China hopeful EU investment deal can be ratified despite growing doubts over its future

·3-min read

China says it hopes to see its investment agreement with the European Union ratified soon amid intense speculation that the EU may abandon the deal.

An EU spokeswoman on Tuesday denied reports it had suspended efforts to ratify the deal signed with China but warned the ratification process “cannot be separated from the evolving dynamics of the wider EU-China relationship”.

After the Comprehensive Agreement on Investment (CAI) was signed last year, relations between China and the EU have nosedived over human rights concerns in Xinjiang. In March, the EU joined the United States, Britain and Canada in imposing sanctions on Chinese officials for human rights abuses in Xinjiang. Beijing has retaliated with sanctions on European officials and academics, hitting the chances of the European Parliament ratifying the deal.

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China’s foreign ministry spokesman Wang Wenbin said on Thursday that Beijing wanted to keep up communications with the EU to ensure the deal was ratified as soon as possible.

“The nature of the China-EU Comprehensive Agreement on Investment is mutually beneficial and serves the interest of China, the EU and the world,” Wang said at a regular press conference.

“The Chinese side is willing to maintain communication with the EU side to push for the early ratification of the agreement, so as to benefit the people on both sides and to send a positive signal to the world about China and the EU upholding an open world economy.”

What is the China-EU CAI and how is it different from a trade deal?

Speculation emerged after the French news agency AFP quoted EU trade chief Valdis Dombrovskis as saying in an interview: “We have … for the moment suspended some efforts to raise political awareness on the part of the [European] Commission because it is clear that in the current situation, with the EU sanctions against China and the Chinese counter-sanctions, including against members of the European Parliament, the environment is not conducive to the ratification of the agreement.”

In a written statement, the EU said: “The agreement needs to be now legally reviewed and translated before it can be presented for adoption and ratification. However, the ratification process of the [deal] cannot be separated from the evolving dynamics of the wider EU-China relationship.”

It continued: “In this context, Chinese retaliatory sanctions targeting members of the European Parliament, and an entire parliamentary committee, are unacceptable and regrettable. The prospects for … ratification will depend on how the situation evolves.”

The deal needs to be approved by the parliament but also the EU Council, which is made up of all 27 heads of government, before it can become law.

China hits out as G7 slams Beijing over human rights, backs Taiwan

Also on Thursday, Wang said the EU should not put up new trade barriers. It follows the EU’s proposed new rules – seen as targeting China – preventing subsidised firms devouring strategic European assets.

“The EU … is also a beneficiary of free trade. We hope the EU side can continue to push for trade and investment liberalisation, reduce market barriers, especially avoid creating new barriers, and to provide an open, transparent, and non-discriminatory market environment for Chinese companies in Europe,” he said.

The EU plan was announced on Wednesday alongside an updated industrial policy that was also partly aimed at countering China’s influence on the European economy.

The draft proposals on subsidies, which require approval by the EU’s 27 member states, would make it more difficult for Chinese and other foreign firms to buy EU businesses or assets or bid for public contracts if they recipients of state subsidies.

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