Global Outlook: Europe’s relations with China

In EIU’s latest global outlook video, global forecasting director, Agathe Demarais, and senior analyst, Agnese Ortolani, discuss the outlook for Europe’s relations with China.

As a result of growing EU concerns over China’s unfair competition, human-rights violations and fears of an invasion of Taiwan, European attitudes towards China have hardened in recent years. Since early 2022, China’s tacit support to Russia following the invasion of Ukraine has deepened the rift. 

However, a full economic decoupling between the two economic powers is unlikely. Chinese investment in the EU has declined since the introduction of new screening rules, but trade ties are resilient. China is, along with the US, the EU’s most important training partner. 

This does not mean that efforts to lessen Europe’s reliance on China are not a priority. The EU is elaborating plans to produce domestically 40% of its green technology by 2030 and has set goals to make the bloc more self-reliant in mining, processing and recycling of critical raw materials over the next decade. 

“Diversifying away from China has now become a clear political priority for the EU. The war in Ukraine has shown that over-relying on a single supplier for key goods and commodities is risky and can have enormous economic consequences. Europe is indeed over-reliant on China when it comes to critical resources that are key for the region’s green transition.”

AGNESE ORTOLANI, SENIOR ANALYST, EIU

Europe is now looking at strengthening economic co-operation with alternative markets, such as Canada or Australia. There is also renewed European interest in expanding trade ties with India, ASEAN and Mercosur countries among others.
The analysis and forecasts featured in this piece can be found in EIU’s Country Analysis service. This integrated solution provides unmatched global insights covering the political and economic outlook for nearly 200 countries, enabling organisations to identify prospective opportunities and potential risks.