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China and E.U. Leaders Strike Investment Deal, but Political Hurdles Await


#Chinese and #European #Union leaders agreed on #Wednesday to make it easier for companies to operate on each other’s territory, a significant geopolitical victory for #China at a time when criticism of its human rights record and handling of the pandemic have left it increasingly isolated.

#But the landmark pact faces political opposition in #Europe and #Washington that could ultimately derail it, 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 agreement before it can take effect, opposes the accord on the grounds that it does not do enough to stop human rights abuses in #China. #In addition, a top aide to #President-elect #Joseph R. #Biden #Jr. has signaled that the incoming administration is not happy with the deal.

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#Chancellor #Angela #Merkel of #Germany has made the agreement a priority because of its importance to #German carmakers and other manufacturers with large operations in #China.

The pact loosens many of the restrictions imposed on #European companies operating in #China, including a requirement that they operate through joint ventures with #Chinese partners and share sensitive technology.

The agreement also opens up #China to #European banks and contains provisions intended to curtail secret government subsidies. #Foreign companies often complain that the #Chinese government secretly subsidizes domestic firms to give them a competitive advantage.

The agreement will “significantly improve the competitive environment for #European companies in #China,” #Hildegard Müller, the president of the #German #Association of the #Auto #Industry, said in a statement before the announcement. “It will provide new impetus for a global, rules-based framework for trade and investment.”

#China’s leader, #Xi #Jinping, also made reaching the agreement a priority, authorizing negotiators to make enough concessions to persuade the #Europeans to move ahead.

#Wednesday’s announcement was preceded by a video call that included #Mr. #Xi and #Ursula van der #Leyen, the #European #Commission president, to agree in principle on a deal.

#European officials said that a breakthrough came in mid-December when #China, in a significant concession, agreed to make a stronger commitment to observe international standards on forced labor. #China also agreed to step up its efforts to fight climate change.

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#Valdis #Dombrovskis, the #European trade commissioner, said the deal was the “most ambitious” pact of its kind that #China has ever agreed to.

“But the value of the deal goes beyond euros and cents, because it also anchors our value-based trade agenda with one of our largest trading partners,” #Mr. #Dombrovskis said in a statement #Wednesday.

#Concluding the pact now is a diplomatic victory for #China, which has seen its international standing battered over its handling of the coronavirus pandemic and its crackdowns in #Hong #Kong and the predominantly #Muslim province of #Xinjiang.

#Those issues — and wariness of #Chinese pledges truly to open up to foreign investment — became the focus of opposition to the agreement as the final details were ironed out. #For the #Chinese, the deal demonstrated that the country does not face significant diplomatic isolation over its handling of human rights.

#China also appeared eager to reach an agreement before #Mr. #Biden takes office in #January, calculating that closer economic ties with the #Europeans could forestall efforts by the new administration to come up with an allied strategy for challenging #China’s trade practices and other policies.

#Mr. #Biden, in a speech on #Monday, said that on any issue that mattered to the U.S.-China relationship, the #United #States was “stronger and more effective when we are flanked by nations that share our vision for the future of the world.”

#Currently, he said, there is “an enormous vacuum” in #American leadership. “We’re going to have to regain the trust and confidence of a world that has begun to find ways to work around us or without us.”

The #White #House also opposed the agreement but had little leverage among the #Europeans to block it. The #Trump administration has tried for months to isolate #China and its companies — announcing new restrictions on those tied to the #People’s #Liberation #Army this week — only to be repudiated by countries still willing to engage the #Chinese.

The #Europeans’ decision to overlook objections from the #Biden camp was an indication that relations with the #United #States will not automatically snap back to the relative bonhomie that prevailed during the #Obama administration.

#President #Trump’s penchant for burning bridges with longtime allies inspired #Europe to largely ignore the #United #States as it pursued trade agreements 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 could not subordinate their interests to the U.S. election cycle.

#Members of the #European #Green #Party, among others, say that the deal does not do enough to open #China’s markets, to honor previous pledges on trade and the environment, or to address human rights abuses, including forced labor and the mass internment of #Uighurs and other #Muslims in the far western region of #Xinjiang.

The opponents may be able to muster enough votes to block ratification in the #European #Parliament.

#Negotiators for #China and the #European #Union have been working on a deal for almost seven years, but progress accelerated suddenly after #Mr. #Biden defeated #Mr. #Trump in the election.

#Unlike #Mr. #Trump, who has often been hostile to #Europe, #Mr. #Biden is expected to try to cooperate with the #European #Union to rein in #Chinese ambitions, but those efforts could take many months to materialize.

#United #States law prohibits members of the incoming administration from negotiating directly with foreign officials until #Mr. #Biden is sworn into office on #Jan. 20. #In an interview at the beginning of #December, #Mr. #Biden said that he planned to conduct a full review of the trading relationship with #China and consult with allies in #Asia and #Europe to develop a coherent strategy before making changes to #America’s terms of trade.

“I’m not going to make any immediate moves,” he said.

#In the interim, #Mr. #Biden’s advisers have used public statements to caution #European officials against any hasty action, and to try to persuade them of the benefits of waiting to coordinate with the new #American administration.

#Mr. #Biden’s choice as national security adviser, #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 pressed to keep the deal on track in recent weeks, especially after opposition in #Europe spilled into public.

#As the talks hit a snag last week, #China’s #Ministry of #Commerce said in a statement that the agreement would have “great significance for the recovery of the global economy.” #It said that both sides had to be willing to “meet halfway,” but that #China would protect “own security and development interests.”

#Despite the agreement’s provisions on forced labor, #Chinese officials have repeatedly denied that the country engages in the practice — in #Xinjiang or elsewhere — despite evidence to the contrary. The vehemence of those denials raises questions about how #China could be expected to honor commitments to protect workers’ rights.

“The so-called forced labor in #Xinjiang is a complete lie,” a spokesman for the foreign ministry, #Wang #Wenbin, said recently. “Those responsible for such despicable slandering should be condemned and held accountable.”

#Ana #Swanson contributed reporting from #Washington, #Keith #Bradsher from #Beijing and #Monika #Pronczuk from #Brussels.





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https://www.nytimes.com/2020/12/30/business/china-eu-investment-deal.html

##China ##Leaders ##Strike ##Investment ##Deal ##Political ##Hurdles ##Await

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