China, not the United States, is now Europe’s biggest trading partner for goods

Data released this week by the European Union’s statistics service attributed the shift to a 5.6% increase in imports from China in 2020 and a 2.2% increase in exports. Meanwhile, there was a “significant drop” in trade with the United States, with imports plunging 13.2% and exports falling 8.2%. The overall value of EU-China goods trade last year was €586 billion ($706 billion), about €31 billion ($37 billion) more than between the European Union and the United States.

“The overall transatlantic relationship remains much, much stronger than the one between Europe and China,” Gros said. “It’s much deeper because it has [much] more cross-[border] investment [and] transnational companies in a way you do not have with China.”

Still, Brussels is looking to deepen its economic relationship with China, despite viewing the country as a “strategic competitor” and “systemic rival.”

The European Commission said it laid down “clear obligations on Chinese state-owned enterprises,” which are often heavily subsidized, and established rules against forced technology transfers.

The deal still generated friction with the United States. Jake Sullivan, who is now President Joe Biden’s national security adviser, urged EU leaders to address shared concerns about Beijing with the incoming administration.

Changing trading dynamics could complicate Biden’s efforts to reset relationships with allies and build a global coalition to hold China to account.

Gros, however, said the full text of the EU investment agreement ultimately lacked substance. He advised the Biden administration to look beyond the headlines, and see that the content of the deal, which took seven years to negotiate, changed “very little.”

“Before that agreement, the EU was already open to China, so what concessions could it offer? None,” he said. “So what concessions could you expect China to make?”