Chinese and European Union leaders agreed on Wednesday to make it easier for companies to operate in each other’s territory, an important geopolitical victory for China as critics of its human rights and human rights record. the management of the pandemic has left it increasingly isolated.
But political opposition in Europe and Washington could ultimately derail the historic pact, illustrating the difficulties of dealing with an authoritarian superpower that is both an economic rival and a lucrative market.
A large faction in the European Parliament, which must ratify the deal before it can go into effect, opposes the deal on the grounds that it does not do enough to stop human rights violations in China . In addition, a senior official for President-elect Joseph R. Biden Jr. has signaled that the incoming administration is not happy with the deal.
German Chancellor Angela Merkel has made the deal a priority because of its importance to German automakers and other manufacturers with large operations in China. This year, China overtook the United States as the European Union’s largest trading partner, with 480 billion euros, or $ 590 billion, in bilateral trade through October.
The pact would ease many of the restrictions on European companies operating in China, including the requirement that they operate in joint ventures with Chinese partners and share sensitive technologies.
The deal would also open China up to European banks and contains provisions to reduce covert government subsidies. Foreign companies often complain that the Chinese government secretly subsidizes domestic companies to give them a competitive advantage.
The deal “will significantly improve the competitive environment for European businesses in China,” Hildegard Müller, president of the German Automobile Industry Association, said in a statement ahead of the announcement. “This will give new impetus to a global rules-based framework for trade and investment. “
Chinese leader Xi Jinping has also made closing the deal a priority, allowing negotiators to make enough concessions to persuade the Europeans to move forward.
European officials said a breakthrough came in mid-December when China, in a major concession, agreed to make a stronger commitment to upholding international standards on forced labor. China has also agreed to step up efforts to tackle climate change.
Ursula von der Leyen, President of the European Commission, said the deal would provide “unprecedented access to the Chinese market for European investors, allowing our businesses to grow and create jobs”.
“It will also commit China to uphold ambitious principles of sustainability, transparency and non-discrimination,” she said in a statement.
The announcement was preceded by a video call involving Mr. Xi, Ms. von der Leyen, Ms. Merkel and French President Emmanuel Macron.
The conclusion of the pact is now a diplomatic victory for China, which has seen its international position weakened by its handling of the coronavirus pandemic, its crackdowns in Hong Kong, and the forced labor and mass internment of Uyghurs and other Muslims in the far west region of Xinjiang.
Those issues – and mistrust of Chinese promises to truly open up to foreign investment – became the center of opposition to the deal as final details were worked out. For the Chinese, the agreement demonstrated that the country does not face significant diplomatic isolation in its management of human rights.
But the deal could be a tough sell in Europe.
“Public opinion was very disappointed with the Chinese regime,” because of Hong Kong and the pandemic, said Philippe Le Corre, a researcher at the Harvard Kennedy School who monitors Chinese investments in Europe. “And now we have this deal, which is primarily designed to appeal to a handful of German multinationals.”
Opponents might be able to muster enough votes to block ratification in the European Parliament.
Reinhard Bütikofer, leader of the German Green Party and chairman of the European Parliament’s delegation for relations with China, said the agreement should include a stronger guarantee against the use of forced labor.
“I think the European Parliament will fight very hard for its point of view on this issue and several others,” he said. Deutschlandfunk radio Wednesday.
China appeared keen to reach a deal before Mr Biden took office in January, arguing that closer economic ties with the Europeans could prevent the new administration from developing an allied strategy to challenge trade and other practices. China’s policies.
Mr. Biden, in a speech on Monday, said that on any issue that mattered to U.S.-China relations, the United States is “stronger and more effective when we are flanked by nations who share our vision for the future of China. world. “
Currently, he said, there is “a huge void” in American leadership. “We’re going to have to regain the trust of a world that has started to find ways to function around or without us.”
The White House also opposed the deal, but had little clout among Europeans to block it. The Trump administration has tried for months to isolate China and its businesses – announcing new restrictions this week for those related to the People’s Liberation Army – only to be repudiated by countries still willing to engage the Chinese.
The Europeans’ decision to ignore Camp Biden’s objections was an indication that relations with the United States will not automatically revert to the relative bonhomie that prevailed under the Obama administration.
President Trump’s penchant for building bridges with longtime allies inspired Europe to largely ignore the United States as it pursued trade deals with countries like Japan, Vietnam and Australia. European diplomats said this week that while they hope for a more cooperative relationship with the Biden administration, they cannot subordinate their interests to the U.S. electoral cycle.
Negotiators from China and the European Union had been working on a deal for almost seven years, but progress suddenly accelerated after Mr Biden defeated Mr Trump in the election.
Unlike Mr Trump, who has often been hostile to Europe, Mr Biden is expected to attempt to cooperate with the European Union to curb Chinese ambitions, but those efforts could take several months to materialize.
U.S. law prohibits members of the new administration from negotiating directly with foreign officials until Mr. Biden is sworn in on January 20. In an interview in early December, he said he planned to conduct a full trade relationship review. with China and consult with allies in Asia and Europe to develop a coherent strategy before changing America’s terms of trade.
“I’m not going to make any immediate moves,” he said.
In the meantime, Biden’s advisers have used public statements to warn EU officials against hasty action and to try to persuade them of the benefits of waiting to coordinate with the new US administration.
Mr. Biden’s choice as National Security Advisor Jake Sullivan, wrote on Twitter this month that the new administration “would welcome early consultations with our European partners on our common concerns about China’s economic practices.”
Chinese officials have been pushing to keep the deal on track in recent weeks, especially after opposition in Europe became public.
As the talks reached a tipping point last week, China’s Commerce Ministry said in a statement that the deal would “be of great importance for the recovery of the global economy.” He said the two sides must be willing to “meet halfway”, but that China will protect “its own security and development interests.”
Despite the terms of the forced labor agreement, Chinese officials have repeatedly denied that the country engages in the practice – in Xinjiang or elsewhere – despite evidence to the contrary. The vehemence of these denials raises questions about how China might be held to honor its commitments to protect workers’ rights.
“The so-called forced labor in Xinjiang is a complete lie,” Foreign Ministry spokesman Wang Wenbin said recently. “Those responsible for these vile slanders should be condemned and held accountable. “
The European Chamber of Commerce in China hailed the deal, but with a note of caution, saying it could still face hurdles before the two countries ratify it. “A strong deal would be a powerful statement to show that constructive engagement can deliver results,” Chamber Speaker Jörg Wuttke said in a statement.
Ana Swanson, Keith Bradsher and Monika Pronczuk contributed reporting.