According to new economic data, China dethroned the US as Europe’s top trade partner in 2020, likely buoyed by strong demand in China for European goods, and Chinese medical products in Europe.
The European Union’s statistics office, Eurostat, said trade between the 27-country bloc and the rest of the world was down across the board in the first quarter of last year because of the pandemic. Between Jan. and Dec. 2020, euro area goods exports fell 9.2% year-on-year, while imports fell 10.8% compared with the same period in 2019. European trade appears to be slowly recovering. In Dec. 2020, euro area goods exports saw their first year-on-year increase since February, but imports are still below their pre-pandemic levels.
While the US has historically been the EU’s top trading partner, the economic crisis caused by the pandemic propelled China to the top spot. EU exports to China grew by 2.2% and imports from China by 5.6% in 2020, while EU exports to the US fell by 8.2% and EU imports from the US by 13.2%. (The EU’s third-biggest trade partner after China and the US was the UK, which left the bloc at the end of last year.) EU exports to China in 2020 were worth €202.5 billion ($245 billion) and imports €383.5 billion.
That’s probably because China’s economy is the only one among rich nations to have grown in 2020, in part thanks to large-scale public investment in infrastructure that fueled demand for European manufacturing goods. On the other end, the EU bought vast quantities of pharmaceuticals, medical equipment, personal protective equipment, and medical supplies from China, boosting imports. That trend looks set to continue in the first half of this year, and trade between China and the EU is likely to grow further since both sides agreed to sign an investment deal that will give their companies greater access to each other’s markets.
But the Joint Comprehensive Agreement on Investment, as the deal is formally known, still has to be ratified by the European Parliament, where it faces significant political opposition. And as the EU continues to push for more strategic autonomy and less dependence, it will likely look for alternative suppliers of some of the critical goods it bought en masse from China in 2020.