European Union gets better access to Chinese market after key accord

Investment deal, to come into force in 2022, brings 7 years of negotiations to a closure, but risks EU tensions with US

The European Union (EU) and China announced the political approval of a long-sought agreement to open the Chinese market further to EU investors, marking an economic victory for both sides.

The breakthrough in negotiations on an EU-China investment accord signals the bloc’s determination to focus on economic opportunities in Asia even amid criticism of Beijing’s record on human rights. The accord could enter into force in early 2022, according to EU officials.

The deal, in the works since 2013, is also a salvo against the “America First” challenge to the multilateral order by outgoing President Donald Trump. The EU has lambasted Trump’s confrontational tactics toward China, urging engagement with Beijing in a bid to strengthen global rules.

“We are open for business but we are attached to reciprocity, level playing field & values,” European Commission President Ursula von der Leyen said in a post on Twitter on Wednesday. “Today, the EU & China concluded in principle negotiations on an investment agreement.”

Market access

For the 27-nation EU, the pact expands access to the Chinese market for foreign investors in industries ranging from cars to telecommunications. Furthermore, the agreement tackles underlying Chinese policies deemed by Europe and the US to be market-distorting: industrial subsidies, state control of enterprises and forced technology transfers. 

For China, the accord bolsters the country’s claim to be a mainstream geopolitical force and may limit risks resulting from a tougher EU stance on Chinese investments in Europe.