Europe New Journey-Coordinated Development

China: Although the EU’s trade with China declined in January 2024 China remains the EU’s second largest trading partner. Between January and July 2024 EU imports from China increased by 8.8 percent  while EU exports to China increased by 3.9 percent.

The United States: The United States remains the EU’s largest trading partner. From January to July 2024 EU exports to the United States increased by 8.5 percent while imports fell by 10.6 percent.

Geopolitical tensions, such as the Russia-Ukraine conflict, have created a lot of uncertainty in the trading environment for European markets. The conflict has pushed up energy and agricultural prices, straining global supply chains. In addition, inflationary pressures and interest rate volatility also pose severe challenges to the trading environment in Europe. Inflation raises costs, dampening demand from businesses and consumers, while higher interest rates increase financing costs and make European companies less competitive.

Global logistics delays and rising freight rates continue to have a negative impact on imports and exports in the European market. Many European companies’ supply chains have been hit hard by post-pandemic disruptions and shipping delays. Longer lead times stagnant production and less competitive markets. The continued rise in freight rates has further pushed up companies’ production costs forcing them to look for alternative supply chains and shipping methods.

Trade relations between the United States and the European Union are fraught with uncertainty. Under Trump he has adopted a series of protectionist policies imposing steel and aluminum tariffs on the European Union and threatening to impose high tariffs on cars imported from the EU. The move sparked a trade dispute between the United States and Europe which has been strained by retaliatory tariffs imposed on each other.

Export-oriented countries such as Italy, for example, have been disproportionately affected by Mr. Trump’s trade policies towards the European Union. Italy has been running a trade surplus with the U.S., with exports dominated by food, machinery and luxury goods. The imposition of large-scale tariffs means that it is more difficult for Italian products to enter the US market, reducing the choice for consumers and raising prices, which has a negative impact on the long-term development of enterprises.

The dollar strengthened as news emerged that Mr. Trump had secured victory. Analysts said Mr. Trump’s planned tariffs would have a “strong dollar” result through trade and monetary policy. Higher tariffs would lead the EU to lower its exchange rate to make its exports more competitive, while tariff revenue could be used to finance U.S. fiscal expansion, supporting the dollar. If Mr. Trump takes office, he will impose tariffs on major trading partners, including a 60 percent tariff on imports from China and a 10-20 percent tariff on imports from other countries. This would be particularly bad for export-oriented Asian economies, while also putting significant pressure on the EU.

Brexit has had a significant impact on its trade with the EU. First at the economic level Brexit has led to increased volatility in the pound exchange rate. The depreciation of the pound makes the cost of British imports higher and the price of British exports is relatively low in the international market. This has had an impact on the UK’s trade balance.

Second there have been major changes in trade policy. Prior to Brexit as a member of the EU  the UK followed the EU’s unified trade policy and rules. After Brexit the UK needs to reset its independent trade policy and conduct separate trade negotiations with each country. This process is fraught with uncertainty and complexity increasing trade costs and risks.

From the perspective of trade relations, the trade relations between the UK and the EU have been directly affected. The previous model of frictionless trade has been broken, and the two sides need to re-establish new trade relations and rules. For example, in terms of tariffs, some goods between the UK and the EU may face new tariff barriers, which weakens the convenience and competitiveness of trade between the two sides. In order to show the impact of Brexit on international trade more clearly, there are comparison tables that show that the UK has changed significantly in terms of trade policies, tariffs, trade rules and trade convenience after Brexit.

In addition, Brexit has had an indirect impact on the pattern of global trade. Other countries also need to reassess and adjust their trade strategies to the new situation when trading with the UK and the EU. At the same time, this has also affected investor confidence to a certain extent, leading to increased uncertainty in international capital flows. In terms of industry, Britain’s automobile, financial services and other industries have been hit hard. The automotive industry relies on supply chains and markets within the EU, and Brexit has disrupted supply chains and made market access more difficult. The financial services industry faces new regulatory and compliance requirements in cross-border business, customer service and other aspects.

China’s position in EU trade has been rising in recent years. Data show that from January to September 2024, the bilateral import and export volume of goods between China and Europe was 918.303 billion US dollars, an increase of 5.834 billion US dollars or 0.8% compared with the same period last year. From January to September 2024, the total value of China’s exports to Europe was 545.948 billion US dollars, an increase of 7.405 billion US dollars or 1.6% compared with the same period last year. The total value of China’s imports from Europe was $372.355 billion, down $1.572 billion or 0.5% from the same period last year. From January to September 2024, the trade balance between China and Europe was US $173.593 billion, and the trade balance between China and Europe in September 2024 was US $2.280,700.

China and the EU are highly complementary in economy and trade. The EU exports aircraft automobiles electronic components and chemical products to China while China exports electronic products household appliances textiles and raw materials to the EU. Close trade cooperation has greatly promoted bilateral economic development and achieved mutual benefit and win-win results.

Asian countries such as Japan South Korea and India also play an important role in EU trade. 2020 the top five trading partners of the EU and ASEM are China  Russia  Japan  South Korea and India  accounting for 45%  13%  8%  7% and 5% of the total trade volume between the EU and ASEM countries respectively. China’s share of the total increased by 10 percentage points in 2010  while Russia  Japan and India’s share declined over the same period.

In terms of trade data South Korea trade with the EU is also growing. The trade volume between the EU and Asian countries and regions has increased significantly in recent years and South Korea has also played an important role in the growth of trade.

India’s trade with the EU also has a certain scale. In 2020 India will account for 5% of the total trade between the EU and ASEM countries. With the development of India’s economy its trade with the EU is expected to further strengthen.

The EU’s decision to impose tariffs on Chinese electric vehicles has drawn widespread attention. French media reported that the European Union voted to impose tariffs on Chinese electric vehicles, with 10 countries voting in favor, including France and Italy, 5 countries voting against, such as Germany and Hungary, and 12 countries abstaining. The decision drew mixed reactions within Europe. German Economy Minister Robert Habeck said earlier in Berlin that he did not favor countervailing duties for fear of subsequent disputes. Hungary’s foreign minister, Mr. Scijardo, also confirmed that his country rejected the commission’s proposal to impose tariffs on Chinese electric cars, calling the plan “harmful and dangerous.” Spanish Prime Minister Pedro Sanchez also said the EU should reconsider its planned tariffs on Chinese electric cars. ​

German auto makers such as BMW and Mercedes-Benz have voiced their opposition. BMW said the EU’s tariffs on Chinese electric vehicles were “absolutely unfeasible” and would not help European car companies improve their competitiveness. On the contrary, they could hurt their global operations. Mercedes also called the imposition of anti-subsidy duties on Chinese electric cars a “mistake” that would harm the competitiveness of the entire industry in the long term, and called on the European Union to delay the implementation of the policy and open talks with China to reach a mutually beneficial solution. ​

In response to the EU’s tariffs, China has taken a series of countermeasures. China has launched an anti-subsidy investigation into dairy imports from the European Union. On July 29, 2024, the Ministry of Commerce received the countervailing investigation application formally submitted by China Dairy Industry Association and China Dairy Industry Association on behalf of the domestic dairy industry, and decided to initiate countervailing investigation on the import of relevant dairy products originating from the EU starting from August 21, 2024. ​

The subsidy investigation period determined by this investigation is from April 1, 2023 to March 31, 2024, and the industrial injury investigation period is from January 1, 2020 to March 31, 2024. The scope of the investigated products is imported related dairy products originating in the European Union, involving fresh cheese, processed cheese, blue cheese, etc. In the application submitted, the applicant claimed that the EU and its member state governments provided a total of 20 subsidy projects to the EU related dairy industry. ​

After the news broke, the EU dairy industry widely expressed concern. Mr. Drennan, chairman of the Irish Dairy Suppliers Association, warned the EU that ICMSA would “demand” compensation from the EU for dairy farmers if the trade dispute did affect Ireland’s trade with China in milk powder and butter. Germany is the EU’s biggest producer of milk, butter and cheese and the bloc’s biggest exporter of dairy products to China. The German dairy industry Association, which represents the country’s dairy industry, said cheese and cream products, could be particularly affected. The French national dairy industry association responded that France was part of an investigation into subsidy programs under the EU’s Common Agricultural Policy. ​

Analysts said alternative dairy products could be affected by higher tariffs this time around. At present  with the rise of China’s national economic strength  the domestic demand for dairy products is also on the rise  and the consumption capacity has been enhanced. EU member states have seen the importance of the Chinese market. If there is indeed import substitution from other countries it will worry the relevant exporters in the EU.

The EU signed a “historic” trade deal with Kenya on December 18. The economic partnership agreement will give Kenyan goods tariff-free and quota-free access to the EU market and Kenya will gradually reduce tariffs on EU goods.

The agreement is significant for both sides. For Kenya, the agreement allows its exporters to make long-term plans based on tariff-free, quota-free access to quality export markets, signaling to the world that Kenya is ready to produce and export quality goods to Europe and globally. At the heart of the deal are tangible benefits for people – for example, according to the Kenyan government, the EU27 accounts for more than 20 percent of Kenya’s exports, mainly vegetables, fruits, tea and coffee. Kenya’s bilateral trade with the EU market totaled 3.3 billion euros in 2022, up 27 percent since 2018. ​

For the EU after the agreement comes into effect the EU market will be fully opened to Kenyan products  deepen trade relations  enhance economic resilience  and open a new chapter in the strong relationship between the two sides.

However, the EU’s move is also seen as “competition” with China. Since the Russia-Ukraine conflict, Africa has become a “new diplomatic battlefield” in the eyes of Western countries, where the EU is trying to “compete” with China and Russia. As one of the leading economies in East Africa, Kenya is seen as a stable and reliable partner. In February, the EU announced it would invest hundreds of millions of dollars more in Kenya through its “Global Gateway” initiative. The EU’s “Global Gateway” plan is clearly intended to counter China’s Belt and Road Initiative, but it has made little progress in implementing concrete projects.

The EU-Chile Association Agreement signed in 2002 has been further updated and improved. The interim trade agreement will open up more opportunities for businesses and consumers on both sides and promote increased trade and investment. At the same time, the two sides will strengthen cooperation in sustainable development and jointly tackle climate change and other global challenges. The agreement covers a variety of areas, including trade in goods, trade in services, investment, and intellectual property rights, providing a broader framework for economic cooperation between the two sides. The signing of this agreement marks a new stage in trade relations between the EU and Chile, which is expected to bring greater economic and social benefits to both sides.

Characteristics of the western european electronic commerce market:

Western Europe is the most developed e-commerce market in Europe, with 83% of consumers shopping online on e-commerce platforms. Its advantage lies in the high Internet penetration rate, such as 94.84% in northern Europe, which provides a good foundation for the development of e-commerce. At the same time, Western European consumers have strong consumption ability and high consumption willingness, and their demand for various commodities is relatively diversified, which provides a broad market space for e-commerce enterprises. However, the Western European e-commerce market also faces some challenges. On the one hand, the competition is fierce, and many e-commerce platforms and traditional retailers are involved in online business, resulting in a high degree of market saturation. On the other hand, consumers have strict requirements on commodity quality and service, and e-commerce enterprises need to continuously improve their own operation level and service quality to meet the needs of consumers. In addition, the laws and regulations of Western European countries are relatively perfect, which puts forward higher requirements for the compliance operation of e-commerce enterprises.

E-commerce Growth Potential in Eastern Europe:

Eastern Europe has seen the fastest growth in e-commerce due to several factors. First  the total population of Eastern Europe is more than 0.3 billion. Although its per capita GDP is relatively low  its large population base and high price sensitivity provide huge market potential for e-commerce. For example  in Ukraine  despite its low per capita GDP  e-commerce is growing faster due to its relatively large population (about 42 million people) and high demand for low-priced goods. Secondly  the Internet penetration rate in Eastern Europe has reached more than 70% in 2020. Although there is still a gap with Western Europe  it has reached the level of about 2017 in China  providing technical support for the development of e-commerce. In addition  logistics in Eastern Europe is developing rapidly. Although the economic level is relatively backward  outsourcing third-party logistics has a long historical tradition  and the history of some logistics providers can even be traced back to the Middle Ages. In addition  the local light industry and manufacturing industry in Eastern Europe are underdeveloped  and a large number of products with low prices need to be imported from abroad  which provides opportunities for e-commerce enterprises in China and other countries. Eastern European residents prefer cross-border e-commerce platforms such as AliExpress  eBay and Amazon  and the market is dominated by Russian  AliExpress ranking first among the most popular platforms. The number of mobile Internet users has nearly doubled in the past two years  providing a new channel for the development of e-commerce.The Eastern European e-commerce market is also constantly introducing new technologies for online sales  such as actively testing cutting-edge technologies such as VR/AR  Tatbota  and virtual assistants  bringing users a new shopping experience.

There are several main reasons for the strong demand for electronic products in Europe under the pandemic. Firstly, the popularity of remote working and online education has led to a significant increase in the demand for electronic products such as laptops and tablets. As the pandemic drags on, many businesses and schools are embracing remote working and online teaching, requiring employees and students to have functioning electronics. According to statistics, laptop sales in Europe increased by 30% year on year in 2020. Secondly, the increasing demand for entertainment is also driving the sales of electronics. While quarantined at home, people are relying more on electronics for entertainment, such as watching movies and playing games. Smart phones, smart TVS and other electronic products have become an important tool for people to spend time. In addition, European consumers have a strong demand for upgrading electronic products. With the continuous progress of science and technology, the performance and functions of electronic products continue to improve, and consumers are more inclined to buy new electronic products. For example, new mobile phones from Apple, Samsung and other brands have been warmly received by consumers as soon as they are launched in the European market.

Auto parts products in the European market face the challenges and opportunities brought by the professional requirements. On the one hand  the European market has high requirements for the quality and safety of auto parts products. As the birthplace of the automobile industry  consumers in Europe have strict standards for the quality of auto parts. For example  Germany’s quality inspection of auto parts is very strict  and only products that meet high standards can enter the market. This requires auto parts companies to continuously improve product quality and strengthen technology research and development to meet the needs of the European market. According to data from the General Administration of Customs compiled by the China Association of Automobile Manufacturers  from January to November 2023  the export value of auto parts was 90.54 billion billion U.S. dollars  an increase of 7.6 percent year-on-year. Among them  auto parts exported to the European market invested a lot in quality control. cost. On the other hand  with the development of electric vehicles and smart cars  auto parts products have also ushered in new opportunities. The European Parliament has passed a law banning the sale of new petrol and diesel cars within the EU in 2035  which will accelerate the transition to electric vehicles. Auto parts companies need to actively invest in new technologies and research and development of parts suitable for electric and smart cars  such as batteries  motors  and electronic control systems. At the same time  the popularity of smart cars will also promote the development of auto parts products in the direction of intelligence  such as smart sensors and automatic driving assistance systems.In addition  the aging phenomenon of the European auto market also provides market opportunities for auto parts companies.

Western Europe is the most developed e-commerce market in Europe, with 83% of consumers shopping online on e-commerce platforms. Its advantage lies in the high Internet penetration rate, such as 94.84% in northern Europe, which provides a good foundation for the development of e-commerce. At the same time, Western European consumers have strong consumption ability and high consumption willingness, and their demand for various commodities is relatively diversified, which provides a broad market space for e-commerce enterprises. However, the Western European e-commerce market also faces some challenges. On the one hand, the competition is fierce, and many e-commerce platforms and traditional retailers are involved in online business, resulting in a high degree of market saturation. On the other hand, consumers have strict requirements on commodity quality and service, and e-commerce enterprises need to continuously improve their own operation level and service quality to meet the needs of consumers. In addition, the laws and regulations of Western European countries are relatively perfect, which puts forward higher requirements for the compliance operation of e-commerce enterprises.

Eastern Europe has seen the fastest growth in e-commerce due to several factors. First  the total population of Eastern Europe is more than 0.3 billion. Although its per capita GDP is relatively low  its large population base and high price sensitivity provide huge market potential for e-commerce. For example  in Ukraine  despite its low per capita GDP  e-commerce is growing faster due to its relatively large population (about 42 million people) and high demand for low-priced goods. Secondly  the Internet penetration rate in Eastern Europe has reached more than 70% in 2020. Although there is still a gap with Western Europe  it has reached the level of about 2017 in China  providing technical support for the development of e-commerce. In addition  logistics in Eastern Europe is developing rapidly. Although the economic level is relatively backward  outsourcing third-party logistics has a long historical tradition  and the history of some logistics providers can even be traced back to the Middle Ages. In addition  the local light industry and manufacturing industry in Eastern Europe are underdeveloped  and a large number of products with low prices need to be imported from abroad  which provides opportunities for e-commerce enterprises in China and other countries. Eastern European residents prefer cross-border e-commerce platforms such as AliExpress  eBay and Amazon  and the market is dominated by Russian  AliExpress ranking first among the most popular platforms. The number of mobile Internet users has nearly doubled in the past two years  providing a new channel for the development of e-commerce.The Eastern European e-commerce market is also constantly introducing new technologies for online sales  such as actively testing cutting-edge technologies such as VR/AR  Tatbota  and virtual assistants  bringing users a new shopping experience.

There are several main reasons for the strong demand for electronic products in Europe under the pandemic. Firstly, the popularity of remote working and online education has led to a significant increase in the demand for electronic products such as laptops and tablets. As the pandemic drags on, many businesses and schools are embracing remote working and online teaching, requiring employees and students to have functioning electronics. According to statistics, laptop sales in Europe increased by 30% year on year in 2020. Secondly, the increasing demand for entertainment is also driving the sales of electronics. While quarantined at home, people are relying more on electronics for entertainment, such as watching movies and playing games. Smart phones, smart TVS and other electronic products have become an important tool for people to spend time. In addition, European consumers have a strong demand for upgrading electronic products. With the continuous progress of science and technology, the performance and functions of electronic products continue to improve, and consumers are more inclined to buy new electronic products. For example, new mobile phones from Apple, Samsung and other brands have been warmly received by consumers as soon as they are launched in the European market.

Auto parts products in the European market face the challenges and opportunities brought by the professional requirements. On the one hand  the European market has high requirements for the quality and safety of auto parts products. As the birthplace of the automobile industry  consumers in Europe have strict standards for the quality of auto parts. For example  Germany’s quality inspection of auto parts is very strict  and only products that meet high standards can enter the market. This requires auto parts companies to continuously improve product quality and strengthen technology research and development to meet the needs of the European market. According to data from the General Administration of Customs compiled by the China Association of Automobile Manufacturers  from January to November 2023  the export value of auto parts was 90.54 billion billion U.S. dollars  an increase of 7.6 percent year-on-year. Among them  auto parts exported to the European market invested a lot in quality control. cost. On the other hand  with the development of electric vehicles and smart cars  auto parts products have also ushered in new opportunities. The European Parliament has passed a law banning the sale of new petrol and diesel cars within the EU in 2035  which will accelerate the transition to electric vehicles. Auto parts companies need to actively invest in new technologies and research and development of parts suitable for electric and smart cars  such as batteries  motors  and electronic control systems. At the same time  the popularity of smart cars will also promote the development of auto parts products in the direction of intelligence  such as smart sensors and automatic driving assistance systems.In addition  the aging phenomenon of the European auto market also provides market opportunities for auto parts companies.

The pandemic has given a significant boost to online payments in Europe. According to a survey report by the German Association of Information Technology, Telecommunications and New Media, more than three-quarters of respondents used contactless payment between September and November 2020, with smartphones and smartwatches taking their place in the payment field, and 39% of respondents used smart devices to make payments during this period. Similar to Germany, France has seen rapid growth in digital payments. In France, the frequency and amount of withdrawals from banks fell sharply during the lockdown, while the proportion of digital payments rose, with 60% of card payments made contactless in April, up 15% from a year earlier. In addition, several countries in Europe raised the limit on contactless payments from €30 to €50. In addition to cards, smartphone-based electronic wallets have become a popular method of payment for young people, such as Orange Pay, launched by France Telecom, which has seen a 20% increase in transactions since the last week of March.

Multiple payment methods facilitate trade, but they also pose some challenges. On the one hand, the diversification of payment methods provides more convenience for trade and meets the needs of different consumers. More than a fifth of French consumers prefer credit cards for online payments, for example, and three-quarters of UK buyers prefer ecommerce platforms with multiple payment options. Consumers are wary about the security of their online payment details, which is also prompting payment service providers to continuously improve their security safeguards. On the other hand, multiple payment methods pose some challenges. There are differences in fees and settlement cycles of different payment methods, which may increase merchants’ operating costs. In addition, for some traditional merchants or small businesses, adapting to multiple payment methods may require investing a certain amount of time and resources in technology upgrading and training. At the same time, although digital payments are developing rapidly in Europe, it may take some time for some elderly groups or consumers who are used to using cash to adjust to the new payment methods. In Europe, where the population is aging, changes in payment habits will not happen overnight and cash payments will not disappear in the short term. However, with the gradual change of people’s payment habits, the transformation from traditional finance to digital payment will become a trend, which also brings new opportunities and challenges to the development of trade.

By Yiqi Wen