EU, China politically endorse market access deal – China briefing

The EU and China announced their political approval of the Comprehensive Investment Agreement (CAI) on Wednesday, December 30, and the agreement could enter into force as early as 2021. Political consensus around the agreement The opening of markets was reached seven years after negotiations began in 2013.

After a videoconference with Chinese President Xi Jinping – Charles Michel, President of the European Council, and Ursula von der Leyen, President of the European Commission, said in a statement: “This agreement is of major economic importance … ‘is committed to an unprecedented level of market access for European investors, giving European companies certainty and predictability in their operations. “

Meanwhile, Chinese state media reported Xi’s affirmative stance on the deal and its importance to China: [The CAI] “Demonstrates China’s determination and confidence in promoting a high level of openness to the outside world and will provide better market access for China-EU mutual investments, a better business environment, institutional guarantees stronger and brighter prospects for cooperation. “

What to do with the announcement and its timing?

For 2021, the relevance of the CAI is clear. Despite several doubts, the EU and China still managed to conclude the negotiations on the deal positively before the end of this year. This, in itself, is a clear testament to their commitment to wanting to do business with each other and to increase mutual trust, at least on the economic front.

It’s also worth noting that the deal was not delayed by the new administration of US President-elect Joe Biden, indicating that the EU may no longer be so considerate of Washington in determining the scope. of its future ties with Beijing.

In addition, the EU would have obtained significant concessions on the main thorny points: forced technology transfers and the need for transparency on Chinese state subsidies to the services sector – the latter, in particular, has prevented a level playing field between private enterprises with foreign capital and China. public entities, according to EU negotiators.

Now, Beijing will be forced to publish a list of the subsidies it will give each year to specific sectors, such as real estate, telecommunications, banking and construction. In return, the EU will guarantee relatively free access to its market, a major victory for Chinese investors and companies and difficult to achieve as anyone who embarks on market access negotiations with Brussels can attest.

Details are awaited on the text of the final agreement, but the announcement of political consensus is a historic achievement in itself.

And, while Beijing still appears unwilling to remove restrictions in certain sectors (automotive, healthcare and aviation), industry analysts are convinced that EU companies in manufacturing, engineering, new energy vehicles, financial services, real estate, telecommunications, cloud computing the services, health and consulting sectors will benefit the most from the market access agreement.

Finally, in 2021, European investors are expected to make further inroads in Asia, exploiting emerging economic opportunities and taking advantage of large markets and other operational considerations.

Given the experience of the pandemic and the trade war between the United States and China, the transition to localizing supply chains and reducing geographic risks will continue, complemented by a doubling of the focus on important markets like China.

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