As European leaders prepared to meet on Thursday to discuss, among other topics, the future of EU-China economic relations, the EU’s statistics body Eurostat published a well-timed report warning that the EU’s trade deficit with China reached a record 1 billion euros ($1.16 billion) a day in April. This, the London Guardian reported, was “fueling concerns over the future of Europe’s ‘industrial backbone.’”
China’s Global Times took issue with the argument – and the facts. They explained that the balance of payments between two countries consists of two components: the trade in goods, and the trade in services (tourism, financial sector, etc.) “The fundamental flaw in such a [EU] narrative is that it judges the respective gains and losses of EU-China economic cooperation solely on the basis of the goods trade surplus or deficit—a metric that is neither comprehensive nor objective. According to the Mission of China to the European Union, China’s deficit in services trade with the EU reached $48.3 billion last year. The EU was the largest source of China’s services trade deficit, accounting for 41.6 percent of China’s total external services trade deficit. These are real, sizable, and recurring flows of income. Yet they have long been absent from Western media discussions of `trade imbalances.’”
Ignoring the services part of the balance of trade, they assert, is an “unfair and subjective double standard—one that happens to serve certain political discourse.” Global Times further notes that a large portion – 40% of the total – of Chinese exports to the EU are actually produced by European companies based in China.
