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China-EU Economic and Trade Relations

In recent years, China-EU economic cooperation and trade have been developing rapidly as China deepens its reform and opening-up and its economy continues to grow.

1. Trade. EU is China's third largest trading partner, next to the US and Japan. According to statistics of China's Administration of Customs, trade volume between China and the EU reached US$48.86 billion in 1998, up by 13.6% over 1997, including US$28.14 billion in export, an increase of 18.1% over the corresponding period of the previous year, US$20.71 billion in import, up by 7.9%. From January to July this year, the trade volume stood at US$29.83 billion, up by 16.3%, including US$15.78 billion in export, representing an increase of 1.5% over the corresponding period of last year, US$14.05 billion in import, up by 39%.

2. Direct Investment

In 1998, there were 994 projects involving EU direct investment, with a contractual value of US$5.91 billion and US$ 4 billion actually paid in, up by 39.8% and 3.1% respectively. By June 1999, EU countries had directly invested in a total of 9738 projects with a contractual value of US$38.17 billion and US$19.07 billion paid in, ranking EU the fifth place in terms of countries and regions investing in China.

3. Government Loans

In 1998 EU loans to China amounted to US$1.01 billion in contractual value, accounting for 34% of the total value of loans received by China in the same period of time. By the end of 1998, EU member states and official financial institutions had provided China, on accumulative basis, with US$15.277 billion in contractual government loan, about 36.2% of the total amount of loans extended to China by foreign governments and official financial institutions, more than any other parties.

4. Technology Transfer

The European Union is the largest provider of advanced technology and equipment to China. In 1998, technology transfers from the EU to China amounted to 1,700, involving a contractual value of US$7.53 billion and accounting for 46% of the total value in the corresponding period. By the end of 1998, there had been 8,564 technology transfer from the EU to China, with a total contractual value of US$45.52 billion and accounting for 45.1% of the total value in the corresponding period.

5. Cooperation in Industrial Technology

In 1995, the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) signed with the European Commission Minute of Talks between China and the EU on Industrial Cooperation, in which the two sides agreed to unfold cooperation in aviation, telecommunication, automobile and other fields. In 1996, the MOU between China and the EU on Industrial Cooperation in Aviation was signed. In 1998, the MOU on Industrial Cooperation in Aviation and Telecommunication was signed. In 1997, the Agreement of Cooperation between China and the EU in Automobile Industry entered into force by the exchange of letters, beginning the cooperation between the two in the standardization of production first in the auto sector. In July 1999, the agreement on the Project of Auto Exhaust Control was signed between China and the EU.

6. Development Assistance

Since 1983, China and the European Commission have constantly expanded their cooperation in development assistance in personnel training, economic restructuring, commercial cooperation, environmental protection, agriculture and poverty alleviation. Up till now, nineteen projects have been completed involving 146 million ECU. Eighteen projects are under way involving 124 million ECU. Since 1995, annual development assistance from the European Commission to China amounts to 65 million Euro.

7. Cooperation Framework

In 1985, China and the European Community signed the Agreement between China and the European Community on Trade and Economic Cooperation. The agreement, building on the trade agreement signed in 1978, has further expanded economic cooperation between the two sides. According to this agreement, a China-EU Joint Economic and Trade Committee was established that meets on a regular basis with its level later on elevated from the DG level to the ministerial level, making the committee an important framework for bilateral consultations on trade and cooperation. In June 1998, Minister Shi Guangsheng of Economic Cooperation and Foreign Trade and Vice President Sir Leon Brittan of the European Commission co-chaired the 16th session of the Joint Committee in the Brussels. In November the same year, the two sides signed the sixth agreement on textile products.