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What has changed since our ZhōngHuá Mundus series started in 2021?

Publishing date
20 November 2023
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What has changed since our ZhōngHuá Mundus series started in 2021?

Since March 2021, Bruegel has produced monthly podcasts on China and its influence on both Europe and the wider world. Guests from across the globe have joined us to speak on a multitude of topics, which have also served as the basis for Bruegel’s monthly ZhōngHuá Mundus newsletter. This dual approach to covering the main economic factors in China has proven successful, allowing for wide reaching and informative conversations. While I have contributed to the podcast series on topics with a strong focus on Asia, other Bruegel researchers occasionally joined us to discuss topics of relevance to their research and China.

Giuseppe Porcaro – the former Head of Bruegel’s Outreach Governance and HR teams - hosted the podcast series up until October 2023, providing a strong European perspective to the conversation. Giuseppe has left Bruegel, but our ZhōngHuá Mundus project remains intact. Bruegel’s podcast producer and Press officer, Yuyun Zhan, will host me and many other experts from December onwards so stay tuned for a new and revised format to make the conversation even more engaging.

As we look forward to new beginnings, it is a good opportunity to take stock of the past two years and share some key takeaways.

First and foremost, China has grown in importance since ZhōngHuá Mundus began, so the need for analysis on its impact on the world cannot be more compelling. This is not only because China’s economy has grown faster than that of the EU, notwithstanding the terrible 2022 the country had due to huge impact of zero-covid policies on the economy, but also because of China’s increasing focus on strategic competition with the US and its much bigger political influence on the world. China has become central to the EU’s sourcing of strategic goods: from pharmaceutical and PPE supplies during the COVID-19 pandemic to renewables for the EU’s energy transition.

Second, Europe’s economic relations with China have become more asymmetric. While European companies have lost out in terms of Chinese imports (the decrease is measured in double digits over past several months), Europe has stepped up its imports from China, resulting in a sharp increase in the bilateral trade deficit to about €400 billion in 2022. A similar estimate is expected at the end of 2023. China’s value added in exports continues to rise overall, and it has increased its exports to the EU. Meanwhile EU exports are losing value added generally, especially in China.

Third, with the increase in Chinese imports into Europe, the heavy dependence on China for some critical products has led the US to react with a new strategy of derisking as the idea of decoupling seems unfeasible and undesirable.

Fourth, China’s dominance in manufacturing is hurting Europe and this is increasingly noticeable due to the EU’s loss of market share in emerging economies. China’s advantage comes from its innovation and competitiveness, but there is no doubt that industrial policy and heavy subsidies also have a bearing on this outcome. The EU seems to be ready now to use the World Trade Organization to readjust this situation by launching an anti-subsidy investigation for certain products such as electric vehicles and wind turbines.

China’s image in Europe has plummeted because of how its role during the pandemic was perceived, followed by its position on the war in Ukraine. This forced the EU to cling to its transatlantic alliance with the US.

However, all is not lost when it comes to the future of EU-China economic relations. Amid growing global problems that need unified action, such as the war in Ukraine, the Israel-Gaza conflict and climate change, European capitals must realise that China is a key part of the solution for any of those global conflicts given its size and influence in the Global South. The US administration is open to discussions with China, clearly exemplified by the Biden-Xi summit which has just finished. The EU will need to increase its channels of discussion with China to avoid a stalemate in the relations. The EU-China summit in early December should provide a good opportunity for this.

We will continue to analyse the Chinese economy and its global impact as well as EU-China relations, so keep an eye out for exciting developments in the coming months. 

ZhōngHuá Mundus is a newsletter by Bruegel, bringing you monthly analysis of China in the world, as seen from Europe.

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This is an output of China Horizons, Bruegel's contribution in the project Dealing with a resurgent China (DWARC). This project has received funding from the European Union’s HORIZON Research and Innovation Actions under grant agreement No. 101061700.

EU funded project disclaimer

About the authors

  • Alicia García-Herrero

    Alicia García Herrero is a Senior fellow at Bruegel.

    She is the Chief Economist for Asia Pacific at French investment bank Natixis, based in Hong Kong and is an independent Board Member of AGEAS insurance group. Alicia also serves as a non-resident Senior fellow at the East Asian Institute (EAI) of the National University Singapore (NUS). Alicia is also Adjunct Professor at the Hong Kong University of Science and Technology (HKUST). Finally, Alicia is a Member of the Council of the Focused Ultrasound Foundation (FUF), a Member of the Board of the Center for Asia-Pacific Resilience and Innovation (CAPRI), a member of the Council of Advisors on Economic Affairs to the Spanish Government, a member of the Advisory Board of the Berlin-based Mercator Institute for China Studies (MERICS) and an advisor to the Hong Kong Monetary Authority’s research arm (HKIMR).

    In previous years, Alicia held the following positions: Chief Economist for Emerging Markets at Banco Bilbao Vizcaya Argentaria (BBVA), Member of the Asian Research Program at the Bank of International Settlements (BIS), Head of the International Economy Division of the Bank of Spain, Member of the Counsel to the Executive Board of the European Central Bank, Head of Emerging Economies at the Research Department at Banco Santander, and Economist at the International Monetary Fund. As regards her academic career, Alicia has served as visiting Professor at John Hopkins University (SAIS program), China Europe International Business School (CEIBS) and Carlos III University. 

    Alicia holds a PhD in Economics from George Washington University and has published extensively in refereed journals and books (see her publications in ResearchGate, Google Scholar, SSRN or REPEC). Alicia is very active in international media (such as BBC, Bloomberg, CNBC  and CNN) as well as social media (LinkedIn and Twitter). As a recognition of her thought leadership, Alicia was included in the TOP Voices in Economy and Finance by LinkedIn in 2017 and #6 Top Social Media leader by Refinitiv in 2020.

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Dataset

China Economic Database

Repository of what we consider to be the most relevant macroeconomic data for China and EU-China relations.

Alessia Amighini, Alicia García-Herrero, Michal Krystyanczuk, Robin Schindowski and Jianwei Xu