REPORT on EU and China: Unbalanced Trade?

20.4.2012 - (2010/2301(INI))

Committee on International Trade
Rapporteur: Marielle De Sarnez

Procedure : 2010/2301(INI)
Document stages in plenary
Document selected :  


on EU and China: Unbalanced Trade?


The European Parliament,

–   having regard to Articles 2, 3, 6 and 21 of the Treaty on European Union,

–   having regard to Articles 153, 191, 207 and 218 of the Treaty on the Functioning of the European Union,

–   having regard to Articles 12, 21, 28, 29, 31 and 32 of the Charter of Fundamental Rights of the European Union,

–   having regard to the Protocol on the Accession of the People’s Republic of China to the World Trade Organization of 23 November 2001,

–   having regard to its resolution of 5 February 2009, and the report by its External Policies Directorate-General of July 2011, on trade and economic relations with China[1],

–   having regard to the joint statement on the occasion of the 13th EU-China Summit held in Brussels on 6 October 2010,

–   having regard to the Commission Communication entitled ‘Trade, Growth and World Affairs – Trade Policy as a core component of the EU’s 2020 strategy’ (COM(2010)0612) and the European Parliament resolution of 27 September 2011 on a new trade policy for Europe under the Europe 2020 strategy[2],

–   having regard to its resolution of 19 February 2008 on the EU’s strategy to deliver market access for European companies[3],

–   having regard to Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community and the Commission Communication of 6 December 2006 entitled ‘Global Europe: Europe’s trade defence instruments in a changing global economy’,

–   having regard to the Commission Communication entitled ‘A Single Market for Intellectual Property Rights’ of 24 May 2011, the proposal for a regulation of the European Parliament and of the Council concerning customs enforcement of intellectual property rights (COM(2011)0285), the Commission report of 14 July 2011 on EU customs enforcement of intellectual property rights and the European Parliament resolution of 18 December 2008 on the impact of counterfeiting on international trade ,

–   having regard to the WTO report of 5 July 2011 on China’s export measures on various raw materials and the European Parliament resolution of 13 September 2011 on an effective raw materials strategy for Europe[4],

   having regard to its resolution of 13 December 2011 on trade and investment barriers[5] ,

–   having regard to its resolution of 6 April 2011 on the future European international investment policy[6],

–   having regard to its resolutions of 25 November 2010 on corporate social responsibility in international trade agreements[7], on human rights and social and environmental standards in international trade agreements[8] and on international trade policy in the context of climate change imperatives [9],

–   having regard to its resolution of 24 April 2008 entitled ‘Towards a reform of the World Trade Organization’[10] and its resolution of 14 September 2011 on the state of play of the negotiations on the Doha Development Agenda[11],

   having regard to the Commission Communication to the Council and the European Parliament entitled ‘EU – China: Closer partners, growing responsibilities’ (COM(2006)0631) and its accompanying policy paper ‘Competition and Partnership – A policy for EU-China trade and investment’ (COM(2006)0632),

–   having regard to its resolution of 5 February 2009 on enhancing the role of European SMEs in international trade[12],

–   having regard to the European Council conclusions of 23 October 2011, and the final declaration of the G20 Summit in Cannes on 4 November 2001 entitled ‘Building our common future: renewed collective action for the benefit of all’,

   having regard to the Chinese Government’s White Paper of 23 December 2010 on China-Africa economic and trade cooperation,

–   having regard to Rule 48 of its Rules of Procedure,

–   having regard to the report of the Committee on International Trade and the opinions of the Committee on Development, the Committee on Employment and Social Affairs, the Committee on Industry, Research and Energy and the Committee on the Internal Market and Consumer Protection (A7-0141/2012),

A. whereas China joined the WTO in 2001 and has subsequently become the world’s leading exporter of goods, accounting for 10.36 % of exports in 2010 and the world’s second largest economic power;

B.  whereas the EU is the top destination for Chinese exports, which rose by 39.5 % between 2009 and 2010, and whereas China is the EU’s second-largest trading partner;

C. whereas the EU has replaced Japan as China’s largest source of import; whereas growing Chinese imports have been crucial for the recent economic performance of export-oriented EU member states like Germany;

D. whereas the increased development of its economy and its accession to the WTO entail not only substantial benefits but also a greater responsibility for China to play a full and positive role in the global economic order, in particular in the International Monetary Fund (IMF) and the World Bank Group;

E.  Whereas bilateral trade relations have developed considerably since the signature of the EU-China cooperation agreement in 1985, and it is therefore essential that this agreement is brought into line with the current economic situation; whereas the European Commission adopted its major policy strategy on China in 2006 and, under this framework, entered in January 2007 into negotiations on a comprehensive Partnership and Cooperation Agreement with the aim to further improve relations between the EU and China in the fields of trade and investment;

F.  whereas trade between EU and China has been growing rapidly and continuously in the last three decades, reaching a peak amount of total trade of EUR 395 billion in 2010, and whereas the imbalance in bilateral trade has been in China’s favour since 1997, this trade deficit amounted to EUR 168.8 billion in 2010 compared to EUR 49 billion in 2000; while the value added to Chinese exports is very limited once the value of components imported from the EU and elsewhere is discounted; whereas foreign companies established in China account for nearly 85 % of all export trade deriving from assembly operations;

G. whereas foreign investment by the EU in China in 2010 amounted to EUR 4.9 billion and foreign investment by China in the EU in the same year amounted to EUR 0.9 billion;

H. whereas the divergent social, economic, and democratic models in China and in the EU, as well as their respective demographics and natural resources, play a large role in the trade imbalances between the two regions;

I.   whereas the challenge posed by China is more industrial than commercial, and requires Europe to implement an ambitious Europe-wide industrial policy, given that purely national approaches do not permit a cohesive Community approach towards China;

J.   whereas the shift of production of numerous consumer goods to China has eliminated many jobs in the European Union; whereas this shift was also accompanied by drastic price reductions which made many of these consumer goods affordable for European Union low-income households, and has contributed to a relatively low inflation environment;

K. whereas the participants of the last United Nations Climate Change Conference in Durban did not reach a binding agreement, and whereas the commitments made by some countries to reduce their greenhouse gas emissions are not sufficient, given the urgency to limit the increase in temperatures to two degrees during the 21st century if the climate change agenda is to be met;

L.  whereas economic growth in Europe is estimated to be much weaker than the growth in China, which is expected to reach around 9 % in 2012;

M. whereas the type of internal economic imbalances that are affecting the European economies are growing in the Chinese economy as well, not least in the real estate sector, as exemplified by the recent housing bubble;

N. Whereas the impact of the EU Common Commercial Policy is sometimes undermined by the diverging national interests pursued by Member States towards China;

O. whereas the social costs of the current economic crisis are high; whereas the employment rate in the EU has dropped by 1.8 % and, consequently, 9.6 % of the economically active population (23 million people) are unemployed, the youth unemployment rate is 21 %, prospects for employment levels to recover remain uncertain and 17 % of EU citizens risk falling into poverty;

P.  whereas China, having acceded to the WTO in 2001, should respect WTO rules by liberalising its trade and opening its market; whereas so far its efforts in this regard have not been satisfactory by any means;

Q. whereas China’s accession to the Agreement on Government Procurement (GPA) should be eased through a broadening of the scope of the GPA’s rules by means of a revision, as agreed at the last WTO Ministerial Conference on 15 December 2011;

R.  whereas the efforts of European enterprises to access the Chinese market are hindered by the Chinese Government’s interventionist industrial policies, the inadequate protection of intellectual property, a system of rules that is as ambiguous in substance as in its application, and by other non-tariff and technical barriers to trade;

S.  whereas the undervaluation of the yuan continues to create artificial trade advantages for China, and whereas G20 member countries have promised to facilitate greater exchange rate flexibility;

T.  whereas in 2010, over 103 million items of goods, valued in total to EUR 1.11 billion, were seized at the EU’s external borders on suspicion of infringing intellectual property rights (IPR); whereas China is the country of origin for 85 % of these goods; whereas an important feature of intellectual property protection is the correct enforcement of existing laws and international commitments, including statutes on penalties; whereas such goods are frequently produced in facilities that also produce legitimately labelled goods, and are often produced in disregard of both labour law and health and safety requirements and thus pose a danger to consumers and, in the case of chemicals, to the wider environment;

U. whereas China, in accordance with its 12th five-year plan, some goals of which are similar to goals presented in the EU 2020 Strategy, is to develop the strategic sectors of energy, construction and transport, and will have major needs in the service sector; whereas this could provide new investment opportunities for European businesses and for enhanced co-operation;

Improving market access

1.  Calls on the Commission to apply the principle of reciprocity to the EU’s common trade policy with developed and emerging countries such as China, in order to restore fair competition and to ensure a more level playing field.

2.  Welcomes the strengthening of economic relations between the European Union and China; calls on the EU and on China to pursue a relationship of partnership and mutual benefits rather than engage in fierce competition and confrontation;

3.  Notes that the Chinese economy does not fulfil the criteria of a market economy as defined by the WTO; calls on the Commission to cooperate with the Chinese Government in order to eliminate all remaining obstacles by 2016, when market economy status is supposed to be granted China by the WTO; emphasises that this status should only be accorded prior to this date if China has fulfilled all criteria; asks the EU to carry out regular assessments in the form of annual reports on China’s compliance with the obligations included in its protocol on accession to the WTO;

4.  While recognising that the objective conditions for China qualifying for market economy status are unlikely to be met in the near future, calls on the Commission to submit, by the end of 2012, a proposal to the European Parliament on the measures to be taken by the Commission before such status is recognised by the EU;

5.  Regrets the existence of numerous tariff and non-tariff barriers to the Chinese market, such as certain forms of discrimination against foreign operators, particularly in the banking, insurance and telecommunications sectors, and the complexity of the tariff structure and technical barriers to trade, such as the lack of transparency in technical rules and conformity assessment procedures as well as in the Chinese Compulsory Certification System (CCC); regrets that China, contrary to the provisions of the WTO Agreement on Subsidies and Countervailing Measures (ASCM), does not systematically give notification of specific subsidies;

6.  Points out that China has established very considerable trade advantages for itself in relation to the EU through targeted state subsidies, using a great variety of legal constructs; urges China to bring its state subsidy programmes into line with relevant WTO law; further calls on the Commission to reform the anti-subsidy regulation in order for the EU to be able to respond effectively to the considerable challenges presented by China;

7.  Notes that China deplores the existence of trade barriers to the European market, such as the EU’s significant agricultural subsidies for European farmers, the complex system of agricultural tariffs, the technical obstacles to trade and the barriers erected to block third country investments in certain Member States;

8.  Is concerned by the unreliability of the judicial system, which fails to enforce contractual obligations, and by the lack of transparency and uniformity in applying the regulatory regime governing investments;

9.  Is concerned by the lack of predictability and publicity in connection with the technical rules and standards applicable to products, particularly in relation to certification, creating significant trade barriers for businesses exporting to China;

10. Calls on China to adopt international standards for products and services so as to promote increased trade between China and other countries; welcomes the fact that China is increasing its involvement in international standard-setting bodies, and believes that it must be encouraged to do so through reciprocated EU involvement in the bodies which lay down Chinese standards; stresses the importance of compliance by Chinese imports with European standards for food and non-food products;

11. Is concerned by the fact that foreign businesses face difficulties in accessing Chinese public procurement, which stands in contrast to the fact that access to European public procurement is guaranteed; is concerned by the possibly unfair terms of competition that apply whereby, in particular, disguised state aid allows Chinese businesses to make markedly better offers than their European competitors; welcomes the revision – and broadened scope – of the Agreement on Government Procurement (GPA) that was agreed on during the last WTO Ministerial Conference on 15 December 2011, and the commitments made by China on that occasion, even though they are still insufficient; encourages, therefore, China to offer to join the agreement on terms comparable with those of other parties to the Agreement, in line with its commitment in its protocol on accession to the WTO; calls on the Commission rapidly to develop, if possible in 2012, a European instrument to ensure reciprocity as regards openness in public procurement markets; considers that it is also crucial to reinforce instruments aimed at encouraging, coordinating and supporting market access for European SMEs on priority markets such as China;

12. Notes that the export credits granted by the Chinese authorities and banks promote trade distortions; calls on China, therefore, to comply with the OECD Arrangement on Guidelines for Officially Supported Export Credits; calls on the Commission to support OECD efforts to involve China in this Arrangement; in addition, encourages China to become a signatory to the OECD Anti-Bribery Convention;

13. Points out that the main form in which foreign companies are allowed to set up in China is through joint ventures – a mechanism which is very restrictive and too often associated with strategic technology transfers that may favour the competitive development of China to the detriment of European industry in fields in which the EU is at the forefront; is convinced that further openness by China on the joint venture mechanism, combined with better protection of immaterial property rights (IPR), would benefit both sides, and would favour greater access for European businesses to the Chinese market;

14. Calls on the EU, in the event of China engaging in illegal trade practices, to make wherever use necessary of such trade defence instruments as are consistent with WTO rules, such as anti-dumping, anti-subsidy and safeguard measures, and to also make greater use of the WTO dispute settlement mechanism in order to ensure a level playing field for EU-China trade; is concerned by China’s increasing use of anti-dumping measures targeting EU exports as well as price dumping measures and state subsidies; invites, therefore, China to ensure that its anti-dumping measures are consistent with WTO rules;

Defending the interests of European industry

15. Deplores the inadequate protection of IPR in China, and regrets the lack of specific means available to European businesses, and particularly SMEs, to counter IPR infringements effectively; welcomes the Commission’s decision to propose a review of the directive on the enforcement of IPR; calls on the Commission and Member States to defend IPR better in all multilateral organisations where China is a member (the WTO, the World Health Organisation(WHO) and the World Intellectual Property Organisation (WIPO)); wants China to continue to transpose into its national legislation current international law on the protection of IPR and, more specifically, to combat counterfeiting and piracy, and urges the Chinese authorities to ensure enforcement, especially at a regional level; regrets that China has not taken part in the negotiations on the Anti-Counterfeiting Trade Agreement (ACTA); urges the Commission and the Member States to step up customs cooperation in the EU and with third countries, particularly with China, on the seizure of counterfeit goods, and to simplify customs procedures; asks the Commission and the Member States to cooperate more closely with third countries on copyright issues and licensing;

16. Is convinced that better protection of intellectual property rights and effective implementation of related rules in China would greatly promote the EUs and other foreign investors objective of investing, sharing new technological capabilities and updating existing technologies in that country;

17. Notes that China produces 97 % of the rare earths used in the world and calls on it to guarantee its trading partners sustainable production methods and fair market access; calls on the Commission to pay particular attention to any potential restrictions by China on the export of its raw materials; recalls in this context the WTO ruling against China of 5 July 2011, upheld on appeal, for having placed restrictions on the export of certain raw materials; calls on the Commission to develop a European strategy for the proper management of raw materials, involving increased energy efficiency, recycling, more efficient use of resources and the development of industrial cooperation in the green economy growth and innovation sectors; calls for negotiations aimed at adopting common rules and principles on trade in raw materials, thereby creating a framework for the use of export restrictions at the WTO as well at the G20, as this issue mainly concerns industrialised countries and China;

18. Urges the Commission to negotiate an ambitious and balanced EU-China investment agreement that seeks to create better environment for EU investors in China, and to guarantee transparency regarding governance of Chinese companies which invest within the EU whilst increasing the level of reciprocal capital flows; calls on the Council to elaborate its mandate for a future investment agreement with China, taking fully into account Parliament’s views and positions, as set out in the resolution of 6 April 2011 on the future European international investment policy;

19. Welcomes the inauguration of the EU Centre for European Union Small and Medium Enterprises (EU SME Centre) in Beijing in November 2010, which opened its door to SMEs in March 2011and which provides competences on helping European SMEs to overcome the challenges they face when operating on the Chinese market, in particular at their early stages of business development; welcomes also that the Centre seeks areas of opportunities for EU SMEs in China and helps them with the Chinese regulatory environment;

20. Stresses the importance of business-to-business cooperation, and the setting up of partnerships between Chinese universities and EU companies, in order to enhance innovation in China; calls on the advantages offered by the EU Market Access Database which contains information for EU businesses on market access conditions, such as import tariffs, product requirements, trade barriers, formalities and documents and statistics; welcomes the activity of the European Chamber of Commerce in China;

21. Believes that the setting up, by the Commission, of a mechanism for exchanging information on intergovernmental agreements between Member States and third countries in the field of trade with China will facilitate a coherent approach to China;

Alleviating currency competition

22. Points out that China holds sovereign debt of Member States in the eurozone; stresses that this fact has taken on a new political dimension as a result of the serious debt problems within the eurozone; calls on the Commission to start discussions with the European Central Bank (ECB) and Member States on the creation of a coordinated system to identify which parties hold sovereign debt; is concerned that the EU’s negotiating capabilities in trade negotiations with China are being undermined by the latter’s contribution to the financial stabilisation of the eurozone;

23. Emphasises that the alleged undervaluation and non-convertibility of the yuan might give Chinese exports an unfair competitive advantage, as China holds one-third of the world’s foreign exchange reserves; calls for the international financial regulations applicable to – and the macroeconomic coordination between – G20 countries to be strengthened, as economic stability and global trade would otherwise be at risk; calls on China to allow the yuan to appreciate to reach an appropriate exchange rate; points out that it is laid down in the European Treaties that the EU can, in the case of unsustainable global monetary imbalances, adopt an exchange rate policy;

24. Calls on the Commission to encourage China to liberalise its current accounts; calls on the Commission to present evidence on how the fixed exchange rate regime damages EU competitiveness and, having done that, to consider appropriate priorities for action.

Towards a new institutional framework for EU-China trade relations

25. Calls on the Member States, using appropriate monitoring mechanisms, to ensure that foreign enterprises operating in the EU respect all legislation in force in the Single Market, including social and environmental standards, to ensure the protection of patents and to contribute to efforts promoting the sustainability of employment when they purchase European businesses or set up subsidiaries in the EU; asks the Commission and Member States to set up a body entrusted with the ex ante evaluation of foreign strategic investment, along the lines of the Committee on Foreign Investment in the United States (CFIUS), in order to obtain a clear picture of businesses operating and investing in the territory of the EU, and to report to the parliament on a regular basis;

26. Calls on the EU to act within all appropriate international organisations, such as the WHO, the International Labour Organization (ILO) and the United Nations (UN), in order to initiate a process of reform geared at including binding social, environmental and health standards into the rules on the organisation of trade governed by the WTO;

27. Deplores the fragmented and uncoordinated institutional framework of the EU-China trade relations; calls on the Commission urgently to revise the bilateral relations organisational chart, to pursue better coordination and to eliminate the redundancies at the level of the countless working groups, dialogues and other formal – and informal – bodies active in this area; calls on the Member States, individual regions and municipalities to coordinate better their own China policies, and to take urgent steps towards reaching an operational consensus that further common EU objectives;

28. Asks the EU to develop a strategy to avoid compulsory technology transfers; seeks, in this respect, the rapid conclusion of the enhanced cooperation procedure for the Community Patent;

29. Demands strict compliance with European rules and standards for all goods in circulation on the internal market, and calls on the Commission promptly to propose a scenario in line with WTO rules for the gradual introduction of a trade conditionality mechanism and/or a set of border adjustment measures for goods originating in third countries that do not comply with these standards;

Assessing Chinas global role

30. Emphasises China’s growing influence in the theatre of international trade; calls on the EU, therefore, to remain vigilant concerning the political, economic, social and environmental impact of increasing Chinese investment in developing countries, particularly in Africa and Latin America;

31. Reaffirms the need for Chinese investments in Latin America and Africa, particularly in Special Economic Zones (SEZ), to contribute to the economic development of the countries concerned, and to the development of local production chains through the use of local labour;

32. Is concerned that some European companies invest in China mainly because of the low cost of production caused by lower social, environmental and human rights standards; strongly recommends that the Commission and the Member States promote effective corporate social responsibility (CSR) practices by European companies in China, and encourage the dissemination and publicity of best practices of CSR initiatives; furthermore, requests that the Commission assesses how CSR provisions could be included in the future EU-China investment agreement;

33. Considers that seeing Chinese engagement in developing countries as unfair competition, and pursuing a conflictual, response will be unproductive for , above all, the developing countries themselves; emphasises that, in the best interests of developing countries as well as of broader global competition and growth, EU enterprises and actors seeking to compete with China in trade and economic relations with developing countries should work to present offers that are the most attractive in terms of long-term sustainability and benefit, including environmental, social, human rights and governance aspects;

34. Draws attention to the fact that China is the world’s largest emitter of greenhouse gases; calls on the EU to propose within international organisations that ecological aspects and climate change targets should be included in discussions relating to international trade; considers that China’s economic strength and its capacity to foster technological innovation should be used in support of the global fight against climate change;

35. Considers that the efforts made by the Chinese authorities concerning certain basic rights in China, particularly social and labour rights, do not go far enough; encourages, therefore, the EU and China to develop a closer and more responsible strategic dialogue based on mutual understanding;

Reinforcing the EU to cope with global competition

36. Calls on the EU to develop an ambitious common industrial policy based on research and innovation that benefits from innovative financing arrangements such as project bonds and that supports the development of SMEs, particularly via access to public procurement, in order to maintain its competiveness vis-à-vis new major players in industry and research; calls on the EU to enhance the value of European production by providing better quality information to consumers, particularly through the adoption of the regulation on origin marking (’made-in’) of products imported into the EU.

37. Urges the EU to strengthen its economic, budgetary, fiscal and political governance to give it a credible and weighty voice on the international stage; calls on the Council and the Commission to speak with one voice in order to prevent partnerships and bilateral agreements weakening the EU position; urges the Commission to cooperate closely with Member states when defining their commercial policies and their policies towards China; demands that the EU implements a long-term strategy with regard to China, ensuring the operational coordination both between the EU institutions and between the EU and the Member States;

38. Emphasises the need to adopt a balanced approach towards China; calls on the Commission and Member States to build up extensive cooperation with China in areas of joint research such as product safety and human health, and to establish further scientific, technological and cultural exchanges;

39. Many trade issues with China concern regulatory quality and implementation in various areas of policy, including industrial policy, environmental policy, crisis measures, financial stability and consumer protection; calls for such cases to be resolved through increased bilateral co-operation or dispute settlement in the WTO;

40. Instructs its President to forward this resolution to the Council and the Commission.


Just before the start of the G20 Summit, the Chinese President, Hu Jintao, declared that China, together with Europe, was seeking to build a partnership of equals on the foundations of mutual respect, friendship, and trust, a collaborative partnership in which the keynotes would be mutual advantages, win-win outcomes, and common development. These words, at the height of the sovereign debt crisis, served to underline the fact that the Chinese economy cannot content itself for long with faltering growth in Europe.

Essentially, China maintains that it needs its trading partners to grow in order to fuel its own economic development and the internal changes which that entails, not least in terms of domestic consumption and higher living standards. This structural evolution is charted in the 12th Chinese five-year plan (2011-2015), in which the central idea is that China’s growth is to be balanced out by an increase in domestic consumption and by sustainable development.

This is a paradigm shift that could open up new opportunities for the European economy, provided that its aims are backed up by clear-cut decisions by the Chinese authorities on market access, monitoring of foreign investment, the protection of intellectual property rights, and the removal of technical barriers to trade. If those obstacles were eliminated, trade could be brought back into balance, and the European economy could therefore return to growth. Europe needs China and China needs Europe.

It is this thinking which should usher in a new phase in EU-China trading relations, based on a partnership of equals with the emphasis on mutual advantages and common development. That is the reciprocity for which Europeans have long been calling.

Driven for the last 30 years by annual growth in the region of 10%, the Chinese economy, oriented primarily towards exports, has benefited from more open trading. By the middle of the century China will become the world’s most powerful economy.

The EU – the largest trading power and the main destination for Chinese exports – has been affected by a deepening trade deficit, which increased from EUR 49 000 million in 2000 to EUR 168 900 million in 2010, coinciding with sluggish growth that has caused budget deficits to rise in most Member States.

There is thus plainly an imbalance whose causes need to be analysed, and ways and means of remedying it should be put forward within a revitalised partnership based on the principles of reciprocity and fair competition.

I. Causes of imbalances

European firms cannot at present invest in China on the same terms as the Chinese can invest in Europe.

Trade barriers to market access

Although China has to some extent lowered the trade barriers hampering access to its markets, there are still many obstacles, as can be seen from the latest report by the EU Chamber of Commerce in China: according to the findings for 2011, 43% of managers of companies established in China consider themselves to be discriminated against by measures taken by the Beijing authorities, compared with 33% in 2010. The report even makes the point that the recent measures imposing still further restrictions on the opening of markets cast doubt on the determination to create lasting opportunities for all market players.

Other trade barriers continue to exist, for example the subsidies and export credits granted in some sectors, national certification requirements, or unclear standards.

Limited access to Chinese public procurement

Participation in Chinese public procurement is beyond the capacity of European firms. In addition to the problems posed by complex regulations, the scale and scope of procurement is modest, and the lack of transparency and competition and the fact that the standards are not in accordance with international rules act as exclusion factors.

Technology transfers and protection of intellectual property rights (IPRs)

Most of the companies wishing to invest in China are high-tech businesses. However, the Chinese joint venture arrangement debars foreign investors from becoming majority shareholders in the motor or telecommunications industry.

Furthermore, the fact that intellectual property is poorly protected in China – which is not taking part in the ACTA negotiations – is increasingly deterring European investors. Chinese export growth goes hand in hand with improvement in the quality of counterfeit goods seized at the EU’s external borders: out of all the goods infringing intellectual property rights seized by European customs officers in 2010, 85% came from China.


The Chinese policy on commodities, and in particular rare earths, which are important to Europe’s leading edge sectors, is increasingly causing tensions. China, which accounts for 97% of world production, has restricted its rare earth exports, the official explanation being that it wishes to give priority to domestic demand. Certain Chinese practices regarding other commodities have, moreover, been challenged before the WTO Dispute Settlement Body, which ruled against China in July 2011.

The currency issue

Whereas the United States and Europe, China’s two main partners, have ‘floating’ currencies, the undervalued and non-convertible state of the yuan, bordering on monetary dumping on an unmatched scale, raises a serious question. Because the yuan has been undervalued, China has been able not only to accumulate almost USD 3 200 000 million in foreign exchange reserves and expand its investment in Europe with a view to acquiring advanced technologies, but also to purchase part of some European countries’ sovereign debt; however, because there is no instrument to measure it, the size of its holdings – and the same goes for investment – is impossible to know.

But China also has a number of grievances against us, namely the complex system of agricultural tariffs and CAP subsidies, technical barriers to trade, restrictions on foreign investment imposed by EU Member States, and so. This report gives guidelines on the action that the EU should take regarding Chinese investment on its territory, without stepping outside the WTO framework. Its key point is that the EU needs to have a European economic and industrial policy to enable it to trade fairly with China, while ruling out all possibility of protectionism.

II. Reciprocity: the heart of a new partnership

This necessary first stage of opening up our borders, after decades of cold war, has to be followed by a ‘win-win’ partnership, an entirely legitimate goal, given that China has greatly benefited from free trade. The balance to be sought is a necessity because, in the crisis that Europe is now going through, the public might be more inclined to believe accusations against China, viewed as the source of all our woes.

Closing itself off or throwing itself wide open is not Europe’s way. Those two extremes are contrary to the Community spirit and to the interest of Europe and the Europeans, who advocate an orderly, balanced, multilateral approach to international relations. What Europe is attempting to do is to build partnerships founded on honesty and reciprocity, both of which help to calm tensions and promote shared growth.

Fair market access and international competition

European firms must have access to the Chinese market on the same terms as Chinese firms do to the European market. China should accede to the multilateral Agreement on Government Procurement (AGP) as a matter of urgency; and it is also vital to convert Chinese rules and standards into international standards, draw up common standards for up-and-coming sectors, and do away with the shields against access to the Chinese market such as the licensing system, direct aids, and public procurement barriers. In addition, the EU needs to devise a strategy for averting forced technology transfers. The closer cooperation procedure for the Community patent is another matter that should be dealt with without delay.

A further subject for discussion is reform of the WTO to encompass compliance with social, health, and environmental standards drawn up jointly with the ILO, the WHO, and the UN. Within this stringent future framework, the gradual introduction of trading conditionality is a matter that will have to be raised. Finally, there is the particularly sensitive issue of China’s market economy status: the Commission should endeavour to support the Chinese Government in its efforts to remove the existing obstacles.

New tools for greater transparency

Unlike the United States, the EU does not know exactly how deeply China has penetrated the Member States’ economies, be it in terms of investment or in terms of purchases of sovereign debt securities. This ignorance is, of course, damaging to the European interest and likely to encourage all manner of wild ideas. The EU should equip itself with measuring instruments modelled on the Committee on Foreign Investment in the United States (CFIUS) in order to shed light on the foreign holders of sovereign debt. It should also publish an annual report on China’s compliance with the obligations laid down in its WTO accession protocol and make more effective use of the trade defence instruments available to it.

The fact that the yuan is undervalued and non-convertible detracts from open, honest trading. The EU must therefore exert pressure on the Chinese authorities and urge them to continue the efforts already begun. The European Treaties allow the EU, should global monetary imbalances become unsustainable, to adopt an exchange rate policy.

A new framework for EU-China relations

EU-China trading relations have greatly changed in the last 30 years as China’s influence has grown on the international stage. The EU and China therefore need to update the terms of their 1985 cooperation agreement. Although China cannot yet be considered a market economy, more binding rules on imports and exports should nevertheless be incorporated into the agreement.

The new investment agreement should allow for the need to afford unrestricted access to Chinese public procurement, applying the conditions in force in Europe. The EU should, furthermore, keep a close watch on the economic, social, and environmental impact of China’s increasing investment in developing countries, especially in Africa.


It is essential for the EU to implement a concerted reindustrialisation policy and a research and innovation policy commensurate with the new global challenges. From that point of view, it would be useful if, for example, the EU encouraged its citizens to buy European products.

It goes without saying that Member States have to work in closer coordination, so as to ensure that their bilateral relations with China do not weaken the EU’s position in relation to that country.

The need for closer coordination is not confined to trading matters. What we are seeking to do is not just to defend the social market economy, a model that is open but adheres strictly to reciprocity and protects the European interest, but also to promote and advocate our view of development, democracy, and human rights. For we believe that social and economic progress is closely linked to the establishment of democratic institutions.

OPINION of the Committee on Development (8.12.2011)

for the Committee on International Trade

on EU and China: Unbalanced Trade?

Rapporteur: Jan Zahradil


The Committee on Development calls on the Committee on International Trade, as the committee responsible, to incorporate the following suggestions in its motion for a resolution:

A. whereas China has become an emerging economy registering double-digit growth rates since 1999 and is now, since February 2011, the world’s second largest economy; whereas, at the same time, China is still coping with the challenges which traditionally face every developing country, particularly in its central provinces;

B.  whereas an indicative EUR 224 million in EU development assistance was allocated to China for the period 2007-2013; whereas in March 2011 the Commission announced the second 5-year EU-China Trade Project allocating EUR 20 million in EU trade-related assistance to China;

C. whereas economic growth in China has lifted half a billion people out of poverty since 1990; whereas, however, a large proportion of the migrant workers in towns and cities and the rural population are still living in poverty, and whereas, according to the World Bank, there are still 207 million Chinese living below the poverty level;

D. whereas the rise of China as a development actor in Africa is one of the most striking feature of the last ten years;

E.  whereas China’s relations with African countries have been shaped, for example, by the need to obtain energy resources to support its economic development;

F.  whereas there are important differences between OECD-DAC and China development cooperation; whereas China’s concessional loan programme, channelled through China Eximbank, is a major arm of China’s foreign relations, and whereas concessional loans are seen as tied aid;

G. whereas China’s Special Economic Zones (SEZs) in Africa aim to create a supportive environment for small and medium Chinese companies to venture overseas; whereas, according to the African Development Bank Group, Chinese-operated SEZs in Sub-Saharan Africa have had so far limited results in terms of investment, while their job creation impacts and integration with the local economy has been limited;

H. whereas China’s Protocol of Accession is unique in that it includes a number of special commitments applicable to China only that take the form of ‘WTO-plus commitments’ (as in the case of export taxes) as well as ‘WTO-minus rights’, that allow WTO members to take protective measures against Chinese exports that deviate from general WTO disciplines;

I.   whereas China needs access to high-end technology and distribution networks for the next phase of its economic development, which will be based on innovation, domestic trade and internal consumption;

J.   whereas China’s rapid economic growth has taken place partially at the expense of human rights, and is partially built on forced labour and child labour;

K. whereas China, not being a member of the OECD, is not obliged to comply with OECD rules that: limit tied aid; regulate credit practices and impose maximum repayment terms, country risk classification and minimum interest rates; require the exchange of information; and impose social, environmental and governance standards on financing activities;

L.  whereas China is the second biggest trading partner of the European Union;

M. whereas China has in recent decades achieved important social progress; whereas such an improvement in the quality of life for such a huge population in such a short period of time is unique in history, reducing poverty for over 350 million people;

N. whereas Chinese export finance activities have allowed China to increase its presence in many developing countries, particularly in Africa;

O. whereas the EU has been running a structural deficit with China in trade in goods since 1997, which demands from the EU the setting up of a new strategic framework for cooperation with China;

P.  whereas there are considerable potential benefits for developing countries from deeper economic relations with China, notably in terms of infrastructure development;

Q. whereas, however, China’s export credit finance activities in developing countries pose potential threats to developing countries in terms of natural resource management, debt sustainability, governance improvements, and local employment and productivity;

R.  whereas Chinese participation in an international trade system founded on openness and transparency is vital, in order to ensure international prosperity and sustainability;

1.  Is convinced that the strong growth in trade between all the EU Member States and China represents a crucial development instrument for both the EU and China, as open trade is one of the most effective drivers of economic growth, the fight against poverty and wealth creation; takes the view that the unique character of China’s commitment to the WTO, that prevents China from seeking ‘Special and Differentiated Treatment’ like other developing country members, raises questions on coherence and consistency; accordingly, calls on the Commission to evaluate the coherence and consistency of its trade policy towards China against the background of its development policy towards Africa;

2.  Stresses that there is great potential in mutual market access, liberalisation and deepening trade and investment cooperation between Europe and China; stresses however as a precondition that fair competition, mutual access and clear market regulations, especially on Foreign Direct Investment (FDI) and on the protection of International Property Rights (IPR), should be guaranteed;

3.  Notes that the China-Africa Development Fund (CADF) supports the setting-up of special Chinese Economic Processing Zones in Africa; shares the views of the African Development Bank Group according to which there is a need to integrate Chinese investments into the national production chain to ensure that these zones will effectively promote industrialisation, which implies, for example: strengthening legal and regulatory arrangements, including social and environmental safeguards, as well as improving access for local companies and workers to the zones to ensure linkages to the local economy;

4.  Is of the opinion that trade should promote human rights on a global level and that all trade partners of the EU should respect the ILO conventions, in particular the convention against forced labour, which means that products produced in prisons and prison camps (the Lao Gai) should not be permitted on the EU market;

5.  Calls on the EU to improve its effectiveness when it comes to trading with China by better institutional organisation as well as by finding a coherent position towards China among the Member States;

6.  Notes that China’s growth and its capacity to move in thirty years from under-development to an emerging global power has contributed to make China an alternative source of trade and finance from Africa’s traditional partners;

7.  Is aware that China’s impact on Africa varies according to the size, economic structures, and quality of governance and institutions in African economies; takes the view that the impact of China’s trade on African countries - i.e. the extent to which trade with China will encourage further specialisation in primary commodities, or can help African economies diversify their production and finance sustainable projects - needs to be further evaluated;

8.  Underlines that China’s new role as a major source of finance in Africa has sparked several concerns in the EU; in particular, underlines that while international organisations and bilateral aid agencies of traditional donors have made their assistance conditional on good governance, this is not the case for China; fears accordingly that China’s influence could further delay efforts to improve governance and reduce corruption in Africa, especially in its partner countries characterised by weak institutions such as Angola, Congo, Nigeria and Sudan;

9.  Stresses that the development impact of investments in the extractive sector should be enhanced through more transparency in the procurement and contracting process and more active engagement of African civil society organisations in oversight; in this context, calls on the EU to encourage China to endorse the Extractive Industries Transparency Initiative principles;

10. Takes the view that, in order to reap benefits from the collaboration between China and Africa it will be necessary, among other things, for African governments to strengthen their governance institutions; likewise, insists upon the need to upgrade political dialogue between China and EU Member States to engage China to pay attention to the implications of its assistance for governance and the environment, and to ensure that China’s aid complements, rather than competes with, aid from traditional donors;

11. Notes that Chinese investments in Africa, channelled mainly through the Export-Import Bank, raise concerns, e.g. about sustainability of projects, as in the case of large controversial hydropower dam projects; as a first step, shares the view of the African Development Bank Group, according to which it would be desirable to expand the implementation of the Equator principles - a voluntary set of standards for determining, assessing and managing social and environmental risk in project financing - to Chinese investments;

12. Notes with concern that, in Africa, a majority of China’s large-scale projects have been carried out by a predominantly Chinese labour force; considers that this is one of the reasons why the local labour force remains untrained and the spin-offs for the population in terms of employment are minimal;

13. Takes the view that African countries need to increase the added value of their production, irrespective of their partner countries; this implies developing tools to increase for instance the demand for unskilled African labour for investment projects;

14. Is aware of the fact that although rapid economic growth in China has created vast wealth, especially for the urban population, it has amplified the disparities between urban areas and rural areas, where 50.3 % of China’s mainland population live, contributing to a process of urbanisation and flight from the land and creating a situation whereby in 2011, for the first time in China’s history, more than half the country’s population is living in towns and cities;

15. Points out that Chinese aid differs in a number of ways from that applied by OECD countries; in particular, recalls that while OECD members commit, through the OECD Arrangement on Officially Supported Export Credits, to conform to an agreed set of environmental, social and governance standards in their export finance activities, China is not committed to these rules;

16. Recalls also that, while OECD members agreed to the OECD Recommendations on Bribery and Officially Supported Export Credits, which aim to deter and sanction bribery of foreign public officials in international business transactions supported by official export credits, these measures have not been adopted by China; in light of this, finds it of particular importance that the EU engage in further discussion with China to develop and implement common standards with the OECD on development aid, including on debt relief;

17. Calls on the Commission to continue supporting China in the process of achieving its strategic development goals, but at the same time to move away from traditional development cooperation and aid, through a gradual reduction in ODA (official development assistance) as of 2013, towards a more balanced, commercially oriented relationship with China in the interests of both sides; stresses in this respect that the new approach must take into consideration the fact that China has become itself an important donor, especially in Africa, and that therefore its development agenda with the EU should rather focus on concrete areas of common interest; emphasises that the EU’s trade relations with China should continuously be complemented with efforts and demands for democratic development;

18. Calls on the Commission in particular to support China in making its agricultural production more productive;

19. Calls on the Commission to do this in dialogue with the Chinese authorities to ensure that the disadvantaged and poor people currently benefitting from EU development projects are not left behind;

20. Calls on the Commission to phase out development aid to China which represents EUR 128m for the period 2007-2010, as China is an emerging market economy and a major economic and political player at world scale;

21. Calls on the Commission to raise immediately in the dialogue with China the issue of China’s purchases of land in developing countries;

22. Points out that China is emerging as a major aid donor in its own right, despite around 16% of its 1.3 billion people still living below the poverty line;

23. Calls on the Commission, therefore, to treat China as a partner, with respect for its cultural traditions, and to establish the same legitimate claims on China as on the EU’s other trade partners regarding respect for human rights, whilst supporting China’s transition to an open society based on the rule of law and respect for human rights and insisting that it comply with the ILO’s basic labour standards; considers that such an approach will help to overcome current tensions, intensify further exchanges and increase mutual investment leading both partners towards a ‘win-win’ situation;

24. Calls on the Commission, therefore, to work with China as a partner in international development, in order to exchange best practice and utilise the comparative advantages and differentiated strengths of all international development partners, and thereby provide the best and widest range of support to developing countries;

25. Stresses that, given that China is now the second largest economy in the world, the question of market access between Europe and China must be based in any case on the reciprocity principle; calls for a rapid conclusion of the DOHA negotiations; stresses that China has urgently to meet international environment standards and its WTO obligations, in particular the respect of intellectual property rights; warns against the use of protectionist measures, particularly given the current economic climate, as this would be harmful not only to bilateral political relations, but also to the EU and Chinese economies in the long run and would go against EU development goals as defined in the EU 2020 strategy;

26. Calls on the Commission to discuss with the EU’s Chinese partners the possible terms of agreements and concessions for the import of commodities from developing countries which would be fair, transparent and promote development; is concerned at the increasing competition for commodities between the EU and China and its detrimental impact on developing countries;

27. Urges the Commission and Member States to use all available diplomatic channels and other tools to encourage China to commit to international standards of transparency regarding its export credit financing activities in developing countries and other trade-related measures both within China and externally; urges the Commission and Member States to continue to work to engage China in international norms and standard-setting organisations related to the international trading system;

28. Calls on the EU and the US to engage at all levels with this emerging economic giant for the mutual benefit of all parties;

29. Considers it necessary that EU development policy and actors work to build the capacity of developing countries to negotiate robust deals with China - particularly where these deals concern natural resources -, to manage debt, and to face potential threats to local productivity and job markets posed by influxes of Chinese workers and products;

30. Calls on China to be more engaged in global institutions, recognising that China is already playing a full and active role in the UN and in peace-keeping missions;

31. Considers that seeing Chinese engagement in developing countries as unfair competition and pursuing a conflictual response will be unproductive, above all for developing countries themselves; emphasises that in the best interests of developing countries as well as of broader global competition and growth, EU enterprises and actors seeking to compete with China in trade and economic relations with developing countries must work to present offers that are the most attractive in terms of long-term sustainability and benefit, including environmental, social, human rights and governance aspects;


Date adopted





Result of final vote







Members present for the final vote

Véronique De Keyser, Leonidas Donskis, Charles Goerens, Catherine Grèze, Eva Joly, Filip Kaczmarek, Miguel Angel Martínez Martínez, Norbert Neuser, Maurice Ponga, Michèle Striffler, Alf Svensson, Anna Záborská, Iva Zanicchi, Gabriele Zimmer

Substitute(s) present for the final vote

Fiona Hall, Eduard Kukan, Krzysztof Lisek, Judith Sargentini

Substitute(s) under Rule 187(2) present for the final vote

Vittorio Prodi

OPINION of the Committee on Employment and Social Affairs (17.6.2011)

for the Committee on International Trade

EU and China: unbalanced trade?

Rapporteur: Dirk Sterckx


The Committee on Employment and Social Affairs calls on the Committee on International Trade, as the committee responsible, to incorporate the following suggestions in its motion for a resolution:

A. whereas the EU and China are among each other’s biggest trading partners,

B.  whereas, despite the high growth rates recorded in China over the past 20 years, there has been a considerable increase in the country’s unemployment rate,

1.  Calls on the Commission to intensify the existing dialogue on employment and social policy and to enter into a structured social dialogue with China in the framework of the High Level Economic and Trade Dialogue (HLD);

2.  Notes the competition between different social systems resulting from the opening up of the world market; notes a rise in the level of informal work in urban areas as well as violations of the principles of decent work despite the existence of a legislative framework governing employment conditions; notes that, although the opening up of the Chinese economy has brought major benefits such as better access to the employment market and a fall in rural unemployment, not all segments of the Chinese population have equally benefited from the economic growth and there are large disparities emerging between urban and rural parts of the country; points out that inequalities in incomes, access to employment, social welfare, health and education between the urban and rural populations constitute a significant cohesion policy challenge for China;

3.  Calls for trade competition between China and the EU to be based on clearly established rules allowing mutual emulation and business stability and optimisation, in order not to go against employees’ interests;

4.  Stresses the impact which China, as the biggest exporting country, has on the world economy and the responsibility which this entails to comply with minimum social standards; welcomes the efforts made by Chinese central and local government in this area; emphasises that a comprehensive law complying with all international standards, on social security and health care, and strict and efficient monitoring of compliance with legislation on employment conditions, are indispensable; points out that sustainably funding a stable social security and healthcare system that generates the same benefits in all of the country’s provinces is one of the biggest challenges for the Chinese government; stresses in this connection the Social Security Reform Cooperation Project between the EU and China, which aims to give Chinese citizens access to adequate and affordable social insurance;

5.  Stresses the impact which China has on the world economy, its responsibility to comply with minimum social standards and the importance of trade relations between the EU and China; stresses that observance of human and social rights is essential in the cooperation between the EU and China; underlines the importance of compliance with and a rapid implementation of all rules of the International Labour Organisation and the World Trade Organisation, including the right to freely form independent trade unions; supports the pursuit of decent pay and working conditions; calls for mutual respect for labour legislation, especially the prevention of illegal forms of labour such as child labour and prison labour; notes the improvements made by the Chinese government regarding better conditions for employees, yet observes that workers’ rights are not always respected due to poor enforcement of labour laws and employers frequently failing to comply with environmental, health and safety standards, which thus leads to dangerous work environments; calls for a thorough improvement of the legislation concerned; stresses the importance of better supply-chain control with regard to working conditions; expects the Chinese government and Chinese firms to take the GSP+ as the standard for their everyday work;

6.  Considers the intensification of the dialogue between the EU and China, which was launched in 2009 to improve working conditions and to reduce the number of occupational accidents and cases of occupational disease, to be an essential measure; underlines the necessity for exchanges of commercial and social good practices; calls for an exchange of best practices between the EU and Chinese trade unions in order to contribute to improving the working conditions of the labour force and fulfilling the ILO conventions;

7.  Considers that the ILO should be given responsibility for monitoring observance of these rights;

8.  Calls for a further improvement of EU development aid, especially in such areas as employment, protection of safety and health at work, poverty eradication, public health and hygiene, education and improvement of the life conditions of children;

9.  Emphasises the importance for global trade of the further improvement of the Chinese labour force;

10. Emphasises the importance of exchanging experience and best practices in the field of employment opportunities for developing green jobs, when dealing with the economic, social and environmental impact on climate change;

11. Calls for the further development of improved cooperation on employment of legal immigrants and protection of the rights and interests of migrant workers and enhanced coordination in international labour affairs;

12. Notes that the Chinese population is getting older and that the seemingly endless growth in the available workforce, in particular lower-skilled workers, appears to be drying up; notes that a shift in trade from China to other South-East Asian countries is taking place as a result of potential cost advantages; calls, therefore, on the Commission to introduce an integrated European policy for the South-East Asia region that will prevent European multinationals from engaging in socially irresponsible practices in those countries; observes that a stronger awareness of employment standards should arise in China’s growing middle class – an awareness which is relatively undeveloped in the population as a whole at present;

13. Notes that scientific analysis differs as regards the impact of European direct foreign investment in China on employment in Europe; notes that some studies indicate that there might not be any measurably negative impact on employment in Europe, and that direct foreign investment might to some extent have a positive effect on employment in the European branches of the companies concerned; takes note also of studies that indicate certain negative impacts on employment in Europe;

14. Considers that imports of counterfeit goods from China not only pose a threat to the health and safety of EU consumers but also have an adverse impact on employment within the EU;

15. Calls on European businesses operating in China to apply the highest international standards and best practices in corporate social responsibility with regard to workers;

16. Notes the increased clampdown on democratic rights by the Chinese regime in recent months including the jailing and persecution of trade unionists.


Date adopted





Result of final vote







Members present for the final vote

Regina Bastos, Edit Bauer, Heinz K. Becker, Mara Bizzotto, Philippe Boulland, Milan Cabrnoch, Alejandro Cercas, Ole Christensen, Derek Roland Clark, Tadeusz Cymański, Frédéric Daerden, Karima Delli, Proinsias De Rossa, Frank Engel, Sari Essayah, Ilda Figueiredo, Marian Harkin, Nadja Hirsch, Liisa Jaakonsaari, Danuta Jazłowiecka, Martin Kastler, Jean Lambert, Patrick Le Hyaric, Veronica Lope Fontagné, Elizabeth Lynne, Elisabeth Morin-Chartier, Csaba Őry, Konstantinos Poupakis, Sylvana Rapti, Licia Ronzulli, Elisabeth Schroedter, Joanna Katarzyna Skrzydlewska, Jutta Steinruck, Traian Ungureanu

Substitute(s) present for the final vote

Vilija Blinkevičiūtė, Julie Girling, Kinga Göncz, Sergio Gutiérrez Prieto, Richard Howitt, Filiz Hakaeva Hyusmenova, Jan Kozłowski, Evelyn Regner, Dirk Sterckx

OPINION of the Committee on Industry, Research and Energy (24.11.2011)

for the Committee on International Trade

on EU and China: unbalanced trade?

Rapporteur: Yannick Jadot


The Committee on Industry, Research and Energy calls on the Committee on International Trade, as the committee responsible, to incorporate the following suggestions in its motion for a resolution:

1.  Takes the view that the trade imbalances between the EU and China broadly reflect their differing social, economic, democratic models, demographic specificities and natural resources and that the limited or non-existent degree of respect for certain rights, in particular democratic rights and social and workers’ rights, in China is a contributing factor; acknowledges the fact that some efforts are being made to correct the imbalances, but considers that they do not go far enough; encourages, therefore, constructive engagement and a strategy for a closer and more responsible dialogue between the two partners based on mutual understanding;

2.  Notes that China will have market economy status in 2016, and calls on the Commission to propose ways of retaining trade defence mechanisms after 2016, if appropriate, including for innovative European SMEs; calls on China to meet its WTO commitments by permitting full market access for goods and services and freedom of investment; calls for an EU‑China trade policy that facilitates cooperation and the socio-economic development of both parties; believes that both sides face challenges as well as great opportunities; stresses that the demand surge in emerging economies provides a chance for the EU to reap the benefits of globalisation by further stepping up exports of goods and services to new markets; emphasises the need for positive reciprocity, in particular as regards public procurement; considers it regrettable that China continues to resort to various non‑tariff barriers which severely limit the presence of European companies on the Chinese market and which generate costs for European firms and deprive them of commercial outlets; stresses that access to a number of key sectors remains limited owing to investment restrictions taking the form of shareholding ceilings in strategic areas;

3.  Draws attention to the temptation for European enterprises to relocate their operations to China in order to cut their costs and increase their profits, to the detriment of the EU workforce and with disregard for emissions reduction targets and for EU social and employment standards;

4.  Takes the view that the challenges China poses for the EU are those of implementing an ambitious and proactive EU industrial policy, which should be based on:

     –   drafting, implementing and enforcing stringent standards,

     –   strengthening legitimate anti-dumping measures,

     –   adopting a more ambitious, coherent, and balanced approach in European public procurement policies, in particular with a view to improving European companies’ access to the Chinese market,

     –   pursuing research and innovation,

     –   respecting intellectual property rights,

     –   and promoting a green and sustainable economy;

5.  Points out that such an industrial policy will be effective only if it is coordinated, developed and implemented at EU level, and that it will be impossible to generate a coherent and effective EU approach to China on the basis of purely separate national approaches;

6.  Stresses that the weak protection afforded against counterfeiting and the lack of will shown by the Chinese authorities to tackle the counterfeiting of products form barriers to further expansion and investment by European enterprises in China; calls on the Commission, in the context of EU‑China relations and during the new round of macroeconomic negotiations, to devise appropriate anti-counterfeiting measures;

7.  Notes that the Chinese restrictions on market access and the lack of proper intellectual property protection form major barriers to further expansion of European enterprises in China; calls, therefore, for China’s economic openness to be increased as a matter of urgency;

8.  Notes, furthermore, that technical barriers for foreign firms remain in place, that there is a growing tendency for some Chinese regulatory agencies to engage in unequal treatment, and that there is a lack of transparency in the regulatory sphere;

9.  Notes with concern the fact that China is continuing to impose barriers to free global trade in rare earth elements and derivative products, which were toughened up through decreased export quotas that now include rare earth element alloys; calls on the Commission to engage purposefully with China in reaching agreements that are mutually beneficial and comply with environmental law and international trade law;

10. Believes that the setting up by the Commission of a mechanism for exchanging information on intergovernmental agreements between Member States and third countries in the field of trade with China will facilitate a coherent approach to China;

11. Stresses the importance of setting up an investment framework between the two sides, and notes the importance of identifying common ground between the EU 2020 strategy and China’s five-year plan;

12. Is concerned by the lack of will shown the Chinese authorities to enforce cybersecurity and prosecute cybercrime, which is undermining the world wide web and information security and having a significant negative impact on the EU’s economy and society;

13. Recalls the progress China has made in developing and introducing its own standards, and encourages all forms of cooperation between China and the EU in international negotiations on standards; takes the view that, as the world’s largest market, the EU must also continue to be the world leader in terms of developing standards, in particular in strategic areas; calls, therefore, for all goods in circulation on the internal market strictly to comply with social, environmental and health protection standards; calls on the Member States to strengthen market surveillance mechanisms in order to ensure that only goods that meet EU standards are allowed into the internal market; calls on the Commission to assess whether a common EU approach on market surveillance would be an appropriate means of bolstering the current monitoring provisions;

14. Notes that the scale of Chinese investment in and government financial support for energy efficiency and renewable energies is challenging the EU’s own renewable manufacturing sectors; points out that, according to the Renewables 2010 Global Status Report published by the Renewable Energy Policy Network for the 21st Century (REN21), which has the support of the International Energy Agency and the United Nations, China added the most renewable power capacity in 2009 (37 GW of the worldwide increase of 80 GW); calls, therefore, for urgent action and greater commitment in order to ensure that the EU remains at the cutting edge in these fields and does not become a net importer of renewable energy technologies, by focusing EU research efforts on efficient resource management and the green economy and by investing in a sustainable, balanced and cohesive economy; warns against the inappropriate use of trade and investment barriers in the green goods sector;

15. Stresses that China is the world leader in terms of wind farm installation, that Chinese and Indian manufacturers of wind turbines are in the top ten such manufacturers, and that China currently produces a large proportion of the world’s photovoltaic panels; calls on the Commission and Member States to take measures to promote the development and eco‑efficient production, in the EU, of those technologies and of the new, innovative technologies needed to achieve ambitious targets for the reduction of greenhouse gas emissions;

16. Takes the view that rising domestic demand and further economic reform in China will play a decisive role in fostering a more balanced market environment and reducing the trade deficit; supports implementation of the necessary banking services reforms and the development of a genuine consumer credit market;

17. Calls on the EU and China to develop strategic partnerships in relation to R&D and industrial, technological and innovation cooperation in the various growth areas within the green economy, such as consumption cutting, recycling, urban mining, efficient and sustainable management of raw materials, rare earth elements and other strategic resources throughout the economic cycle, renewable energies and energy efficiency, by means of:

     –   sharing and coproduction of renewable energy technologies and joint research and development programmes,

     –   improving the transparency and reliability of energy-related data and the exchange of best practices and information,

     –   stepping up the partnership on the ITER project;

18. Calls on the EU to step up its efforts to enhance its resource security by conducting research into sustainable alternatives;

19. Draws attention to the fact that China is continuing to apply restrictions to raw materials exports in the form of duties and quotas which are prohibited by the WTO and artificially inflate global raw materials prices, hence diminishing internal prices and giving Chinese producers a significant competitive advantage;

20. Points out that China holds around 97% of the world’s rare earth supplies, on which the Chinese Government has imposed restrictive export quotas, thus increasing purchase prices for European enterprises and disadvantaging them in comparison to Chinese enterprises;

21. Calls on the EU and China to develop strategic partnerships in relation to R&D&I through enhanced cooperation between EU and Chinese universities and research institutions, joint training and academic programmes and increased researcher mobility; welcomes the fact that European programmes are open to Chinese research teams, and calls for Chinese programmes to be opened up to European researchers; calls for technology partnerships to be established in order to address the shared challenge of developing resource-saving production methods and collaborative research programmes, for the mutual benefit of the European and Chinese populations;

22. Calls for the impact of the Chinese Special Economic Zones in North and Sub-Saharan African countries, in particular those with which the EU has concluded trade agreements, to be assessed; voices its concern at the fact that China’s policy in Africa may have a dramatic impact on natural resources and constitutes a challenge to the development policies pursued by the EU; calls on the Commission to ascertain whether EU trade policy towards China is consistent with the EU’s development cooperation policies for Africa;



Date adopted





Result of final vote







Members present for the final vote

Jean-Pierre Audy, Ivo Belet, Bendt Bendtsen, Jan Březina, Giles Chichester, Pilar del Castillo Vera, Christian Ehler, Vicky Ford, Adam Gierek, Norbert Glante, Robert Goebbels, Fiona Hall, Jacky Hénin, Edit Herczog, Kent Johansson, Romana Jordan Cizelj, Lena Kolarska-Bobińska, Béla Kovács, Philippe Lamberts, Angelika Niebler, Jaroslav Paška, Aldo Patriciello, Anni Podimata, Herbert Reul, Paul Rübig, Amalia Sartori, Francisco Sosa Wagner, Konrad Szymański, Patrizia Toia, Evžen Tošenovský, Ioannis A. Tsoukalas, Vladimir Urutchev, Alejo Vidal-Quadras, Henri Weber

Substitute(s) present for the final vote

Satu Hassi, Jolanta Emilia Hibner, Yannick Jadot, Ivailo Kalfin, Seán Kelly, Holger Krahmer, Werner Langen, Alajos Mészáros, Mario Pirillo, Vladimír Remek

Substitute(s) under Rule 187(2) present for the final vote

Cristian Silviu Buşoi, Anna Hedh

OPINION of the Committee on the Internal Market and Consumer Protection (23.11.2011)

for the Committee on International Trade

on EU-China: an unbalanced trade?

Rapporteur: Morten Løkkegaard


The Committee on the Internal Market and Consumer Protection calls on the Committee on International Trade, as the committee responsible, to incorporate the following suggestions in its motion for a resolution:

1.  Underlines the interdependence between the Chinese and the EU markets, and the need for a level playing field where protectionism is avoided; notes the progress made by China towards opening up its markets; stresses, however, the need to address ‘behind the border measures’ in China, which hamper the business climate for European businesses; takes the view, while continuing along the WTO track, that a free trade agreement (FTA) with China could improve trade relations and would have a positive impact on both sides; insists on the fact that an agreement at WTO level should be a priority for the EU;

2.  Highlights the importance of the EU-China High-Level Economic and Trade Dialogue; calls for the EU and China to meet twice each year to strengthen their bilateral relationship through dialogue and achieve concrete results in the areas of, inter alia, investments, provision of services, intellectual property rights, public procurement, product safety, compliance with rules on trademarks, access to raw materials standards and tariff barriers as well as non-tariff barriers; calls on the Commission to further emphasise the problems European businesses experience in China in relation to bureaucratic red tape, human resource issues and market access;

3.  Emphasises the need to adopt a balanced approach towards China; calls on the Commission and Member States to build up extensive cooperation with China in areas of joint research such as product safety and human health, and to establish further scientific, technological and cultural exchanges;

4.  Regrets that the investment climate in China lacks transparency and that discriminatory requirements still exist; calls for a bilateral investment agreement with China, aiming at increased market access for investments, starting with the most restricted sectors; emphasises the need to facilitate trade and investment, especially for SMEs; points out the importance of coordination between central and local authorities in China; highlights the fact that China is the largest source of imports for the EU and is the EU’s second-largest export market, with both imports and exports having increased by over 30 per cent between 2009 and 2010;

5.  Is concerned that due to the lack of a freely accessible commercial register there is a shortage of trustworthy information about commercial partners in China; emphasises the importance of reliable information as an essential condition for a good business climate;

6.  Is concerned at the high level of counterfeiting and piracy and the low level of IPR enforcement in China, which both hampers innovation in the EU and significantly affects consumer safety; calls on both the Commission and the Member States to step up discussions with China on the effective enforcement of IPR, including at regional and local levels; highlights the discriminatory formal requirements imposed on foreign enterprises, preventing them from effectively defending their rights and patents in China; is of the opinion that the protection of intellectual property rights of international firms by the Chinese authorities is essential for the growth of trade between the EU and China and welcomes the efforts made; considers that the export of high-tech products from the EU could constitute an area of exponential growth facilitated by China’s need for these products and the EU’s ability to manufacture them;

7.  Emphasises the need for improved access to public procurement markets; is concerned about the comparatively more protectionist Chinese policies and legislation on public procurement; emphasises that the EU must maintain its pressure on China, with its emerging markets, particularly as regards its prompt accession to the WTO Government Procurement Agreement (GPA), so as to ensure that public procurement procedures comply with international standards and to establish predictable conditions for subcontractors; supports the Commission’s review of the measures needed to ensure a level playing field in terms of fair access to procurement procedures in third countries for EU businesses and vice versa; stresses, however, that these measures must be such that they do not lead to the inappropriate new partitioning of the market, which could have negative repercussions on European industry and the EU’s global trade relations;

8.  Is concerned that ever more specific national standards and certification procedures are being introduced, creating new technical barriers to trade; stresses the need for the EU to engage in discussions with China and to integrate China into the decision-making process when developing future international standards, in order to avoid different standards being used as de facto barriers to trade; stresses that the business licence application process in China is slow, and sees it as a tool used by China to slow down the establishment and expansion of foreign companies in a number of sectors; emphasises the need for the simplification of this procedure; welcomes the efforts made by China in aligning national standards with international standards;

9.  Is concerned about China’s restrictive policies and its dominant position on the market for several raw materials which are crucial to the functioning of the European economy; calls on the Commission to constantly monitor and address at regional, multilateral and bilateral levels the gap between supply and demand of critical raw materials and rare earth, and to further engage in a dialogue with China on China’s use of WTO rules to enforce a quota on rare earths, which are in fact not endangered natural resources; insists, in particular, on the need for China to respect WTO rules regarding access to raw materials, as confirmed by the WTO ruling on 5 July 2011, and rules regarding access to rare earth; stresses the need for a common European approach in the field of raw materials in order to strengthen political pressure and to ensure that companies within the EU have equal access to essential resources for their production activities;

10. Calls on the Commission to carry out an in-depth analysis of the impact of exchange rates on the EU-China trade balance; supports China in taking further steps towards full convertibility of the Chinese Yuan;

11. Highlights a number of reports commissioned by the EU institutions in which partisan and derogatory language is often used to describe China’s internal and global economic activity[1]; stresses the need to adopt a constructively critical dialogue whilst respecting cultural idiosyncrasies and differences in political organisation.


Date adopted





Result of final vote







Members present for the final vote

Pablo Arias Echeverría, Lara Comi, Anna Maria Corazza Bildt, António Fernando Correia De Campos, Jürgen Creutzmann, Cornelis de Jong, Evelyne Gebhardt, Małgorzata Handzlik, Iliana Ivanova, Eija-Riitta Korhola, Edvard Kožušník, Hans-Peter Mayer, Phil Prendergast, Mitro Repo, Robert Rochefort, Heide Rühle, Matteo Salvini, Christel Schaldemose, Andreas Schwab, Róża Gräfin von Thun und Hohenstein, Bernadette Vergnaud, Barbara Weiler

Substitute(s) present for the final vote

Regina Bastos, María Irigoyen Pérez, George Lyon, Ramona Nicole Mănescu, Emma McClarkin, Konstantinos Poupakis, Sylvana Rapti, Marc Tarabella, Kyriacos Triantaphyllides, Wim van de Camp

  • [1]  DG EXPO, ‘China in Africa: A Critique’, Policy Briefing (October 2010), PE 449.518, p. 10 - ‘The Chinese economic presence has spread through Africa like an oil slick.’


Date adopted





Result of final vote







Members present for the final vote

William (The Earl of) Dartmouth, Damien Abad, Laima Liucija Andrikienė, Maria Badia i Cutchet, David Campbell Bannerman, Daniel Caspary, Marielle de Sarnez, Yannick Jadot, Metin Kazak, Bernd Lange, David Martin, Vital Moreira, Paul Murphy, Godelieve Quisthoudt-Rowohl, Niccolò Rinaldi, Helmut Scholz, Peter Šťastný, Robert Sturdy, Gianluca Susta, Keith Taylor, Iuliu Winkler, Jan Zahradil, Paweł Zalewski

Substitute(s) present for the final vote

Josefa Andrés Barea, George Sabin Cutaş, Mário David, Elisabeth Köstinger, Jörg Leichtfried, Jarosław Leszek Wałęsa

Substitute(s) under Rule 187(2) present for the final vote

Gabriel Mato Adrover