In Europe, the need to reduce dependence on China has been declared many times.
About half of Finland’s mobile phones come from China. China also has an almost monopoly position in the market of many familiar basic medicines.
China could cut the export of its products if it wanted to, or some surprising event could affect the export.
There are also fears that China might use the technology for espionage.
Despite the crisis analyses, the value of imports from China to the EU almost doubled between 2018 and 2022, according to Eurostat statistics.
A large part of the growth is due to the corona pandemic.
– There came a lot of goods that were needed in Europe and the United States during the corona virus, says a senior economist Eva Kerola from the Bank of Finland.
Masks, computers for remote workers and also a lot of household goods were brought from China when people stayed at home. China managed to rapidly increase its foreign trade.
And the numbers haven’t decreased even after the pandemic.
– China’s customs statistics show that the EU’s share of both China’s imports and exports has remained roughly at the same level this year as well, says Kerola.
China is now clearly the world’s largest exporter. The next largest are the United States and Germany. Their combined share is roughly equal to China’s.
China still dominates the rare metals market
The transition of the economy to less polluting production – i.e. the green transition – will benefit China.
The EU has listed 30 critically important earth metals, and 19 of them come from China. They are needed, for example, in the battery industry.
– Plans have been made, the purpose of which is to diversify the procurement of ground metals. For this, we should get tens of billions of euros for new investments, says Kerola.
For example, new mines and production facilities should be opened in Europe, but it is very slow and expensive.
– There are plans and we are certainly working towards them, but the change is not yet visible in the sales figures, says Kerola.
In the United States, imports from China have decreased
In the United States, the direction has been different, as the country has clearly hardened its attitude towards China in recent years. There is an outright trade war going on.
A clear change took place in 2018, when the previous president Donald Trump imposed import tariffs on Chinese goods, and China responded.
According to US trade statistics, China’s share of all imports in the country between 2018 and 2022 dropped from just over 20 percent to 16 percent in value terms.
– The higher the tariffs have been, the more imports from China have decreased, Kerola points out.
However, experts consider it possible that the relationship between the United States and China has not grown as far apart as the statistics suggest. China has been able to move the final assembly of the products to, for example, Vietnam or Thailand, in which case these countries appear in the statistics as countries of origin.
In the car trade, the relationship with China is going strong
The close relationship between China and the EU can be seen, for example, in the car trade. European car manufacturers’ sales in China have started to rise after the Americans left the market, reviews the Financial Times.
On the other hand, a lot of electric cars are imported from China to Europe. The three best-selling electric car brands in Europe last year were Chinese.
Bank of Finland’s Eeva Kerola estimates that car trade between the EU and China may well continue to grow. A large part of China’s investments in Europe last year was specifically related to the electric car industry.
– China is clearly trying to increase cooperation in this field and thereby increase its share of the European car market, he says.
The Netherlands decided on new restrictions on the chip trade
Europe has also seen signs of concrete restrictions on trade with China.
The Netherlands has decided on new sales restrictions, which will come into effect at the beginning of September. A major semiconductor manufacturer ASML must apply for an export permit To China for some of its microchip manufacturing equipment. The company is one of the few equipment manufacturers in the world.
The US pressured ASML to restrict trade with China.
China, on the other hand, has announced that it will limit the export of two key rare metals, gallium and germanium. Minerals are needed in the production of microchips.
According to Eeva Kerola, the world has had time to fill up stocks of earth metals before the export restrictions.
– It may be that as a result of China’s decision, efforts will be made to increase production elsewhere, or to utilize recycling, Kerola estimates.
According to him, there are no signs of EU-level trade restrictions.
The subject can be discussed until 11.08.2023 at 23:00.