Trade and Economic Relations with China - 2012

12-06-2012

2012 will be a politically interesting but difficult year for China. The 18th National Congress of the China's Communist Party, due to take place in the autumn, is unlikely to dramatically modify the economic and trade strategy that Beijing has followed so far. However, the Chinese policy-makers will have to make long-lasting decisions this year — including how to deal with the global financial turmoil that has gripped its most important trading partners, the United States and the European Union — in order to ensure that the country remains stable. Chinese trade and economic policy will thus be determined by both internal and external factors. External factors include the problem of sovereign debts in the Euro area. This has already severely impacted Chinese export performance, as demand for Chinese goods has fallen to levels rarely seen in the past two decades. To offset this threat to its industry, China must seriously reconsider the structure of its economy and its status as an exporting country. The country's economic growth strategy will have to be adapted to boost domestic consumption. A sustained internal market will therefore be essential to maintain China's GDP growth at healthy levels and avoid a potentially disruptive slowdown of the national economy. Major issues that will need to be addressed include: - imbalances between the rural areas and the industrial coastal areas, - a real estate market that needs to be kept under close scrutiny, - a potentially fragile banking system and - unsustainably high levels of investment. The EU's trade and economic relations with China are generally good. Negotiations for a bilateral investment treaty are underway, and Beijing has softened certain access barriers to its market. However, the EU is still dissatisfied with China's reluctance to fully implement its World Trade Organisation (WTO) commitments and to proceed with a new trade agreement that would replace the 1985 partnership and cooperation ag

2012 will be a politically interesting but difficult year for China. The 18th National Congress of the China's Communist Party, due to take place in the autumn, is unlikely to dramatically modify the economic and trade strategy that Beijing has followed so far. However, the Chinese policy-makers will have to make long-lasting decisions this year — including how to deal with the global financial turmoil that has gripped its most important trading partners, the United States and the European Union — in order to ensure that the country remains stable. Chinese trade and economic policy will thus be determined by both internal and external factors. External factors include the problem of sovereign debts in the Euro area. This has already severely impacted Chinese export performance, as demand for Chinese goods has fallen to levels rarely seen in the past two decades. To offset this threat to its industry, China must seriously reconsider the structure of its economy and its status as an exporting country. The country's economic growth strategy will have to be adapted to boost domestic consumption. A sustained internal market will therefore be essential to maintain China's GDP growth at healthy levels and avoid a potentially disruptive slowdown of the national economy. Major issues that will need to be addressed include: - imbalances between the rural areas and the industrial coastal areas, - a real estate market that needs to be kept under close scrutiny, - a potentially fragile banking system and - unsustainably high levels of investment. The EU's trade and economic relations with China are generally good. Negotiations for a bilateral investment treaty are underway, and Beijing has softened certain access barriers to its market. However, the EU is still dissatisfied with China's reluctance to fully implement its World Trade Organisation (WTO) commitments and to proceed with a new trade agreement that would replace the 1985 partnership and cooperation ag