Study On Sion-EU Economic And Trade Relations Under The European Sovereign Debt Crisis

European Union (EU) is currently the biggest economic entity in the world with the huge consumer market, world-class technology and talents in many industries, is currently the biggest economic entity in the world. Since China established diplomatic relation with EU in1975, the economic and trade relations between China and EU have rapidly developed. The trade volume of cargo between China and EU in2008is up to USD425.58billion, which is185times of that in1975. EU has become China’s largest trade partner, primary export market, and the second largest source of import, and vice versa, China has been EU’s second largest trade partner, the largest sources of import, and the second largest export market. With the quick development of investment from EU to China, the FDI flows from EU to China is USD4.99billion in2008, which is28.6times of that in1986, and EU has become China’s second largest source of investment. Although China’s direct investment in EU had a late start, it grew fast and the FDI inflows expanded from USD190million in2005to USD2.97billion in2008, with an annual average growth rate up to35.2%. Evidently Sino-EU economic and trade relation has become the most important part of China’s foreign economic and trade relations. Being of great significance for stimulating EU and China’s economic growth, the development of Sino-EU economic and trade relations can promote communication in capital, technology, and management experience between China and EU.With years of continuous and steady development, Sino-EU economic and trade relations came across a big challenge at the end of2009. In October2009, Greek debt crisis broke out and quickly spread to Ireland, Portugal, Spain, Italy, and Cyprus in a short period and evolved into European sovereign debt crisis. European sovereign debt crisis has not only made the economic development of PIIGS precarious, but also interfered with normal economic order of Euro Zone and even the whole EU. Most EU countries suffered from the economic slowdown and rising unemployment. In what aspects has European debt crisis influenced the development of economic and trade relation between China and EU? How shall we develop Sino-EU economic and trade relations in the context of European debt crisis? How will Sino-EU economic and trade relations show? In view of the above questions, empirical analysis, comparative analysis and other methods are used in the dissertation to carry out systematic research on Sino-EU economic and trade relations in the context of European debt crisis on the basis of reviewing relevant literature. The dissertation consists of the following parts. Chapter1is the introduction of background, significance, main contents and research methods of the dissertation. Domestic and foreign scholars’research status is summarized, and the innovations and defects of the dissertation are put forwarded.Chapter2refers to theoretical review. Classical theories of international trade and international investment are mainly introduced to lay a theoretical foundation for the following research.Chapter3analyzes the development history of Sino-EU economic and trade relations. Their history is divided into4stages since the establishment of New China:development stage before reform and opening up; development stage after reform and opening up and before China’s WTO accession; development stage after China’s joining WTO and before occurrence of European debt crisis; development stage after occurrence of European debt crisis. The development of Sino-EU economic and trade relations in first3stages is mainly reviewed, and a brief analysis is made on economic and trade relations between China and EU’s main members, UK, Germany and France, at each stage.Chapter4analyzes the progress, cause, and influence of European sovereign debt crisis. First of all the European debt crisis is divided into four periods, i.e. outbreak period, diffusion period, deepening period, and alleviation period according to the crisis’s severity, and the development characteristics of each stage are briefly summarized. Then main causes of occurrence of European debt crisis are analyzed from perspectives of internal and external cause. Furthermore, the influence of European debt crisis on EU economy and world economy is also analyzed. As for EU economy, the European debt crisis has two sides. On one hand, the European debt crisis strikes its economic development, and on the other hand it provides a chance for EU to examine its system defects. As for world economy, the European debt crisis intensifies the unrest of world economy, speeds up the reform of international monetary system, and increases the economic risk of emerging economies.Chapter5does deep analysis on Sino-EU trade under the background of European debt crisis. It analyzes development status of goods and services trade between China and EU; international market share and trade competitive index as well as CMS model are used to analyze the competitiveness of products exported from China to EU. Then a conclusion is drawn that the competitiveness of Chinese goods decreases after European debt crisis happened. Main factors which influence the trade between China and EU under the background of European debt crisis are discussed, and finally prediction of Sino-EU trade is made. In the long run there still exists great room in Sino-EU trade, but the uncertainty of EU economy, rise of Chinese labor cost, and other factors also restrain the development of Sino-EU trade.Chapter6mainly analyzes the problems of FDI from EU to China under background of European debt crisis. The current situation of FDI from EU and its members to China is analyzed, and then on the basis of Dunning’s OIL Paradigm, the influence of European debt crisis on direct investment from EU to China is analyzed, and the conclusion is drawn that the European debt crisis weakens EU enterprises’ability to make investment in foreign countries and causes side effect on FDI from EU to China through trade channel. Finally, the trend of investment from EU to China is predicted in aspects of investment scale, regional structure, and industrial structure.Chapter7researches on the FDI from China to EU under the background of European debt crisis. The investment status from China to EU and5important target countries in EU is introduced. After occurrence of European debt crisis, there is fluctuation in the flow of direct investment from China to EU, but the proportion of FDI stock from China to EU keeps rising in China’s FDI stock. In terms of investment structure, China’s investment regions in EU mainly include UK, Germany, France, Luxembourg, Netherlands and Sweden. The industries of investment is scattered, and there is large fluctuation in the investment scale and proportion of each industry. Furthermore, the theory of Investment-induced Factors Portfolio ia taken as the framework to analyze stimulating factors and inhibited factors on FDI from China to EU, and the development trend of Chinese enterprises’investment in EU is also predicted.Chapter8is the summary of previous7chapters, the countermeasures and suggestions for development of Sino-EU economic and trade relations are proposed.The innovation of the dissertation is displayed from three angles:firstly, this dissertation carries out a systematic and comprehensive analysis on Sino-EU economic and trade relation under the background of European debt crisis. Although there are many researches about Sino-EU economic and trade relations in current literature, most of them concentrate on one aspect or another of economic and trade relations. This dissertation attempts to carry out comprehensive research on Sino-EU economic and trade relations, and analyzes economic and trade relations between China and main members of EU as far as possible. Secondly, the researches on trade between China and EU under European debt crisis in existing literature mainly focus on how the crisis influences the trade between China and EU, but lack of the analysis of other factors. Thus in this dissertation a comprehensive analysis is made both on factors influencing the trade between China and EU and the competitiveness of Chinese products in EU market under European debt crisis. Thirdly, the existing literature lacks the research on the FDI from EU to China under European debt crisis. Therefore the trial discussion is made on the influence of European debt crisis on EU’s investment in China from the perspective of investment country, and the development trend of EU’s investment in China in the future is analyzed to make up the existing research.Although a comprehensive and further research on Sino-EU economic and trade relations under the background of European debt crisis is done in the dissertation, there still exists the following defects:(1) In terms of research method, econometric model is not used to analyze trade or investment between China and EU. On one hand, it is due to the author’s limited ability; on the other hand, so far it has been only4years since European debt crisis happened, and there are many factors influencing trade and investment between China and EU, thus it is very difficult to carry out analysis with econometric model.(2) In terms of research contents, imperfection still exists. Due to limited statistical information, an incomplete research on investment status between EU and China, like property of enterprises invested by China, is made. Although it’s not a serious problem, it is regretful the author failed to get collection of accurate data. Moreover, there is a lack of research on relation and mutual investment between Sino-EU trade and Sino-EU, which needs author’s further trial and exploration.