Redistributing the EU-China economic relationship: the role of domestic change in China

As the importance of China in the global economy has grown, changes in its domestic economy have increasing impact in the EU. However, a key factor is no longer the simple fact of China’s rise, but that its economy is undergoing rapid change through structural transition. Many scholars argue that the interaction of political and economic dimensions is a significant factor in the distribution of economic benefits of the EU’s relations with China among Member States. However, underlying these bilateral aspects of the relationship are domestic economic policies and structures both in the EU and China. In the future, domestic policy in China will have a greater effect in determining the structure of the bilateral economic relationship. These domestic policy dimensions outweigh any direct political intervention in the bilateral relationship. The increasing complexity resulting from structural change in China is likely to create redistribution in the relationship with the EU, notably among Member States. This “new normal” stage in China’s rise will create new winners and losers in the EU, with differentiated interests.