David Cameron's recent call for a free trade deal between the European Union (EU) and China was met with icy scepticism from the EU. David Cameron criticised those who wanted to erect a "bamboo curtain" between China and the EU. However an EU spokesman said in a press conference that any such deal would be "premature."
Here are three reasons why a free trade deal between China and the EU is if anything long overdue.
1. Cheaper goods and more efficient business
A wealth of cheaper goods will become available to consumers in both areas raising living standards. Chinese and European companies being kept on life support by protectionist policies will come to an end, allowing capital and labour to be reallocated to things they are more suited to. There will be new opportunities for job creation in Europe, as a burgeoning Chinese middle class seeks high end European food products and brands. Many member states have already been rapidly increasing their trade with China and some have produced estimates that show the benefits of lifting tariffs.
Exports from the UK to China have increased by 20 per cent in the first three quarters of this year alone. The UK government has estimated that if tariffs were lifted in the 20 sectors where tariffs are the highest, UK exporters would save $1bn (£826m) a year. Europe would not see a mass destruction of its productive industries due to China's lower labour and capital costs as the continent has largely adjusted to these changes.
2. New opportunities for business investment and tourism
Trade liberalisation could lead to greater security and confidence for European investors. Currently just 2.1 per cent of overall EU foreign direct investment (FDI) is in China, this figure could rise markedly should China and the EU embrace free trade. Further easing of tourism could also add billions to European economy with Chinese tourists already representing a significant part of the European luxury goods market.
China is likely to remain a large exporter of capital over the next decade and would benefit from investing surplus savings in Europe.
3. Speed up Chinese reforms
Joining the World Trade Organisation assisted China's programme of domestic reforms, a China EU trade deal could do the same.
China is the EU's second largest trading partner and the largest source of imports while the EU is China's largest trading partner. Bilateral trading between the two was insignificant a few decades ago but is now the largest in the world. In 2012 China was already the EU's most important trading partner with trade estimated at €433.8bn (£358bn).
After the European Union's recent trade deal with Canada and ongoing talks with the United States there is little reason why the EU should shy away from embracing free trade with one of the world's most important economies.