Study on the Agricultural Products Trade between China and EU
Name: ZhaoYaowen Student ID：S07330
Research paper supervisor:Dr.Seku Conde
Minzu University of China
2007-2008 Academic Year
Abstract：This thesis firstly introduce the current trade status between China and EU, then state the current status of agricultural products trade between them. Besides, according to illustrating the China and EU’s agricultural products markets respectively it analyse the potentials of agricultural products trade between China and EU. Finally, it analyze the obstacles of agricultural products trade between them and give some recommendations.
Key words: agricultural products trade, potentials, obstacles, recommendations
1. Introduction
Europe is one of the leading agricultural production areas in the world and is also a significant net exporter of many commodities such as pig meat, poultry, cereals, dairy products, wine, and spirits. Concerning on the consumption level in the past 20 years and EU’s economic development, to improve the quality of people's lives the consumption of agricultural products grow rapidly, the demanding for varieties of agricultural products also increased rapidly and need of the quality of agricultural products is become much higher. It provides great opportunities for agricultural products trade with China. On the other hand, China is fast becoming one of the world’s largest food markets. Its increasing population, combined with rapid economic growth and urbanization, are bringing about profound changes in demand for agricultural products as well as in the country’s ability to meet this demand through domestic agricultural industries. Overall food consumption in China is rising and there are marked changes in the composition of diets.
Considering the situation above, it is important to study the agricultural products trade relations between China and EU.
2. The current trade status between China and EU
China-EU trade relations have developed significantly while the economic changes were taking place in both China and the EU. Their development process can be roughly divided into three phases: the initial phase (1949-1974), the legalization phase (1975-1989) and the promotion phase (1991-present).[①] At the initial phase a number of EU member states, like the Italy, Belgium, Germany and Luxembourg, established diplomatic relationships with China during the early 1970s. The trade during this phase was based only on a China-EU member state level. The second development stage is the legalization phase. At this phase bilateral legal mechanism was built on the China-EU level. There were three major legal developments during this period regulating the China-EU trade relations. [②]The first legal development was the establishment of China-EU diplomatic relationship in 1975. The second was the adoption of the China-EC Trade Agreement in 1978, which was the basis for developing China-EU trade relations at the EU level. The third legal development was the update of China-EC Trade Agreement and implementing the China-EC Economic Co-operation Agreement in 1985, which enlarged the cooperation between China and the EU.[③] All the above-mentioned legal developments provided both sides with a legal basis for their trade relation. The promotion phase has been in effect since 1991. China-EU bilateral trade relations have entered a new era resulting in both sides seeking to develop their relations constructively and consider their economic relations strategically.[④]
Regarding the total trade volume, China-EU trade can be divided into three distinct periods (See table 1). During the first period, which ended in 1985, the total amount of import and export lingered under 10 billion US dollars. From 1985 to 1992, the trade amount gradually increased and exceeded 10 billion US dollars. After 1993, the pace accelerated. The total trade in the period between 1993 and 2003 increased dramatically.
Table 1: China’s trade with the EU: 1975-2003
(Unit: USD billions)
Source: collected from Chinese statistics bureau and China’s Customs statistics
In terms of import and export, the bilateral trade has experienced three stages from 1975 to 1996. Before 1984, China’s trade with the EU was balanced, and the gap of import and export was narrow. After 1984, the growth of trade achieved an unfavorable balance, reaching a peak in deficit trading of $6 billion in 1989. The trade deficit with the EU remained roughly $2 billion during 1990 and 1995, and reached zero in 1996. The trade deficit changed in 1997 with a trade surplus around $4.7 billion, and the tendency toward a trade surplus remains as a concern for the EU.
According to the data from table 1, I formed an EU-China trade tendency chart (Graph 1) below. From this graph one notices there are three turning points from 1975 to 2003. The growth of China-EU trade in the period between 1975 and 1988 is flat. The primary reason for this is that the EU was involved in its internal affairs, such as the negotiations on EMU and the other preparations for the Maastricht Treaty in 1992. At the same time, the recovery from the impact of the Chinese Culture Revolution, which started in 1966 and ended in 1976, causing great damage to the Chinese economy, absorbed much of the energy of China. As a result the development of China-EU trade was sluggish during this period. The year 1986 shows the first peak in trading. By comparing with the figure in 1985, the growth rate was 39%. The trade growth in 1986 can be attributed to the enlargement of the EU. Trade between China and the EU was suspended in 1989. This was caused by the outbreak of the Tian Anmeng issue, which led the EU to freeze relations with China and adopt a series of sanctions on China. As a result, China-EU trade decline steeply from 1990 and reached the lowest point in 1991. The EU resumed relationships with China in 1992 and bilateral trade dollars increased. In 1995, because of the third enlargement of the EU, the total trade volume reached another peak. The continuous increase since 1996 is reflected in the readjustments in policies from the EU side, notably the adoptions of EU policy paper on ‘A Long-term Policy for China-Europe Relations’ in 1995 and on ‘Building a Comprehensive Partnership with China’ in 1998.[⑤]
Graph 1: EU-China trade tendency
From the data and analysis stated above, it is clear that the trend-line of China-EU trade is upwards. With the upcoming of the EU’s fifth enlargement and China’s accession into the WTO that will lead further reforms in economics and politics, it is reasonable to forecast that the prospect of China-EU trade is positive.
3.The current status of agricultural products trade between China and EU
The EU-25 trade in agricultural products with China has risen steadily since 2001. Latest figures [⑥]show that agricultural imports from China rose from € 2.9 billion in 2001 to € 3.4 billion in 2005 accounting for 2.2% of total imports from China in 2005. Exports in EU agricultural products to China also rose during that period with € 963 million in 2001 rising to € 1.5 billion in 2005 accounting for 2.8% of all exports to China in 2005. Though gaining in share of total trade, a trade deficit of € 1.9 billion still remained. Among total imports from China, agricultural products rank fifth in importance and they are the sixth most important goods exported to China. Overall, after the US, China has become the EU's second largest source of imports and the fourth most important export destination after the US, Switzerland and Russia.[⑦] More than 90% of the agricultural trade with China used to be concentrated in raw products. It is interesting to note that the share of raw materials in EU exports is declining fast, and that value added goods are showing a high growth rate as China’s buying power increases. The EU agricultural trade balance with China has been fluctuating but has been traditionally characterised by a trade deficit.
The EU is a China's important agricultural export market. 2001-2005, exports of China’s agricultural products to the EU-25 countries, largely maintain a steady increasing trend (Except for 2002) from the absolute number. The percentage of China's exports of agricultural products to EU-25 countries account for the average of 11%, and has been slightly increased by present situation. From the figures(Table 1) by contrast, the Chinese agricultural products exports to increase faster than the total agricultural products exports of China in the same time last year. The EU-25 markets’s importance for Chinese agricultural exports is growing. However, China’s agricultural products exports to EU-25 countries only accounted for a very small proportion of the total exports and have a declining trend. In 2004 this ratio was 2.42 percent, 2.41 percent for 2005 .In addition, among the exports products to EU-25 countries, the growth rate of agricultural products lower than the growth rate of total exports. The exports of agricultural products are also living in the back seat.
Table2: The statistics of China's exports of agricultural products to EU-15 countries among 2001-2005
year
total amounts of exports
(thousand dollor)
increaing exports the same period last year(%)
the ratio of EU
account for(%)
the ratio of agricultural products
account for(%)
total exports to EU-15 the same period last year(%)
total export of china's agri-products the same period last year(%)
2001
1,967,167
12.3
2002
1,766,874
-10.2
9.8
12.8
2003
2,306,804
30.6
10.9
17.9
2004
2,594,846
12.5
11.2
2.42
36.9
8.7
2005
3,464,602
33.5
12.7
2.41
34.1
17.7
Source: www .stats.gov.cn
The EU-25 countries is a important source market of China's imports of agricultural products ,see (Table 2). In 2004, the EU-25 countries accounted for 5.5 per cent and accounting for 7 percent in 2005. In [...]
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