Global growth via China-EU cooperation

Beijing—The year 2025 marks the 50th anniversary of diplomatic relations between China and the European Union (EU). At a time when global economic growth is slowing and the return of Donald Trump to the White House has heightened instability and uncertainty, China and the EU—as two of the world’s largest economies—can offer stability and certainty for inclusive global economic growth through strengthened cooperation.

China and the EU are each other’s key economic and trade partners. According to China’s customs, the total import and export of goods between China and the EU in 2024 was $785.8 billion, up 0.4 percent year on year, of which China’s exports to the EU amounted to $516.4 billion, up 3 percent year on year.

The EU is China’s third largest export destination and second largest import source, while China remains the EU’s largest import source and third largest export destination, according to European statistics.

In terms of investment cooperation, two-way investment flows between China and the EU have continued to grow in recent years, demonstrating good momentum. Between 2020 and 2023, EU foreign direct investment (FDI) flows to China rose from $5.69 billion to $10.58 billion, while China’s FDI inflows to the EU grew from 6.27 billion euros in 2020 to 8.06 billion euros in 2023, with greenfield investment reaching 5.3 billion euros in 2023—an increase of 48 percent compared to 2022.

The development of both China and the EU requires stronger cooperation between the two sides. However, in recent years, the EU has increasingly characterized China as a “competitor” and “systemic rival,” prioritizing security concerns over economic interests and adopting a de-risking approach in its trade and economic relations with China.

Despite this, as an export-oriented economy, the EU’s economic growth remains dependent on access to China’s vast and expanding market. During the European sovereign debt crisis, robust export growth to China and the influx of Chinese capital were instrumental in driving the EU’s economic recovery. According to statistics from both China and Europe, bilateral trade supports employment for around 3 million people in the EU and 6 million people in China.

Mutual investments between the two sides have boosted profits for European companies and supported the development of green industries in Europe. Thanks to this cooperation, by 2024, half of Volkswagen’s sales, one-third of BMW’s sales, and 36 percent of Mercedes-Benz’s global sales were generated from China.

Global economic growth requires cooperation between China and Europe. Amid escalating geopolitical tensions and structural challenges such as an aging population, weak investment, and declining total factory productivity, global economic growth has struggled to find sufficient endogenous impetus in recent years.

According to the International Monetary Fund, the global economy was expected to grow by just 3.2 percent in 2024, marking the lowest growth rate since 2021. According to the World Trade Organization, while global trade has seen a year-on-year growth of 2.7 percent, an improvement over the 1.1 percent decline in 2023, it has fluctuated between growth and decline in recent years, with increasing fragmentation. The role it once played as a key engine of economic growth before the 2008 global financial crisis has significantly diminished.

Together, China and the EU account for more than a third of the global economy. In 2023, China’s economy grew by 5.2 percent year on year, while the EU’s economy expanded by 0.4 percent. Together, they contributed 1.1 percentage points to global growth, accounting for 33 percent of the total. The combined contribution of China and the EU to global economic growth and trade development is expected to become even more significant.

Maintaining a healthy, stable, and predictable global trading environment is in the interest of both parties—and the vast majority of economies worldwide. In response to the US “tariff stick,” China and the EU have a shared responsibility to explore ways to maintain normal international trade exchanges while balancing the development of their respective industries. They must fully leverage their respective internal market strengths to spearhead global trade, investment, technological cooperation, and rulemaking in green and low-carbon sectors. As two major economies, this is not only their responsibility but also essential to their shared development. China Daily/Asia News Network

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Yao Ling is director of the European Institute at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce. Xia Chuanxin is an associate researcher with the same institute.

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