German Institute MERICS Finds « Critical Dependence » on China in 103 Product Categories

Scientists at the Berlin Mercator Institute for Chinese Studies (MERICS) have concluded that the EU is ‘critically dependent’ on exports from China in 103 product categories, including certain electronics, chemicals and medical products. However, in their opinion, China also cannot do without the EU.

The volume of trade between the EU and China is growing year by year, and for some product categories the EU is quite heavily dependent on Chinese exports – this was the conclusion reached by scientists at the German institute MERICS. They estimate that there are 659 product categories in which the EU is ‘strategically dependent’ on shipments from China, out of a total of 5,600 product categories.

The authors of the report call the situation where EU countries export more than 50% of goods from China as a strategic dependence on China.

The report says that a significant proportion of these categories are consumer electronics and consumer goods in general, so if there is a deficit for any reason, it could affect the retail sector, but would not be critical for the EU.

Critical dependence – « where a restriction on access to this category of goods could undermine a country’s economy or otherwise make it vulnerable » – is recorded in 103 categories in sectors such as electronics, metals and minerals, chemicals, medical products and medicines. These are just a few of the critical products that are mainly exported to the EU from China:

• vitamin B (97.9% of vitamin B is exported from China, while China’s share in the world as a whole is 68.3%),
• manganese (83% and 75%),
• printed circuit boards (63% and 57%).

At the same time, the report stresses that, firstly, the EU’s dependence on Chinese exports should not be overestimated, and secondly, such dependence is mutual. Between 2000 and 2019, trade between the EU and China increased almost eightfold, reaching €560 billion. However, China accounted on average for only 2.4% of EU exports last year. By comparison, exports between European countries account for 67% and those from the USA for 5.7%. Even countries with a relatively high share of exports from China do not exceed 10%. Germany (7.2%) has the highest share, while the UK (which is considered together with the EU countries), Finland, Ireland, Denmark and Sweden (5% to 7%) also have quite high shares.

In general, the report stresses that the European authorities need to make a clear assessment of the EU’s dependence on China in certain product categories and the associated vulnerability to deterioration in relations. At the same time, « EU policy towards China should not be limited to an exaggerated sense of economic vulnerability and should be built on mutual strengths ».

source: merics.org

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