EU Member States Projected to Reach €300 Billion Trade Deficit with China in 2024
Issue 179, Monday 13th January 2025
EU Exports to China: Member States' Performance
China's Trade Balance with the EU in 2024 by Member State
Member State origin/destination is according to China Customs.
EU Imports from China: Volume Up 6.4%, Value Drops 3.1%, Unit Prices Fall 9%
Roughly 2% of the drop in import prices can be linked to the EURO/yuan exchange rate, though this is likely offset by higher freight costs in 2024 compared to 2023. With the product mix remaining largely unchanged, it’s reasonable to conclude that factors like overcapacity and intense domestic competition have pushed Chinese exporters to reduce their prices
EU Exports to U.S. and China: The Gap Widens
Since Xi took the reins, the EU has interacted with three U.S. presidents, during which its exports to China grew three percentage points slower than those to the U.S. The gap is widening.
China Ministry of Commerce Harshly Criticizes EU Regulations
On January 9, China’s Ministry of Commerce (MOFCOM) announced its determination that the EU’s investigative practices under the Foreign Subsidies Regulation (FSR) and its implementing rules constitute trade and investment barriers.
Enacted in 2023, the FSR enables the European Commission to address distortions caused by foreign subsidies, with the Commission serving as its sole enforcer.
MOFCOM contends that the FSR specifically targets Chinese companies. However, a review of the ongoing case database at the time of writing reveals 18 open cases, none involving Chinese companies.
The Recurrent Discrepancies
Frankly, we are struggling to reconcile both sets of data; the categories of medicaments and fuels show major discrepancies.
Following Russia's Invasion of Ukraine, the EU’s Gradual Post-COVID Shift to India as a Key Supplier Drives Four Consecutive Years of Record Trade
Dutch Ports Increase Their Share of EU Cargo from China by Two Percentage Points
Ports in the Netherlands, Germany, Italy, Spain, France, Belgium, and Poland account for 81% of the total cargo from China into the EU. Dutch ports saw an increase of two percentage points in volume through October, offsetting the two-percentage-point decline in cargo received by ports in Germany, Italy, France, and Belgium.
Spain's share of incoming cargo remained stable, while Poland's Baltic ports experienced a 12% increase in volume from China.
Notably, Danish ports saw a year-on-year rise of 27% in cargo from China.
China Surpassed $1 Billion Surplus with Serbia in 2024
Xi Jinping’s first visit to Serbia in 2016 saw him meet with both Tomislav Nikolić, the then-President, and Aleksandar Vučić, who was serving as Prime Minister at the time. Fast forward to 2024, and Xi returned to Serbia to meet Vučić, now President. The 'iron-clad' relationship (as Vučić described it) has paid off for China, with a $1.2 billion trade surplus in 2024.
From a trade perspective, China’s interest in Serbia is primarily driven by copper. Around 85% of China's imports from Serbia consist of copper, either in ores or refined form, aside from the overall trade surplus.
Think Tank Warns: Ongoing EU-Morocco Trade Disputes Could Pave Way for Chinese Influence
On October 4, the Court of Justice of the European Union invalidated EU-Morocco trade deals covering fisheries and agricultural goods. The U.S. think tank cautions that the ruling may drive Rabat closer to China.
Following its usual playbook, China’s trade surplus with Morocco has exceeded 80% of its exports for over a decade, siphoning nearly $40 billion. To sweeten this brutal trade imbalance, China has invested in Morocco’s sectors of strategic interest for China, such as lithium and hydrogen.
Trade in Services Up 7% in 2024; Trade in Goods Rises 2% but Remains Below 2022 Levels
Working harder, competing more, achieving less
The Chinese language is known for expressing powerful ideas with just a few characters, and the term 内卷 (nèi juǎn) appears in over 100 million online comments every day. While Chinese leader denies overcapacity exists, citizens are caught in exhausting cycles of intense competition, with few rewards for their efforts.
The truth is that overcapacity leads to suicidal competition where everyone loses money, and as recently as last month, Han Wenxiu, deputy director of the Office of the Central Financial and Economic Commission, called for stopping the 内卷 madness.
“Fully address the issue of ‘involutionary’ (内卷式) competition”
China Dominates Global Wig Exports as Demand for Escapism Grows
China accounts for 80% of global wig exports, with a small but growing share of production now outsourced to North Korea to reduce costs further. Global demand has more than tripled compared to pre-pandemic levels. It’s tempting to speculate that this surge reflects a growing need for escapism, fueled by activities like costume play and similar pastimes.
China’s GDP Unveiled on January 17, Trump Sworn In on the 20th—And Then China Goes Into Holiday Mode
Researchers generally avoid models with excessive free parameters, preferring simpler models with as few well-known variables as possible. Too many free parameters can make tuning the model chaotic. When China adjusts its GDP growth, it must consider numerous parameters to satisfy the leadership's goals. One of these is controlling the unemployment rate. Whether the reported percentage is accurate, however, is another matter.
In 2024, China produced 11.8 million fresh graduates. China states that each one percentage point of GDP growth creates 2.6 million jobs. The current cohort of young people has 63% college graduates. So, in ballpark figures, to keep the unemployment rate unchanged, China would need a nominal growth of 7.2%.
To view our forecast for China’s GDP in 2024, refer to a previous issue of SOAPBOX: here.