Ukraine War Negatively Impacts China-EU Trade
Come check out our blog to find out how China's decision to not condemn Russia amidst the Russia-Ukraine conflict will likely affect China's trade with the European Union.
Since invading Ukraine, Russia has been condemned by the EU and faces strict sanctions that have been imposed in five packages of sanctions, including targeted restrictive measures, economic sanctions, and diplomatic measures. China, however, has failed to condemn Russia for the war in Ukraine and continues to see it as its most important strategic partner. This decision has led to strained relations between the EU and China, which has negatively impacted China-EU trade.
Sanctions Imposed on Russia as EU Shows Solidarity with Ukraine
Following Russia’s invasion of Ukraine in February, the EU was quick to respond by imposing five packages of sanctions on the country, including freezing Russia’s central bank assets, phasing out the use of Russian energy, and targeting individuals and companies. In May, further sanctions have been planned but are yet to be put in place by the EU, including the phasing out of reliance on Russian crude oil by the end of the year, the cutting off of three of Russia's state-owned broadcasters from the EU, disconnecting Sberbank, Russia's largest bank, and sanctioning 58 individuals, such as those involved in war crimes in Bucha and the siege of Mariupol.
China Fails to Sanction Russia
China has not reacted in the same way to Russia’s actions in Ukraine, with some fearing that this failure to condemn Russia signifies the start of a new era of dictators. While China has been put under increasing pressure to follow the EU’s lead, it has not made the decision to sanction Russia yet. Ties between the two nations appear strong. Back in February, China joined Russia in opposing further Nato expansion. Recently, there have been claims that Russia has sought out China for both economic and military support, although these claims have been denied.
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The EU’s Relationship with China May Worsen
In recent years, the EU’s relationship with China has not been smooth. A summit was held in March, to pressure China over its response to the Russia-Ukraine war, with the aim of ensuring the neutrality of China, although it seems that China resisted pressure from the West. China’s decision to not sanction Russia will likely worsen this relationship, and will probably have both political and economic consequences.
Experts predict that China-EU trade will be affected in the short term due to China’s stance on Ukraine. In the long-term, it will also be impacted by factors relating to the war, such as disruptions to railway services, logistical issues and supply chain disturbance, as well as problems emerging from energy supply issues.
China is an important trade partner for the EU. In 2021, China was the EU’s third-largest trading partner for exports, accounting for 10.2% of all exports. In the same year, it was also the largest partner for EU imports of goods, accounting for 22.4%. Exports of EU machinery and transport equipment, in particular, rely on China, with €116 billion of goods moving from the EU to China in 2021. Also, in the same year, €12.82 billion worth of food and live animals were exported to China.
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