Countries around the world are trying to cope with various challenges. According to media reports, the European Union and China are close to reaching a business investment deal. There is a chance that the EU and China will finalize the details this week is important for both sides. For example, it will give the EU better access to the Chinese market and improve competition conditions.
As a reminder, talks on the investment deal began in 2014, but have been stuck for years over a number of issues. However, rising trade tensions between the U.S. and China may have helped changed the Chinese position.
Interestingly, the deal comes less than two weeks after another important agreement. Hopefully, the U.K. and EU reached an agreement on December 24.
Based on the information taken from multiple reports, the deal would open up China’s manufacturing sector to EU companies, as well as construction, advertising, air transport, and telecoms.
People should take into account that one of the sticking points was China’s demands for access to the EU’s energy market. This topic is closely related to national security. The deal is expected to give China access to a small part of the European renewable energy sector on a reciprocal basis.
One of the purposes of this pact is to remove barriers to investment in China. For example, joint-venture requirements and caps on foreign ownership in certain industries. Importantly, the European Parliament must rectify this business investment deal. This process may not begin until the second half of 2021.
Business investment deal and a hard labor
On December 28, the European Commission reported on the talks with China, including the core issue of workers’ rights in China. Unfortunately, this is a contentious issue given reports that China uses Uighur Muslims detained in large numbers in the Xinjiang province as forced labor. However, China denies these claims.
As part of the business investment deal, the EU wants China to pledge to subscribe to the International Labour Organization’s rules on forced labor. Importantly, the deal has the potential to cause frictions with the incoming administration. The trade war between China and the U.S. is one of the main topics for both sides. Moroever, it won’t be easy to resolve all challenges. However, China should work with the Biden administration to come up with the best solution.