Research on the Complementarities of the Trade between China and the European Union

Since China and the European Community established their diplomatic relations, their bilateral trade has gone through rapid development. In 2004, the European Union (EU) became China's biggest trading partner as a result of the EU's eastward expansion and China became the EU's second biggest trading partner because of the complementarities of the trade between China and the EU. This paper analyzes the complementarities of the trade between China and the EU on the basis of the theory of comparative advantage and the theory of intra-industry trade by taking advantage of the trade statistics of the last more than ten years and has reached the following conclusions: the trade between China and the EU is very complementarily related and is mainly based on the vertical division of labor among different industries. In addition, the intra-industry trade is getting increasingly important in the trade between China and the EU and the division of labor between them is developing in the horizontal direction with the increase of the competitiveness of Chinese industrial manufactured goods.