EU and China poised to agree investment pact

The EU and China are close to reaching a long-awaited business investment deal as Brussels seeks to level the playing field for European companies operating in the Chinese market.

During a meeting with national ambassadors in Brussels on Monday, the European Commission reported progress on talks with Beijing, including on the core remaining issue of workers' rights in China. No objections were raised and a formal announcement by the commission that the deal has been reached is expected this week, according to EU diplomats.

“The commission reported on recent positive developments in the negotiations with China including on labour standards,” said one EU diplomat. “Ambassadors broadly welcomed the latest progress in the EU-China talks.”

The EU, which has been racing to meet an end of year deadline for the deal, has seen the talks as a core part of its strategy for managing increasingly tense trade relations with China, which it has identified as an “economic competitor” and a “systemic rival”.

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The pact is designed to remove barriers to investment in China such as joint-venture requirements and caps on foreign equity in certain industries. Sectors set to be covered include manufacturing, financial services, real estate, environmental services, construction, and auxiliary services to support shipping and air transport.

Chinese benefits

For China, the deal is set to lock in existing market-access rights while offering some investment possibilities in renewable energies.

But the agreement is expected to cause frictions with the incoming administration of US president-elect Joe Biden.

The new US administration would "welcome early consultations with our European partners on our common concerns about China's economic practices", Jake Sullivan - who will serve as Mr Biden's national security adviser - tweeted last week.

The deal would come less than a month after the EU published a transatlantic strategy in which it urged the US to work with it to meet the “strategic challenge” posed by China. – Copyright The Financial Times Limited 2020