EU, China leaders seal long-awaited investment deal

BRUSSELS (AP) — Top European Union (EU) officials and Chinese President Xi Jinping concluded a business investment deal on Wednesday that will open big opportunities to European companies, but has the potential to irk the new American administration.

Amid concerns about the human rights situation in China, the EU said the seven-year-long negotiations were concluded “in principle” during a videoconference involving Xi, European Commission President Ursula von der Leyen and EU Council President Charles Michel.

German Chancellor Angela Merkel — whose country holds the rotating presidency of the EU — and French President Emmanuel Macron also took part in the discussions with the Chinese president, the EU said.

“We are open for business but we are attached to reciprocity, level playing field and values,” von der Leyen said.

The videoconference launched a ratification process that will take several months as the text of the agreement still needs to be legally reviewed and translated before it is approved by the EU Council.

“The EU has traditionally been much more open than China to foreign investment,” the EU said. “This is true as regards foreign investment in general. China now commits to open up to the EU in a number of key sectors.”

According to EU figures, China is now the bloc’s second-biggest trading partner behind the United States, and the EU is China’s biggest trading partner. China and Europe trade on average over EUR1 billion a day.

Xi said China and the EU “rose to the challenge” despite the impact of the coronavirus pandemic, the official Xinhua News Agency said. Xi said the agreement will provide greater market access and “brighter cooperation prospects”.

China is crucially important to Germany, where companies like BMW, Daimler and Volkswagen make a large share of their profits in the world’s largest car market.

The Director General of the Federation of German Industries Joachim Lang said the agreement was “a significant step” but added that “what is decisive is rather how the Chinese government in fact implements these improvements and if the planned implementation mechanisms take effect”.

The 27-nation bloc said the agreement is the most ambitious that China has ever agreed with a third country and will give additional access to many areas including the electric cars and hybrid vehicles sector, as well as private hospitals, telecoms, cloud and financial services, international maritime transport and air transport-related services.

But it has the potential to cause tension with the administration of US President-elect Joe Biden only weeks after the EU proposed a trans-Atlantic dialogue to address “the strategic challenge presented by China’s growing international assertiveness”.