EU states on course to approve China investment deal, but concerns over forced labour remain potential stumbling block

Stuart Lau
·3-min read

China is on course to secure a major investment deal with the European Union after a last-minute agreement won widespread but conditional backing from most of the bloc’s member states, according to diplomatic sources.

The developments came after the European Commission, the EU’s executive arm, made “a political decision in principle” to take the deal, which was seven years in the making, a senior diplomatic source said.

An agreement is now widely expected to be reached within this year, in what analysts say could be a game-changer for Joe Biden’s anticipated plan to rebuild an alliance with European countries to counter Beijing’s growing assertiveness.

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Breakthroughs came this week when China agreed to open up its hitherto restricted market to EU businesses in multiple sectors. In return, it could get access to part of the EU’s energy sector, according to sources briefed on the negotiation.

Chinese ambassador to the EU Zhang Ming, shown taking part in an online chat with European Commission president Ursula von der Leyen earlier this year, has said EU-China investment talks “are now in the final stage”.
Chinese ambassador to the EU Zhang Ming, shown taking part in an online chat with European Commission president Ursula von der Leyen earlier this year, has said EU-China investment talks “are now in the final stage”.

But one key EU demand – that China make a commitment to end forced labour – was not met, a point repeatedly expressed by “many” of the 27 countries at a closed-door meeting in Brussels on Friday.

“The meeting was smooth and in an overall positive mood. We’ll see – but it’s in the right direction,” said a senior diplomat at the meeting who requested anonymity.

“The ILO [International Labour Organisation] was a central point for many,” the source said. China, he added, “needs to show strong commitment to move towards ratification of ILO conventions on forced labour”.

Reinhard Bütikofer, who chairs the European Parliament’s China delegation, said of the possibility of an EU-China deal on Twitter: “It would be an interesting development, if EU would ignore concerns about forced labour in China and rush to conclude with China just before the Biden transition opens opportunities for better and stronger transatlantic cooperation on China.”

Another diplomatic source said: “There is a chance for this to be agreed by the end of this year. However, the quality of the agreement is more important than the date of finalisation.”

Joe Biden is expected to seek EU backing in the US-China rivalry. Photo: Reuters
Joe Biden is expected to seek EU backing in the US-China rivalry. Photo: Reuters

The date, however, matters to German and EU officials, sources say. Not only is Germany’s presidency of the EU Council coming to an end this month, but EU officials also believe that the best chance for getting concessions from China would be before the start of the Biden presidency.

“Of course China is interested in an agreement right now to be in a better position vis-à-vis the US,” an EU diplomatic source said. “That’s why they made concessions we didn’t expect from them till the last minute.”

Earlier this month, the European Commission signalled readiness to coordinate with the Biden administration on China, while it also strengthened policies on cybersecurity, state-funded businesses and human rights sanctions, all of which have a direct or indirect bearing on future relations with Beijing.

EU agrees ‘in principle’ to an investment agreement with China

Over the meeting on Friday, “geopolitical questions were raised but no one argued that a deal would contradict the expected close cooperation with Biden on values, security and economy, including in relation to China”, the first source said.

A Commission spokeswoman said there were “no updates at this stage”, when contacted for comment.

On Thursday, the Chinese ambassador to the EU, Zhang Ming, told the Financial Times that the talks “are now in the final stage”.

Referring to President Xi Jinping, he said: “It’s quite unusual for a Chinese head of state to give such … attention to an agreement under negotiation.”

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