EU and China Reach Comprehensive Agreement on Investments

The EU and China completed the bilateral Comprehensive Agreement on Investments (CAI) on December 30.  The agreement, which has been negotiated for the last seven years, is seen as a success of the German rotating chairmanship of the EU and contains several concessions by China on European investments in automotive, private health, environment, services, and finance. Although all details are not yet known, it has been reported by EU sources that among other things, European companies can invest in China without being forced to do it in a joint-venture form, and without compulsory technology transfer. Since the EU has jurisdiction over trade but not over investments, the deal must be signed by the parliaments of all EU members.

But the deal is also seen as a political success for Chinese President Xi Jinping, who succeeded in having a bilateral deal with the EU without the latter consulting or following the US.

In a comment for AGI newswire, former Italian government official and China expert Michele Geraci welcomed the deal, but remarked that it looks as if it is tailored more for large corporations than for SMEs. Geraci also is curious to see what the US reaction will be, whether they will protest as they did when Italy signed the Belt and Road MoU, now that the EU has signed a deal that goes further than that.

The deal is rather an advantage for everybody, including the USA, as it establishes a new benchmark for foreign investments in China, Geraci said. “Even if we do not know all details, it must be said that the main merit of this agreement is that it will help to bring China on western standards, especially regarding their policies of access to the market and respect for intellectual property.”

As to the USA, “Washington must understand that the agreement offers a support base for new agreements with China on a silver plate, because it brings China closer to western levels. Any agreement made between the EU and China, or USA and China, is beneficial both for Europe and America.”

President Xi Jinping meets with 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 on December 30. During the meeting, Xi and the European leaders announced that the two sides have completed investment agreement negotiations as scheduled.

The negotiations on this agreement began in October 2013, one month after President Xi had announced the Silk Road Economic Belt project in Kazakhstan. It has taken years of negotiation to bring it about. “The balanced, high-quality and mutually beneficial deal demonstrates China’s resolve and confidence to promote high-level opening-up,” Xi said in the video conference. “It will promote the recovery of the world economy in the post-pandemic era, facilitate global trade and economy, boost the international community’s confidence toward economic globalization and free trade, and make important contributions to building an open world economy.”

President Xi observed that 2020 had been an extraordinary year for China, Europe and the world with the outbreak of COVID-19 and “great changes unseen in a century.” “China and Europe have overcome difficulties and made fruitful achievements in strengthening bilateral relation. China and Europe, as two major forces, two large markets and two ancient civilizations, should assume their responsibilities and be proactive in promoting peace and progress,” he said.


Related stories:

Watch the BRIX webinar on EU-China relations, including a presentation by Mr. Geraci.

Read the key elements of the agreement here!