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After more than 7 years of negotiations between the EU and China, the new investment agreement was agreed in principle, which is expected to open up the Chinese market to European companies. In writing at least, it fulfills the Chinese companies’ call for fair competition and has attracted considerable market attention.
The agreement promises that Beijing will end mandatory technology transfer and be more transparent about corporate subsidy policies. EU officials said this transaction won the support of all EU leaders, but has yet to vote in the European Parliament. If we want to specify the content of the agreement more specifically, it is more or less the same as the “Phase One” trade agreement signed by the United States and China earlier this year, except that China does not require China to buy agricultural products from the EU. .
Of course, some critics believe that even if this brings short-term trade benefits for the EU, it is not good to further strengthen economic ties with China. The reason China has accepted the EU’s request so quickly is that it hopes to complete the negotiations before the United States joins the EU further, and the EU may need more by then. Now, although it seems that China unilaterally agreed to the EU’s requirements, in reality it has not promised much, and has also divorced the trust of the United States and Europe from each other.
Judging from the negotiating text, Beijing still has some important industries that are unwilling to open up too wide, including the automotive, aviation and healthcare sectors. The competitive environment is obviously still unbalanced. For example, in terms of health care, the EU can only establish fully-owned private hospitals in major cities such as Beijing, Shanghai, Guangzhou, and Shenzhen. Other authorized places can only be realized in the form of joint ventures. However, China allows the EU to conditionally invest in new EV factories, which Germany has been striving for, and it is the biggest gain from this deal.
Given that China has clearly made concessions on some key issues, EU officials are unlikely to reject China’s proposal, even if they know that signing the deal at this point has more international political implications. Especially now that the epidemic is on the rise, the European economy must urgently strengthen. Charles Michel, President of the European Council, said that this investment agreement will balance trade and investment relations between the EU and China, and make European companies more secure and predictable in their operations.
Although the EU also stated that this agreement will not undermine Western coordination. But at present, both German and Chinese officials hope to complete the transaction before the new US President Biden takes office, but it may take several months to approve the deal and there are still variables. It is worth mentioning that during the talks, China opposed the participation of two experts who often criticized China, leading to the cancellation of the meeting. Although it did not ultimately affect the signing of the agreement, it still clouded the dialogue between the two parties.
(Source of the first image: shutterstock)
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