In 2010， the European economy began to slowly revive， but the increasingly sovereign debt crisis made the process of recovery extremely fragile and full of uncertainty. Despite the challenges and adverse factors， the economic and trade relations between China and the EU still maintained a good momentum， bilateral trade volume was substantially increased and even exceeded precrisis levels. With both China and the EU’ entering into the new phase for economic adjustment， the future is expected to continue to deepen bilateral economic and trade cooperation.Recovering bilateral tradeAccording to the latest data from China Customs， in 2010， bilateral trade volume reached 479.7 billion dollars， an increase of 31.8% year on year. Among them， China exported 311.2 billion dollars to the EU， an increase of 31.8%; China imported 168.5 billion dollars from the EU， an increase of 31.9%. China’s trade surplus was 142.7 billion dollars， up 35.7%， a significant increase. China continues to maintain the EU’s largest source of imports and second largest export market. (See the Table and the Chart.)In the first two months of 2010， the trade volume declined and became a negative growth year-on-year due to the financial crisis. In the second quarter， with the slow recovery of the global economy， bilateral trade was largely and quickly increased， a fast， high rate of growth quarter-on-quarter. In the third quarter， the growth slowed down and decreased to a negative growth in August. In the fourth quarter， trade volume fluctuated greatly and created annual record high of negative growth in October. While in November the trade rebounded sharply， it came down slightly in December.Increasing investment flowIn addition to the rapid recovery in foreign trade， direct investment between China and the EU has been expanding， and investment further widened. In the first ten months of 2010， the EU invested in China for 5.1 billion dollars， European companies’ investment in China extended from traditional manufacturing to service industries， business areas such as mergers and acquisitions and venture capital. At the same time， Chinese companies have also begun to actively invest to Europe. In the first three quarters of 2010， Chinese direct investment in the EU in- creased by more than 5 times. Currently， many Chinese enterprises go to Europe to invest in large-scale projects， for example， China Ocean Shipping (Group) Company invested in Piraeus Greece， China Geely Holding Group Co.， Ltd. acquired Volvo Car Corporation.Challenges aheadHowever， with the further development of the bilateral trade and investment， China-EU economic and trade relations will inevitably face many challenges.First， the Trade Friction. In 2010， the EU had launched anti-dumping investigation or imposed high anti-dumping duties on a variety of Chinese goods. According to Chinese Ministry of Commerce statistics， in the first ten months of 2010， the EU launched 10 cases of trade remedy investigations to China， which is more than the whole year’s cases of 2009. In addition， the EU also continued to break its previous range of trade remedy investigations and the bottom line， launched the first anti-subsidy investigation on Chinese goods (coated)， involving goods from light industry， textiles to electrical， electronics and other high-tech. In 2010， the EU has become the largest member in WTO that set trade remedy investigations to China.Second， Exchange Rate Fluctuation. In 2010， the wide Euro exchange rate fluctuation led to a greater exchange loss to trade enterprises， many enterprises in trade with Europe therefore did not dare to take large， long list. Currently， when the Euro is still unstable because of the impact of the Euro zone sovereign debt crisis， how to effectively trade in the EU to avoid exchange rate risk is the problem before us.Third， the Technical Barrier. The EU has continued to emphasize the environmental and safety standards of goods， Chinese toys， clothing and motor vehicles became the main victims. According to the China Trade Remedy Information Network statistics， from January to August 2010， the EU recalled 338 textile and garment goods， an increase of 117%. Among them， the recall of Chinese goods was 175， an increase of 127%.Fourth， Market Access. In 2010， the EU strengthened the border enforcement on intellectual property rights， restricted the companies of nonopening market countries to participate in its government procurement. On the issue of market access， EU put further pressure on china， which created new troubles to China-EU trade.But overall， the positive factors in China-EU trade are far more than the disadvantages. In particular， the frequent high-level visits between China-EU in 2010 set a more solid foundation for bilateral cooperation and made the mutually most important trading partners relationship strengthened. EU is fully aware of the importance of China’s market in pulling its economy out of crisis and achieving sustainable growth. China supports the EU’s measures to deal with the debt crisis and Euro’s stability and continues to send trade and investment delegations to visit Europe， to expand and deepen cooperation. We have good reason to believe that， with the gradual improvement of the EU’s economy， China-EU trade and investment will also enter into a brighter tomorrow.(Authors: from School of Economics and Business Administration， Beijing Normal University Beijing， P.R.C.)
