First look: China-EU Comprehensive Agreement of Investment spurs optimism

On 30 December 2020, leaders of China and the EU jointly announced the success of the China-EU Comprehensive Agreement on Investments (CAI) negotiations as scheduled.

It is a milestone for the EU, while China believes it is a balanced, mutually beneficial, win-win investment agreement.

There are two main reasons why many in China view the agreement positively:

• The substantial opening of market access, especially in the fields of manufacturing, communications, aviation, medicine and finance, has broadened the market access for China and the EU in each other’s markets, provided more market opportunities for Europe and the world, created more space for cooperation, and promoted trade liberalization and investment facilitation.

• The market and business environment will be greatly improved, especially in the aspects of level playing fields, transparency, State Owned Enterprises (SOE) subsidies, Intellectual Property Rights (IPR), technology transfer, supervision mechanisms, and dispute settlement mechanisms, as well as the protection of workers’ rights and interests, etc. These have been the main demand of European companies in recent years, and also the focus of China’s reform and opening up.

At present, China-EU trade accounts for 13.9% of China’s global trade volume. It is expected that this agreement will greatly improve the level of mutual investment and trade between China and Europe, and also help to promote the economic recovery of post pandemic.

This agreement, we hope, also provides a reference sample for the second stage of China-US trade agreement negotiation.

China’s President Xi and the European leaders have jointly announced that the two sides should enhance dialogue and mutual trust, deepen cooperation, properly manage differences, and work together to nurture new opportunities and open up new prospects.

For immediate next steps, China and the EU will complete the review and translation of the negotiation texts, which will need to be legally reviewed and translated before they can be submitted for approval by the EU Council and the European Parliament, as well as China’s National People’s Congress.

During this period, China and the EU hope to strengthen cooperation in the following five areas:

• Coordination to fight the pandemic, and ensure the equal distribution of covid-19 vaccines as global public goods
• Co-building global economic recovery by stepping up policy coordination and building an open world economy to bring global industrial and supply chains back on track as soon as possible
• Explore the cooperation in digital field;
• Accelerate cooperation on green development, climate change, biodiversity conservation and sustainable development;
• Promote multilateral cooperation in the UN system and the G20.