EU, China win approval for investment agreement

BRUSSELS • The European Union and China announced the political approval of a long-sought agreement to open the Chinese market further to EU investors, marking an economic victory for both sides.

The breakthrough in negotiations on an EU-China investment accord signals the bloc's determination to focus on economic opportunities in Asia even amid criticism of Beijing's record on human rights. The accord could take effect in early 2022.

The deal, in the works since 2013, is also a salvo against the "America First" challenge to the multilateral order by US President Donald Trump. The EU has lambasted Mr Trump's confrontational tactics towards China, urging engagement with Beijing in a bid to strengthen global rules.

"This agreement is of major economic significance," the leaders of the bloc's two main institutions, Mr Charles Michel and Dr Ursula von der Leyen, said in a statement yesterday after a video conference with Chinese President Xi Jinping. "China has committed to an unprecedented level of market access for EU investors, giving European businesses certainty and predictability for their operations."

Calling the investment agreement "balanced, high-standard and mutually beneficial", Mr Xi said the treaty has shown China's determination and confidence to push a high-level opening-up.

"The agreement will provide greater market access, higher level of business environment, stronger institutional guarantees and brighter cooperation prospects for mutual investment," Mr Xi said.

The treaty will also greatly boost world economic recovery in the post-pandemic era, enhance the international community's confidence in economic globalisation and free trade, making significant contributions to the building of an open world economy, he added.

Stressing China's commitment to fostering a new development paradigm that will provide more market opportunities and cooperation potential for the EU and the world at large, Mr Xi called on the EU to uphold free trade and multilateralism, and provide an open, fair and non-discriminatory business environment for Chinese investors.

For the 27-nation EU, the pact expands access to the Chinese market for foreign investors in industries ranging from cars to telecommunications. It also tackles underlying Chinese policies deemed by Europe and the United States to be market-distorting: industrial subsidies, state control of enterprises and forced technology transfers.

For China, the accord strengthens Beijing's longstanding call for the start of negotiations on a free-trade pact with the EU, which has insisted on an investment deal first.

China was the EU's second-largest trade partner last year (behind the US), with two-way goods commerce exceeding €1 billion (S$1.6 billion) a day.

BLOOMBERG, XINHUA