Europe finalizes major investment deal with China despite US concerns

Europe and China have finalized an investment agreement aimed at rebalancing trade with the world's second largest economy, in spite of a request for talks on the issue by the incoming administration of US President-elect Joe Biden.

On Wednesday, Chinese President Xi Jinping and European leaders - European Council President Charles Michel, European Commission President Ursula von der Leyen, French President Emmanuel Macron and German Chancellor Angela Merkel - completed their negotiations during a video conference.

The two sides have been negotiating the Comprehensive Agreement on Investment for seven years, however, they speeded up the talks in recent months ahead of a joint deadline established for the end of 2020.

"The European Union has the largest single market in the world. We are open for business but we are attached to reciprocity, level playing field and values. Today, the EU & China concluded in principle negotiations on an investment agreement," European Commission President Ursula von der Leyen said on Twitter.

Valdis Dombrovskis, the EU’s trade commissioner, told the Financial Times the agreement contained the “most ambitious outcomes that China has ever agreed with a third country” pertaining to market access, fair competition and sustainable development.

“We expect European businesses will have more certainty and predictability for their operations,” he said, adding that “for a long period, trade and investment relations with China have been unbalanced.”

The agreement might, however, harm Brussels' relationship with the US under the incoming administration of Biden who earlier this year described Xi as a "thug" who does not have a "democratic ... bone in his body."

His administration had expressed a desire to work closely with the bloc on issues related to China.

In Washington, cooperation with Europe is viewed by many as the most effective way to counter China's economic practices and human rights record.

In response to a post on Twitter about the EU agreement, Jake Sullivan, who has been tapped to be Biden's national security adviser, said last week the administration "would welcome early consultations with our European partners on our common concerns about China's economic practices."

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Last year, the EU said it regarded China as a "strategic competitor" and a "systemic rival," reflecting a recent hardening of attitudes toward the country.

The US and China have been at loggerheads over a number of issues.

They two have clashed with each other over Hong Kong and Taiwan, US military patrols and navigation in the East and South China Seas, and the theft of corporate secrets resulting in shuttering of diplomatic consulates on both sides. The two countries are also fighting a trade and technological war. The US has also blamed China for the COVID-19 pandemic and called on Beijing to be punished for its handling of the disease.

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