China is going to begin discussing an increased investment with the European Union. This agreement would increase the openness and coordination between the nations as well as increase the investment, which has been holding the trade growth rate back.
Prime minister Li said that trade has increased between the two sides, but there is room for improvement. They could do better by increasing direct investment between the two sides. Europe is the most important trading partner for China. However, they have had many disputes with each other over steel, wine, and solar panels.
Europe sees this new agreement as a test of China’s “willingness to compromise.” China has not been too excited to play by the rules of the World Trade Union, but this agreement requires more cooperation, so it will be a good test.
The beauty of these sorts of deals is the mutually beneficial nature of the treaty. Promoting trade between the EU and China can help stimulate the global economy. I do not know the details about the deal, but Germany, the engine of EU economic growth is highly dependent upon exports to China. Secondly, many analysts have been discussing, since the European Financial Crisis, that the periphery countries need exports to help stimulate their economies. Although most commentators expected this to be the result of a declining Euro value, free trade agreements also have the potential to help stimulate these periphery countries who suffer from stagnant growth or contraction, elevated unemployment, and onerous debt levels.
In my research for my term paper, I learned how significant every deal China has made with the west has been for the world economy as a whole. This will definitely have more advantages for all parties involved than initially bargained for.