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China and the EU are close to securing an investment agreement. Photo: Reuters

China-EU investment deal will not be a panacea for troubled relationship, observers say

  • While an agreement looks imminent, ‘it remains to be seen how China addresses the EU’s many long-standing concerns’, academic says
  • By agreeing to an investment deal with China, the EU is ‘showing Washington it must do more to draw Brussels into its camp’, researcher says
China’s relationship with the European Union is set to get a much-needed boost as the two sides close in on a long-awaited investment deal, but even that is unlikely to lead to a softening of Brussels’ stance on Beijing, observers say.

According to people with knowledge of the talks, the comprehensive investment agreement, which has been seven years in the making, has won widespread but conditional backing from most EU member states.

The European Commission (EC), which is in charge of the talks, has secured breakthroughs, with China agreeing to further open up its markets to European firms, and has also demanded Beijing make a commitment to ending the use of forced labour, the sources said.

Pang Zhongying, a professor of international affairs at the Ocean University of China, said: “While the EU is keen to see progress in the trade talks with China in a bid to offset the losses as a result of Brexit, it would mean a lot for China too.”

The coronavirus pandemic has brought the tensions between China and major Western powers into the open, with Beijing’s increasingly assertive diplomacy, its unfair trade practices and repressive domestic policies coming under tighter international scrutiny.

China’s traditionally trade-driven relations with the EU have also worsened after the EC last year referred to Beijing as a systemic rival for the first time.

China loses its lustre among Europeans but doors remain open: survey

“But it remains to be seen how China addresses the many long-standing concerns the EU has voiced over the years and what major concessions Beijing may make to ensure a deal is reached,” Pang said.

According to the sources, China has made concessions on sectors like financial services, manufacturing and property. In return, China secured the EU’s agreement to open up its renewable energy sector to Chinese investment, a clause that drew opposition from some Eastern European member states like Poland and Lithuania that rely on US support to deter the threat from Russia.

Jiang Feng, a European affairs professor at Shanghai International Studies University, said the China-EU negotiations showed the importance of making compromises, adding that the deal would benefit the world economy.

“Admit it or not, it’s an era of globalisation. Opening up is the guarantee for China’s and the EU’s development,” he said.

Analysts have long argued that many of the conciliatory steps requested by the United States and the EU are in China’s long-term interests to help address its domestic socioeconomic and political woes.

EU agrees ‘in principle’ to an investment agreement with China

Song Luzheng, a research associate at Fudan University’s China Institute, said the agreement of an investment deal gave hope for closer cooperation between China and Europe, which would in turn be a positive development for global geopolitics.

“By agreeing to an investment deal with China, the EU is showing Washington that it needs to do more to draw Brussels into its camp, while China is showing the US that China can rise up to the challenge from the US by stabilising ties with the EU,” he said.

But Pang said the significance of the deal should not be overstated, especially in terms of its impact on EU-China relations or EU-US relations when Joe Biden takes over as president.

“To a large extent, the challenges and uncertainties confronting EU-China relations are similar to those facing US-China relations,” he said.

“It’s important to note that despite its less confrontational approach on China compared to the Trump administration, the EU has nonetheless put China under tight investment scrutiny over the past four years.”

The investment agreement was unlikely to narrow the gap between the two sides on geostrategic, security and value-related issues, like human rights, he said.

“Pending details of the deal and how it could be implemented, it’s still too early to say whether it represents a substantial step to jointly address outstanding issues and concerns, or is just another symbolic move by the two sides to show their outlook for the future,” he said.

This article appeared in the South China Morning Post print edition as: China-EU investment deal ‘unlikely’ to resolve troubled relationship