat DS-018995

Table 8c shows that only three Member States had a trade surplus with China in 2017, these were Germany (EUR 15 billion), Finland and Ireland (both EUR 1.4 billion). The remaining 25 Member States had a trade deficit, which for the Netherlands (71 billion) and the United Kingdom (33 billion) exceeded EUR 30 billion. Spain and Italy (both EUR 15 billion) and Poland (EUR 14 billion) were the other Member States with trade deficits higher than EUR 10 billion.

Table 8c: Trade balance with China by Member State, 2017 (EUR million)
Source: Eurostat DS-018995