EU Increases Trade Deficit with China

While we read a lot about the huge trade deficit that America runs with China it is important to understand that we are not the only one. Other countries also have this problem.

Europe as a whole runs solid trade deficit with China. In some way, this is balanced by an EU surplus with America. However, in many respects, China has a poor trade deficit with a growing trade with China as they look down the road.

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Europe is running a Solid Trade Deficit with China

Reuters reports the European Union trade surplus in goods with the US and its deficit with China increased in the first seven months of 2019. Eurostat, the EU statistics office, reported that the EU’s surplus to the US grows to 100.8 billion dollars in January. July 2019 from 88.6 billion over the same period 2018. During that time the EU trade deficit with China increased to 120.9 billion dollars from 109.2. This happens at a time when trading figures are putting additional pressure on global tensions.

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This gives the importance of buying and selling countries together. If county exports are not focused on products that have a key advantage over time they can detect them. I argue that as part of the EU’s ongoing problem, only a large part of the EU is non-competitive. This means that if it does not strongly accept Chinese consumer goods to stop it becoming flooded in the coming years. As Europe does not sell China much because of “raw goods” there is little to balance this trade.

Simply put, the EU and its calling companies hamper innovation and technology. The most innovative companies based on the number of patents they received in 2017 were IBM, Samsung Electronics, Canon, Intel, LG, Qualcomm, Google, and Microsoft, in that order. Note how European companies are absent from this list. The absence of industrial leadership is the key to the EU companies’ progress. For low-cost production China and other Asian countries also meet them. As a result, Brussels replaced Washington to complain that China needs free trade but is not fair.

The automobile industry is just one example of the EU that has lost its ability to compete. A recent article entitled “European Carmakers Face Perfect Storm” explores how European agents are facing a major crisis. It is being created by automated EU regulators to reduce emissions at a great cost. The EU is implementing emissions caps on cars but starting next year they will be reduced to 95 grams per km. This means that electric vehicle spew will be applied but there is no guarantee that people will want to buy these cars. These cars will be much more expensive to construct, each is estimated to cost more than $ 10,000 more to produce, so as many people do not claim to be a greener option, they guarantee a market for them.

In the coming years it is expected that the EU will continue to fall further afield in many areas. Politico reports that Washington is preparing to announce tariffs on billions of goods from the European Union. This follows a WTO decision which has been in favor of the United States in the case of Airbus. This concludes a perennial transatlantic dispute between the two largest aircraft manufacturers in the world as to whether Airbus has availed of illegal state subsidies. Unfortunately, in the case of America and the EU, the state-owned aviation manufacturer of China’s Commercial Aircraft Corp (COMAC), has been busy developing the C919, which is seen as the Chinese response to Boeing 737 and Airbus. 320.

The C-919 hits the core market of both companies. COMAC is not yet releasing the jet price tag, but according to a report from China National Radio, it is likely to be sold for about $ 43 million. This is much cheaper than Boeing 737 or Airbus 320 costing about $ 80 million $ 100 million respectively. It does not take a rocket scientist to calculate how quickly China can increase production.

This is just the sort of thing that the EU puts in an unpredictable position. The EU will be hit hard if America breaks the existing deficit with the region and the China deficit continues to expand.

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