China and the EU need each other now more than ever, Feng Zhongping, Director of the Institute of European Studies, China Institutes of Contemporary International Relations, told the Global Times, a daily newspaper. He said that disputes and conflicts arose because of their different interests. Previously, Europe believed China's development offered a big market. Nowadays, some European countries, competing with China at the age of economic globalization, consider China's development as a kind of threat. "But their need of each other means that the bilateral relationship will develop despite small and short-term challenges," he said. Feng said that while European countries can realize economic benefits through communication, they hope to influence China through this communication and make China move in the direction that the EU countries would like to see.

Currently, China and the EU are working on negotiations to sign a Partnership and Cooperation Agreement (PCA), which is expected to replace the 1985 China-European Community Trade and Cooperation Agreement and serves as the new framework document that guides the bilateral relationship, especially in the political and economic aspects. "The new PCA will set the tone for the partnership and cooperation between the two sides in the coming 10 to 20 years," Zhao predicted.

Same direction

In recent years, the trade and economic cooperation between China and the EU has developed rapidly. The EU is now China's top trade partner and biggest technology exporter, and China is the EU's second biggest trade partner and fourth biggest importer. "The bilateral trade volumes are impressive and are increasing every year by 20-25 percent," said Barroso on April 25.

EU companies' investment to China totaled nearly $54 billion, with almost 27,000 EU companies setting up their plants in China. Chen Deming, Minister of Commerce, published an article on April 25 in the British newspaper Financial Times and confirmed that China and the EU, as two big world markets, have had a significant input into each other's economic development.

Trade imbalance between China and the EU is an issue affecting bilateral trade. Last year, China's trade surplus reached 134.23 billion euro ($208.49 billion), which triggered dissatisfaction among the EU members. Moreover, the two sides have disputes on EU antidumping policies against Chinese products. However, Chinese observers believed that the bilateral cooperation, which is benefiting both sides, would develop in many areas, such as in environment protection and research on clean and renewable energy, in the future.

In his article, the minister of commerce pointed out that in 2007, China imported $110 billion from the EU, up 22.4 percent from the year before. The import growth rate from the EU was 6 percent higher than the import growth rates from Japan and the United States. During the first quarter of 2008, China imported nearly $30 billion from the EU, increasing 25.6 percent, which actually created about more than 2.2 million job opportunities to the EU, said Chen. Now export volume to China is the fastest growth of all EU total export volume.

Zhao from the CASS said that although the EU claimed that 93 percent of its trade deficit was from China, it did not understand that over 60 percent of its trade deficit with China was created through Sino-EU joint ventures. "Actually, most of the profits of these joint ventures go to the EU," he said, adding, "The trade surplus problem is a pseudo-problem."

Zhao said that government purchase is a good method to balance current trade surplus. As the international tradition shows, the precondition of big-scale government purchases is maintaining harmonious political relations between them.

Zhao Yumin, an expert from the Ministry of Commerce, pointed out that due to the complementary trade, the trade surplus did not impact EU industrial structure.

Besides, as the EU has the advantage in researching advanced technologies of clean energy and improving energy efficiency, exporting technologies to the Chinese market in these areas would bring the EU big benefits, he added.

Bilateral Trade Figures

Bilateral trade volume in 2007: $356.2 billion, increasing 27 percent over the previous year;

Bilateral trade volume in the first quarter of 2008: $93.9 billion, increasing 24.7 percent over the same period in 2007