China is now the EU’s biggest trading partner, overtaking the US, as volumes of goods grew in both directions, propelled by sustained pandemic demand.
As business with Europe’s major partners fell due to the COVID-19 pandemic, trade with China (import and export) was worth €586bn last year, rising €25bn in 2020, compared with €555bn worth of imports and exports from the US, signifying a fall of €62bn on 2019.
Although China’s economy crashed in the first quarter due to the domestic impact of the Coronavirus, its economic recovery fuelled increased demand for EU goods, while strong and sustained demand for medical equipment and electronics drove Chinese exports to the EU.
This may assist to explain the unprecedented levels of demand on container shipping over the last few quarters and the resulting disruption and challenges that have occurred within the industry, as we have updated consistently on during 2020 and now in the first few months of 2021.
Coupled with latent infrastructure issues within the industry the sustained demand levels have further accentuated the problems that have occurred and the sharp rise in container shipping costs that have been experienced on all major trade lanes globally.
Eurostat, the EU’s statistical office confirmed that China was the main partner for the EU in 2020, with an increase in imports of (+5.6%) and exports (+2.2%). The EU’s trade deficit with China grew over the same period from $199bn to $219bn in 2020.
Conversely trade with the UK and the United States (the EU’s largest export markets) dropped significantly with a reported decline in both EU imports from the US of -13.2% and exports to the US of -8.2%.
It should be noted that the Eurostat report did not include trade in services, which have been growing faster than goods, and the US remains the EU’s top services trade partner.
While final numbers for trade in services are not yet available for the full year of 2020, over the first three quarters trade in services between the EU and the US during that period was €296.3 billion, which is five times more than the trade in services with China.
The estimated value of the EU’s total trade in goods and services for 2020 with China will be in the region of €657 billion in 2020, while the equivalent US trade will be around €950 billion.
The EU and China, meanwhile, have agreed a new investment treaty, which brings seven years of negotiations to a successful close, but risks tensions with the US.
The deal will remove some barriers to EU companies’ hopes of investing in China, and improves access to markets including private healthcare, cloud computing, air transport and car manufacturing, including electric vehicles and hybrids.
For Beijing, the deal will lock in existing market access rights while securing some openings in the areas of manufacturing and renewable energy.
For the US, the investment treaty may create tension with the Biden administration, which has been calling for transatlantic co-operation, to put pressure on China’s perceived unfair economic practices and other important challenges.
Metro’s network extends across Asia and the United States, with many customers – including leading brands and manufacturers – sourcing and having established, and expanding, export markets.
As the fallout of the pandemic on global economies continues to unravel, and will for some time, it is clear that traditional trade lanes and markets will adapt, as has Metro’s strategy and planning, to ensure that we are well positioned to deliver consistent and innovative solutions to our clients.
This includes the European markets, which have seen a huge impact post-Brexit, with the implementation of border controls and new processes. The UK is Europe’s third largest trading partner after China and the USA and a significant contributor to the economy and wealth of The Continent.
Carriers continue to adjust services and schedules, withdrawing and introducing new ones, to accommodate the new world landscape. And we are at the forefront of the industry, in influencing and maintaining the best service offering in the dynamic logistics market, to ensure our customers are best positioned to take advantage of the anticipated post-Covid rebound and new trading relationship with many of the world’s leading economies.
We are here to support our customers supply chains.
To discuss current market developments and intelligence relating to any of these markets please contact Grant Liddell or Ian Barnes.