New economic data has confirmed that China has supplanted the United States to become Europe's top trading partner. This is the first time that the Middle Kingdom has beaten out the U.S. for the lead trade position.
According to CNBC, European Union exports to China grew by 2.2 percent last year while imports rose by 5.6 percent. Economists have claimed that E.U. exports grew because of strong demand in China for general European goods; meanwhile, imports were dominated by Chinese medical goods.
In comparison, Europe-based exports to the United States dropped by 8.2 percent and imports fell by a staggering 13.2 percent.
Much of the reason behind the change in trading relations has been blamed on the novel coronavirus. The COVID-19 crisis has had a dire effect on both businesses and production. Though China was the first nation to undergo a lockdown to stop the spread of the disease, similar quarantine measures have been implemented more widely in the West.
In the U.S., gross domestic product shrank at an annual rate of 32.9 percent in the second quarter, which is more than three times the previous record for sharpest economic contraction, per NPR.
"Horrific," said Nariman Behravesh, chief economist at IHS Markit, at the time. "We've never seen anything quite like it."
In addition, China has been able to open up and recover, while the rest of the world has struggled to recuperate.
"The reason behind it is clearly the fact that China/Asia is the only region going through a nice V-shaped recovery," Carsten Brzeski, economist at ING Germany, told CNBC.
The Chinese ascendency in trade will also likely lead to ramifications in foreign policy.
"Looking ahead, the importance China has for European trade is also a clear dilemma," Brzeski said, adding that "Europe will have a hard time making choices" between trading with China and keeping strong relations with the U.S.
The E.U. already reached a deal with the Middle Kingdom in January that made it easier for Europe-based firms to operate in Beijing.
"The current crisis gives us no other option but to work hand in hand with our global partners, including China," noted Europe's trade chief, Valdis Dombrovskis on the deal.
"By pulling together we can recover more quickly economically, and make progress on areas of mutual interest such as trade and investment relations," he said in a statement.
Meanwhile, panic has gripped Hong Kong after a new proposed law would stop anyone -- resident or not -- from leaving the city as part of the mainland's continued security campaign, per The Inquisitr.