China-Euroean Unio Economic Ties In The Works

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On December 30/2020 China and the European Union wrapped up seven years of negotiations, resulting in the bilateral Comprehensive Agreement on Investment. A Happy New Year’s gift for both sides. The announcement was made during a meeting between Chinese President Xi Jinping and German Chancellor Angela Merkel, French President Emmanuel Macron, President of the European Council Charles Michel and President of the European Commission Ursula von der Leyen via video link.

The agreement will give companies from both sides more access to the other’s market. “It is a comprehensive, balanced, and advanced agreement based on high-level international finance and trade rules, Shi Zhiqin, a professor with the School of Social Sciences at Tsinghua University, said. “The pact will break down the barriers for bilateral investment, provide a stable and open business environment to unleash the fullest investment potential.”

Mutual benefits

There lies a huge untapped potential for bilateral investment between China and the European Union. Compared to the overall trade volume, it lags far behind.

In 2019, the European Union became China’s largest trading partner with bilateral trade reaching 559.6 billion euros ($630 billion). In the first nine months of 2020, their import-export volume amounted to 425.5 billion euros ($524.85 billion), according to Eurostat, the European Union’s statistics organization. China overtook the United State to become the Eurpean Union’s largest trading partner and the EU was China’s second largest after the Association of Southeast Asian Nations.

However, in 2018, the European Union’s actual investment, $10.42 billion, accounted for only 7.7 percent of the foreign capital inflow into China. China, in turn, invested $8.11 billion in the bloc that same year. Under the Comprehensive Agreement on Investment., both China and the Eurpean Union are committed to promoting investment liberalization and facilitation, Li Yongjie, Director General of the Department of Treaty and Law of the Ministry of Commerce, said at a press conference in Beijing on December 30, 2020.

The agreement covers areas far beyond traditional bilateral investment agreements, involving market access commitments, rules on fair competition, sustainable development and dispute settlement.

It opts for the management approach of pre-establishment national treatment plus a negative list for foreign investment when it comes to market access. Pre-establishment national treatment means affording foreign investors and their projects treatment no less favorable than that afforded to local businesses and their investment. A negative list specifies the investment areas off-limits to foreigners.

For the first time, China promises to introduce negative lists for all industries, including service and non-service sectors, to align with the negative list-based management system established in accordance with the Foreign Investment Law, Li said, adding that the European Union also promises to grant China fairly high-level market access.

“The conclusion of the agreement shows China’s willingness to share development opportunities and a booming domestic market with the rest of the world,” Shen Yi, an associate professor at Fudan University in Shanghai, said. “Foreign companies’ entry into the Chinese market will also contribute to the country’s high-quality development, and deliver tangible benefits to improve the people’s livelihood.”

China and the European Union will strive to facilitate the early signing of the agreement, which will enter into force after both parties complete their respective legal procedures, Li said.

Greater significance

Amid the coronavirus pandemic and global economic slowdown, the conclusion of the Comprehensive Agreement on Investment. negotiations is an important contribution of China and the European Union to building an open world economy and upholding the multilateral trading system, Li Chenggang, Assistant Minister of Commerce, told Xinhua News Agency.

He said it will help stabilize global industrial and supply chains and promote global economic recovery. China and the European Union working together could refute the tide of anti-globalization and reinforce a free and open world economy, Shi said, adding that the Comprehensive Agreement on Investment. is also a central manifestation of the European Union’s pursuit of strategic autonomy and independence from the United State.

Recently, the United State has escalated its containment of China, requiring the European Union to “choose sides” on issues including 5G technology, international trade and global governance. But the European Union chose to defend its own interests and basic principles and refuses to succumb to external pressures in the Comprehensive Agreement on Investment negotiations, Shi said.

According to Shen, the wedge between the European Union and the United State. is that their relationship model doesn’t fit for the call of the times. The transatlantic relations were strong when the United State. provided security protection and economic opportunities for the European Union. Yet today, the United State. expects to preserve its ties with the European Union in an international system dominated by its hegemony, which veers against the tide of the times.

“In fields such as the economy, finance, science and technology, investment and trade, China and the European Union should create a new mechanism under which they can effectively manage differences through pragmatic negotiations,” Shen said. The Comprehensive Agreement on Investment. is clear proof that this new mechanism exceeds the agreement itself. 

Comprehensive Agreement on Investment. Negotiation Timeline

December 30/2020: Chinese and European leaders announced the conclusion of negotiations as scheduled. April 2019 The 21st China-European Union leaders’ meeting in Brussels, Belgium, pledged to achieve decisive progress necessary to conclude negotiations, more particularly those advancements regarding investment liberalization commitments.

July 2018 During the 20th China-European Union leaders’ meeting, the two sides exchanged their market access offers, agreeing to build an open, transparent, fair, and predictable business environment for potential investors. July 2017 Positive progress was achieved on issues including transparency, domestic policies and special procedures in the 14th round of negotiations in Brussels.

November 30/December 4/2015: Both sides made significant headway with the scope of issues under the agreement and arranged for the drafting of a joint text during the eighth round of negotiations in Brussels. January 2014 The first round of negotiations took place in Beijing, China. November 2013 Start of negotiations for a bilateral investment treaty was announced at the 16th China-European Union leaders’ meeting in Beijing.

(Source: Xinhua News Agency)

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