China and European Union Likely to Sign Investment Treaty

The European Union and China are likely to sign an investment treaty within this week.

The South China Morning Post reported on Dec. 29 that the European Union and China are likely to sign an investment treaty within this week after the negotiations started in 2014 and European companies will gain unprecedented access to the Chinese market once the treaty is concluded.

The treaty is to facilitate investment in China in relation to requirements applied to joint corporations, foreign investors’ equity caps, and so on. The treaty covers almost every sector, including manufacturing, financial, real estate, environmental service, construction, shipping and aviation.

The biggest hurdle was labor standards such as forced labor prohibition, but China drastically changed its stance in the latest talks. Its concession for a much higher level of market opening is because the United States is strangling China and support from the European Union can be a strategic countermeasure.

However, it is still uncertain whether things will turn out as Chinese wishes. This is because the new U.S. government will increase its pressure on China by restoring its alliance with Europe. “As we compete with China and hold China’s government accountable for its abuses on trade, technology, human rights, and other fronts, our position will be much stronger when we build coalitions of like-minded partners and allies to make common cause with us in defense of our shared interests and values. We are almost 25 percent of the global economy on our own, but together with our democratic partners, we more than double our economic leverage,” President-elect Joe Biden remarked on Dec. 28, implying that those partners and allies include European states.