A free trade between China and EU will increase combined GDP by this much

The combined annual gross domestic product (GDP) of China and the European Union (EU) may grow by an additional US$200 billion by 2030, according to a study on the impact of a EU-China free trade agreement.

That would mean a total increment of GDP the size of Portugal, said Christian Ewert, director-general of Foreign Trade Association, a leading business association of European and international commerce that promotes free trade.

China expressed interest to start negotiations on a free trade agreement when President Xi Jinping visited Brussels in March 2014. Analysts say Beijing has since accelerated negotiations as the US-led Trans-Pacific Partnership (TPP) agreement was signed by 12 countries in October and the talks between the US and the EU on a Transatlantic Trade and Investment Partnership have gathered pace.

Ewert’s association last July commissioned the Centre of European Policy Studies, one of the leading think tanks in the region, to conduct a study on the economic impact of a potential EU-China free trade agreement.

READ MORE: It’s the geopolitics, stupid: US-led TPP trade pact less about boosting economies than about containing China’s rise

One important finding is that the additional GDP as a result of the extra trade would be in excess of US$200 billion over the next 15 years, Ewert told the South China Morning Post. “To put US$200 billion in perspective, that is the annual GDP of Portugal.”

Trade and investment relations between the EU and China have shown tremendous dynamism in past decades but a raft of barriers such as tariffs, technical obstacles and “government-driven distortions” remain, said Ewert.