Instead of taking sides, Europe should stay neutral between China and the U.S. for its own interests, the Bavarian Industry Association (vbw), a cross-industrial, interest group of German Bavarian industry, said in a recent research.

In addition to remaining neutral, the EU should also make good use of market and technological advantages, so that neither China nor the U.S. can afford to lose Europe as a market or as a scientific research partner, the group said.

The vbw painted a bleak picture for global free trade, saying the 2008 financial crisis fueled anti-globalization, while populist politicians like former U.S. President Donald Trump advocated protectionism. It added that even the EU, which takes pride in building a unified market, is facing instability due to Brexit.

The report anticipated that competition between China and the U.S. will continue to greatly affect international economic and trade relations as both sides are striving to expand their support base.

The vbw noted that Europe is in closer cooperation with the U.S. in scientific research than with China. It illustrated that about 40 percent of patent cooperation between German and EU companies is carried out with companies from Western countries.

From the perspective of ideology and military security, Europe belongs to the Western world led by the U.S. However, relations with its Western allies have continued to cool down this year, and the EU urgently needs China in supporting the multilateral trading system, the report indicated.

It continued that the "Chinese camp" is of great significance to German exports. The export output value stands at 700 billion euros ($831 billion), and is linked to 9 million jobs in Europe. In terms of imports, EU member states are highly dependent on Asian and African countries for raw materials.

The report also touched on consumption power, noting that supported by population growth and China's economic might, the Asia-pacific region will see greater consumption potential than the Western world.