Biden News: EU signs investment agreement with China without waiting for Joe Biden

Biden News: EU signs investment agreement with China without waiting for Joe Biden 

 

The pact had been in the works for seven years and, as if Brussels wanted to prevent the dish from burning, it did not even want to wait for the inauguration of the US president-elect, Joe Biden, scheduled for January 20, and yesterday announced the signing of the investment agreement between Europe and China. And all this when the next US president, repeatedly during the presidential campaign, had called for a common position with the Europeans regarding the policy to follow with China!

 

But business has its agenda, and yesterday the two sides gave their go-ahead to an agreement that will boost investment between the EU and the vast Chinese territory. Biden News - Once it enters into force (expected date 2022) and after pending ratifications, it will improve European investors' access to the China market and give them more guarantees to compete on equal terms with local companies, state-owned firms that enjoyed privileges and benefits.

 

The sums at stake are considerable: the investment stock of Europeans (excluding the United Kingdom) in China amounts to about 150 billion Euros, and that of Chinese in the EU, 113 billion Euros.

 

Companies from the Old Continent will be able to enter the Chinese manufacturing sector (which receives more than half of the community investment in the country), including automobiles, as well as in the production of sanitary equipment, transport, or chemicals, among others. Beijing will also facilitate investments in financial services, as well as in environmental services, construction, air transport, or private health.

 

The obligation for Europeans to form joint ventures disappears

A key aspect is that China will eliminate the condition that it imposed until now on European companies to form a joint venture with a Chinese one to enter its market in certain sectors - private hospitals, financial services, or cloud computing. The obligation that European investors had to transfer their technologies to the Chinese also falls, among other measures.

 

On the other side of the scale, China is committed to implementing the Paris Climate Agreement and moving towards the ratification of the ILO conventions that it has not yet signed, particularly those on child and forced labour. In case of conflict between the parties, an arbitration group is also established.

 

The agreement, while representing a historic milestone, is limited in scope because it does not address many outstanding challenges that Europe has with China, such as the issue of public subsidies to industry, excess capacity in the steel and aluminium sector, or public tenders. Mining, energy, and culture will continue to be banned from Europeans.

 

Concerning China that we face, which are many. But it ties China to important commitments in the right direction. More than I have ever accepted before,”said Commission Vice-President Valdis Dombrovskis. Chinese President Xi Jinping, for his part, said that the pact will make an "important contribution" to the construction of an "open world economy" and to promote the recovery after the pandemic.

 

"Most critics say the Chinese segregate the West and display themselves as a global force"

 

However, with this operation, the EU runs the risk of damaging relations with the US (already affected by the commercial controversy as a result of the subsidies from Airbus and Boeing and the successive commercial reprisals). 

Biden News - The incoming Joe Biden Administration has already expressed reservations, at least about the timing of the deal. Jake Sullivan, national security adviser, on December 22 urged "early consultations with our European partners on our common concerns about China's economic practices." But the appeal fell into a vacuum.

 

Theresa Fallon, director of the Centre for Russia Europe Asia Studies, was critical of the deal. "The most important purpose from Beijing's standpoint was to create a gap in transatlantic operations, and Brussels seems to have delivered," he said ironically. Ultimately, apart from dividing the West, China will now sell itself abroad as an economic superpower champion of globalization and economic freedoms. Policies are another matter.