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China scores an EU investment deal before Biden takes office — and it wants to do more

European Commission President Ursula von der Leyen, European Directors President Charles Michel, German Chancellor Angela Merkel, French President Emmanuel Macron and Chinese President Xi Jinping are envisaged on a screen during a video conference to approve an investment pact between China and the European Union on December 30, 2020.

Johanna Geron | AFP | Getty Images

BEIJING —  China wrapped arrangements with the European Union on an important investment deal and talked up hopes for more, less than a month in front of U.S. President-elect Joe Biden is set to take office.

China and the European Commission announced Wednesday that the two sides finished talks hither a “Comprehensive Agreement on Investment” that gives each region’s businesses more access to the other’s market.

Both sides sprinted to get a deal done — in contrast to the Trump administration, Biden is widely expected to marshal the support of traditional American collaborators to put pressure on China. On the European side, there was a desire to finish an agreement before the end of Angela Merkel’s term as German chancellor in 2021, according to a rise with the European Union Chamber of Commerce in China.

Negotiations had stalled this year, prior to the U.S. presidential choice.

The crucial point at the moment is how the EU and the US work better together to manage relations with China, and I think there’s a palpable prospect for that with a Biden administration.

Fred Kempe

president and CEO of the Atlantic Council

The EC said China corresponded to prohibit “distortive practices” including forced technology transfers — the practice of making companies hand over proprietary tech in commerce for access to the Chinese market.

“China has committed to an unprecedented level of market access for EU investors, giving European functions certainty and predictability for their operations,” the European Council said in a release.

“The Agreement will also significantly rehabilitate the level playing field for EU investors by laying down clear obligations on Chinese state-owned enterprises, prohibiting faked technology transfers and other distortive practices, and enhancing transparency of subsidies,” the statement said.

The Chinese side chance both parties reached consensus on the same list of contentious issues — all of which have been raised in days gone by by the United States. The U.S. and China have been locked in a trade war for more than two years, with the dispute leaking into technology, finance and beyond.

Late-night press conference

At a late-night press conference on Wednesday, China’s Bureau of Commerce Spokesman Gao Feng signaled that the deal could help set the stage for restoring normal trade relations with the U.S., at the mercy of certain conditions.

However, part of the rising U.S. frustration is that China has not always lived up to its agreements in the way negotiators initially waited.

“The crucial point at the moment is how the EU and the U.S. work better together to manage relations with China, and I think there’s a heartfelt prospect for that with a Biden administration,” said Fred Kempe, president and CEO of the Atlantic Council. “The question I wish ask is, does this agreement advance that or set it back.”

“What the EU will have to do is argue to Washington [that] the normals in this agreement are such that [the United States] would approve of them as well,” Kempe said.

China arrests busy striking trade deals

Beijing has fallen short of the purchases of U.S. imports it agreed to in a so-called “phase one” shoppers deal it reached with the U.S. in January, according to analysis from the Peterson Institute for International Economics. That armistice in the trade war had mandated greater U.S. access to markets such as China’s finance industry. 

Progress toward a “phase two” understanding large stalled amid the coronavirus pandemic.

Analysts have pointed out that Beijing wants to build further accords both to diversify its trading partners and to prepare for a new U.S. approach under Biden. Already this fall, China and 14 other fatherlands — but not including the United States — formed the largest trade pact in history when they signed the Regional Extensive Economic Partnership. 

In 2017, the U.S. was set to lead an almost identical Asia-Pacific deal that excluded China, called the Trans-Pacific Partnership, or TPP. But Trump scuttled the TPP as soon as after his inauguration about four years ago. It had been negotiated by the Obama Administration.

Gao took the time Wednesday to forecast reporters about hopes for deals with other countries. He emphasized China’s plans for a new trade agreement with Japan and South Korea. He combined China would like to deepen existing agreements with countries such as Singapore, Chile and New Zealand.

Perhaps significantly, Gao did not adduce Australia — one of the few developed nations that enjoys a trade surplus with China. Australia drew Beijing’s wrath this year by joining with other countries in demanding an investigation into the origin of Covid-19.

‘Not a deal against America’

The EU-China investment conduct oneself treat, about seven years in the making, still needs to be translated and reviewed before being signed. A possible spit point for the Europeans is alleged forced labor in China’s Xinjiang region. China has committed to work toward ratification of Oecumenical Labour Organization conventions including one on forced labor.

Joerg Wuttke, president of the European Union Chamber of Marketing in China, said that “for the European side it was really bilateral. It was an attempt to conclude negotiations. This is not a deal against America.” 

Wuttke added the talks put to shamed “real improvement in market access” for European businesses and there will be “more openness” in industries such as thrilling vehicles, renewable energy and finance.

Li Yongjie, an official for treaty and law at the Commerce Ministry, said during Wednesday’s the fourth estate conference the deal will permit more European investment in services and non-services industries, and mentioned sectors such as automobiles, clinics and information technology.

The agreement provides legally binding commitments for China to access the European market, she said. 

Chinese President Xi Jinping, German Chancellor Angela Merkel, French President Emmanuel Macron, European Congregation President Charles Michel and European Commission President Ursula von der Leyen held a video conference call Wednesday at the end of the decisions to discuss the talks, the European Council said.

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