However the important question is that under such circumstances how is it possible for Europe and China to gain from engagement at economy level with each other? It is important for China and European Union to analyze their relationship, be they economic or political in light of mutual benefits and other factors which enables both parties to exploit and make the best out of their comparative advantages. In terms of comparative advantages it can be said that China has an edge over European Union in terms of cheap and massive base of labor, presence of low to mid-level manufacturing units spanning across sectors, along with a huge market for European business (Möller 2002). On other hand, EU has an advantage in terms of advanced technologies, superior management resources and overall social structure.
This comparative advantage of both entities can be understood better with an example, like cooperation of EU-China in field of energy production. China’s entire growth model is dependent on the viability of the energy and its efficiency in harnessing alternative source of energy sources as compared to the fossil fuels. Rapid rise in prices of crude oil and other commodity prices will directly impact on sustainability of China’s growth rate. In this regard EU has huge advantage in terms of technology and regulatory experience with regard to efficiency related to energy (Fox & Godement 2009), and other fuel related policies as compared to China. Thus such situation can be an advantage to both parties, as for China it means exposure to cost effective and efficient technologies, whereas for European Union it becomes a huge business opportunity in future. There are several areas where both entities can work together in achieving a stable financial and economic relationship, for example higher education, pharmacy etc.