The bilateral trade imbalances between the EU and China: Structure and trends

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The EU and China are among the largest economies affecting the global economy and each other. The paper aims to determine the structure and trends in the trade relations between the EU and China from the perspective of trade imbalances. Net export index (–29% in 2021) and the difference between export and import growth rates (–9% in 2016-2021) were calculated as the indicators of competitiveness of the economies relative to each other. Correlation coefficients and regression models were used to estimate the effects of several factors on the net export index. The EU has a surplus in services trade with China (21% of the trade), but it does not cover a much larger bilateral merchandise trade deficit (–36%), which exists in most member states. Machinery and vehicles are the most important traded items. The net export index shows that the European Union is more competitive than China in nonfuel minerals, food, vehicles, pharmaceutical products, intellectual property, computer, travel, and sea transport services. The effect of the real exchange rates on the trade imbalances is not robust due to the large difference in regression coefficients for the real exchange rates based on consumer prices and unit labor costs. In recent years, the trade balance was not significantly affected by industrial output growth trends in the EU and China (except for the COVID-19 pandemic crisis when the relative competitiveness of China in its trade with the EU improved at least in the short run).

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    • Table 1. EU merchandise trade with China
    • Table 2. EU services trade with China.
    • Table 3. Structure of the EU merchandise trade with China, 2021
    • Table 4. Structure of EU services trade with China, 2021
    • Table 5. EU merchandise and services trade with China by the member states, 2021
    • Table 6. Correlation between the net export index and its factors
    • Table 7. Regression results for the factors of net export index in bilateral trade
    • Conceptualization
      Athina Ditsiou, Konstantia Darvidou, Evangelos Siskos
    • Data curation
      Athina Ditsiou, Konstantia Darvidou, Evangelos Siskos
    • Formal Analysis
      Athina Ditsiou, Konstantia Darvidou, Evangelos Siskos
    • Investigation
      Athina Ditsiou, Konstantia Darvidou, Evangelos Siskos
    • Methodology
      Athina Ditsiou, Konstantia Darvidou, Evangelos Siskos
    • Project administration
      Athina Ditsiou, Konstantia Darvidou
    • Writing – original draft
      Athina Ditsiou, Konstantia Darvidou, Evangelos Siskos
    • Writing – review & editing
      Athina Ditsiou, Konstantia Darvidou, Evangelos Siskos
    • Resources
      Konstantia Darvidou
    • Supervision
      Evangelos Siskos