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EU-China Trade

Selected e-articles

Absrtact: (Open) strategic autonomy (OSA) has quickly become the dominant concept in European Union (EU) trade policy strategy. This article aims to better understand how the concept plays out in policy practice by focusing on its discursive use in the rise and fall of the EU-China Comprehensive Investment Agreement (CAI). We start from the assumption that OSA as an ‘empty signifier’ is sufficiently malleable to account for diverging interpretations. Building on existing literature, we then construct an analytical framework that distinguishes between trade policy paradigms. Subsequently, we utilize Fairclough & Fairclough’s ‘scheme of practical argument’ to analyze how the three signifiers of OSA – openness, sustainability and assertiveness – are connected in EU trade policy debates for or against CAI between May 2020 and September 2021. Our findings reveal that the concept of OSA can be utilized in both economics and foreign policy oriented arguments. While the Trade instead of Foreign Policy’ (TiFP) paradigm was initially co-opted by the neoliberal paradigm, the Trade steered by Foreign Policy (TsFP) paradigm became gradually more dominant. These findings also contribute to explaining, respectively, the rise and fall of the CAI.

Abstract: Economic relationship has been the cornerstone of the China-EU relation as well as the China-EU comprehensive strategic partnership which was established in 2003. On the other side of the coin, economic relations have been main sources of disputes between China and the EU since the 2005–2006 textile disputes. This paper examines their mutual perceptions in this field as one way of explaining the development of the bilateral relationship, supported by substantial empirical data. It is found that the successful economic development of China has generated different perceptions between the EU and China. With the difference in the development level reducing, the EU side was concerned more about the rise of China, while the Chinese side emphasised more the relative decline of the EU’s economic might.

Abstract: This paper examines how EU‐China trade affected intra‐EU trade. The estimation shows that when a country's share of trade with China increased, its share of trade with EU partners declined. This suggests that stronger trade links with China resulted in weaker trade links among EU countries. Furthermore, the “disintegration” effect of the export to China was stronger than that of import from China, meaning that the influence of China as an export destination was greater than that of China as a source of import. An extended analysis shows that the disintegration effect was most strongly felt in trade links among EU core countries, less strongly felt in trade links between EU core and periphery countries, and least strongly felt in trade links among EU periphery countries. In comparison, we find that EU import from the United States and India significantly weakened and strengthened intra‐EU trade, respectively. Estimation results using product level data demonstrate that the effects depend on the types of products we are concerned with. Whether using gross value or value added, the conclusions remain valid.

Abstract: This paper investigates the international diffusion of green innovation through trade, focusing on the impact of the European Union Emissions Trading Scheme (EU ETS) on Chinese exporters. Using a difference-in-differences approach with firm-level data from 2000 to 2013, we find that the EU ETS significantly increased green patent applications among China-to-EU exporters. The likelihood of green patent applications increased by 0.2%, effectively doubling the pre-policy rate. Our mechanism analyses indicate that the increase is driven by the learning-by-exporting effect, rather than market size effects or the anticipation of regulatory and market condition changes. These results highlight the role of international trade in disseminating green technology and demonstrate how environmental regulations can foster innovation across global markets.

Abstract: In the period between 2015 and 2020, we have witnessed an increase in ‘system friction’ in the trade and investment relations between the EU and the People’s Republic of China (PRC). This paper focuses on the meaning of this notion of ‘system friction’, originally coined by Sylvia Ostry and on how the EU and especially the European Commission reacted to this friction. This notion might present an alternative to the notion of ‘system rivalry’. The result of system friction in the relation between the EU and the PRC had been a convergence towards more trade defensive moves. A form of managed trade with help of a ratified Investment treaty between the two sides might be a potential outcome.

Abstract: The European Union Chamber of Commerce in China recognises the challenges in progressing the CAI, but remains convinced that the investment agreement is worthwhile and in the EU’s best interests. While not the ‘silver bullet’ that would be the ideal, the CAI meaningfully improves market access, equal treatment, and sustainability interests and should be ratified if political tensions can be ratchetted down.

Abstract: Greater antitrust enforcement is argued to have positive correlations with the promotion of international trade. By 2019, the US, the EU and China, as global trade powers, have formed and strengthened bilateral antitrust cooperation to seek greater enforcement. However, the impact of such development on international trade has remained underexamined. The article argues that irrespective of their different legal forces, the US-EU, US-China and EU-China antitrust cooperation share convergences at the optimum and minimum levels. Based on the case study of the US, the EU and China’s regulations of the international Liquid Crystal Display (LCD) panel cartel, the article illustrates that as the effects doctrine continues to serve as the main normative value underpinning antitrust cooperation, matured competition regimes lack the incentive to share information with new regimes, competition regimes converge to apply comity restrictively and the consultation mechanism plays a limited role in holding the sides accountable under bilateral cooperation. Consequently, international antitrust remains fragmented, positing restraints to trade. The article calls for reconsideration of the effects doctrine as part of the transnational normative repertoire shaping bilateral antitrust cooperation and for devising policy tools to guarantee minimum information exchange among agencies.

Abstract: The EU Carbon Border Adjustment Mechanism (CBAM), which is regarded as the EU’s key policy tool to address carbon leakage, might have a non-negligible impact on China’s exports, as China is an important trading partner for the EU’s carbon-intensive products. This paper uses the GTAP-E model to simulate the impact of the EU CBAM on China’s exports to the EU from four aspects, export price, trade structure, trade value and terms of trade, by setting up multiple scenarios. The results show that the EU CBAM reduces the export prices of China’s taxed sectors to the EU, and that the export prices of other sectors show the same change characteristics. The export volume of China’s taxed sectors decreases differently with the export transfer effect and export inhibition effect. In terms of trade value, the EU carbon tariffs not only reduce China’s export value but also lead to a reduction in EU exports. The implementation of the EU CBAM improves the terms of trade of the EU and worsens the terms of trade of China. An expansion of the scope of taxation and a change in the calculation method of carbon emissions would aggravate the change in the terms of trade. The results suggest that feasible measures should be taken to strengthen international cooperation, promote the construction of a unified national carbon market and export diversification, and establish a firm carbon emission accounting system in order to mitigate the negative impact of the EU CBAM.

Abstract: This article looks at the linkages between export to the European Union (EU), export to china and human rights policies. The article argues that countries that export to the EU at high rates are more likely to converge towards its policies than countries that don't export to the EU. The article also argues that the rise of China as a significant economic actor does not undermine this process. The article tests these arguments by analysing the links between human rights protection in the EU and in China, and export to the EU and to China, on the one hand, and human rights protection in all the countries for which there are data, on the other. The results indicate that countries' human rights policies are positively associated with the EU's human rights policies and this association is conditioned by countries' levels of export to the EU. The results further indicate that export to China does not undermine this pattern. The article draws conceptual and policy implications.

Abstract: Tensions in the EU-China relationship have hampered cooperation in various sectors, including a set of transnational security issues where engagement with China is unavoidable but nevertheless profoundly challenging. The EU maintains a “tripartite” strategy, originally outlined in its 2019 Strategic Outlook, seeing China as a “partner”, but also as an economic “competitor” and a “systemic rival”. China’s former State Councilor and Foreign Minister Wang Yi has described the European approach as suffering from “cognitive dissonance”. As a result, and as demonstrated by the failure of the 2022 EU-China Summit, the two parties are now operating within two different frameworks, and constructive cooperation has become increasingly difficult. By working with Qin Yaqing’s concept of “relationality”, this article aims to contribute to a better conceptualisation of the ways in which the EU and China can work with each other to tackle global issues. Challenging the literature that tries to explain the shift in EU-China relations by focusing on individual actors, this research’s approach focuses on the relations between actors. Adopting this ontology of relations, this research paper analyses how, in the EU-China relationship, relations between the two parties contribute to creating their own identities and motivate their actions.

Abstract: Against the backdrop of intensifying United States–China strategic competition, the European Union (EU) has recently changed course and moved closer to mirroring US rhetoric and action on China. Why has this happened, and how can it be best explained? In this article, it is argued that current role dynamics between the EU and the two rival great powers can help us understand the growing, albeit not full, EU–United States alignment on China. Role theory assumes that co-operation between actors intensifies when their roles become more compatible. Accordingly, it is shown that the EU has recently adjusted its role to be more closely aligned with the United States' position. That is to say, the EU has reshaped its own role conception, whilst the bloc has likewise become more open to meeting US role expectations after EU–United States role-playing turned positive once again under President Joe Biden.

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