Economic Competitiveness of the EU in the Light of Growing Trade Essay

Economic Competitiveness of the EU in the Light of Growing Trade Expansion from China - Essay Example The study will try to understand the competitiveness by taking into consideration of the emergence of China. However, it is not possible to consider all the above mentioned aspects in accordance to their merit due to space restriction. This can be referred as the major limitation of this report. Trade Deficit between EU and China International trade between EU and China has been increased in last decade, for example, export of EU to China has been increased by 110 billion euro during the year 2000 to 2011 (Eurostat, 2012). However, import from China to EU has been increased by 173 billion euro in the same period of time (Eurostat, 2012). The trend is showing that balance of trade is declining for EU and dependency on Chinese export is increasing. Export and import deficit of EU in context to China can be depicted in the following manner. (Source: Eurostat, 2012) Although the trade deficit between for EU has been decreased from 75 billion euro to 67 billion euro in the first six month of 2012 but still the amount of deficit is large enough to impact the competitiveness of EU. After the economic recession, the trade deficit between EU and China has been improving but still the difference is large enough to affect the economic strength of EU nations. According to the above table only Germany and Finland have trade surplus to china while other European countries have trade deficit with China. However, Germany and Finland were unable to convert the trade deficit into trade surplus prior to recession. Careful analysis of the chart shows that growth rate of export from EU nations to China has been outpaced the growth rate of import from China. For example, export volume of Greece to Chine has been doubled... This essay presents a modern comprehensive analysis of the changing nature of economic relationships between China and European Union. It is shown in the essay, that China gradually improve its level of competitiveness in these relationships, by increasing its exports to the EU, to an extent with the help of such practices as protectionism, intellectual property rights violation and dumping. International trade between EU and China has been increased in last decade, for example, export of EU to China has been increased by 110 billion euro during the year 2000 to 2011. However, import from China to EU has been increased by 173 billion euro. The trend is showing that balance of trade is declining for EU and dependency on Chinese export is increasing. Although the trade deficit between for EU has been decreased from 75 billion euro to 67 billion euro in the first six month of 2012 but the amount of deficit is large enough to impact the competitiveness of EU. After the economic recession, the trade deficit between EU and China has been improving Harsh fact is that there cannot be a single recommendation which can help EU nations to improve its competitiveness in overnight manner. It is shown through that low cost advantage of China cannot be depleted easily by EU manufacturers. EU can use the concept of vertical specialisation to decrease its dependency on Chinese imports and give the domestic players some breathing space. In vertical specialisation model, EU needs to identify sectors which need immediate attention.