EU-China Comprehensive Agreement on Investment

On December 30, 2020China’s President Xi Jinping, held a long-awaited video conference with European Union leaders including Germany’s Chancellor Angela Merkel and French President Emmanuel Macron. After the video call, the European Union announced in a press statement, “The EU and China concluded in principle the negotiations for a Comprehensive Agreement on Investment (CAI).”

The CAI covers areas far beyond the traditional consensus investment agreement, and the results of the negotiations cover many areas such as market access commitments, fair competition rules, sustainable development and dispute resolution, and provide a better business environment for companies of both sides. The CAI is a comprehensive, balanced and high-level agreement based on international high-level economic and trade rules, focusing on institutional openness.

From the perspective of bilateral investment between China and Europe in recent years, China’s overall direct investment in the EU has gradually slowed since 2017, and the proportion of British investment in China has declined the most. Affected by the epidemic this year, foreign direct investment continued to shrink. China’s direct investment in the EU this year is mainly concentrated in the fields of transportation, public utilities and infrastructure, followed by the entertainment and automobile industries. During the same period, the EU’s major investment areas in China were dominated by the automobile industry, accounting for more than 60% of the total, reaching US$1.4 billion. From the perspective of regional investment, Britain, Germany and France are traditional areas for China’s direct investment in the EU. In recent years, China’s direct investment in the Netherlands and Sweden has exceeded that of Britain and Germany.