The EU and China have agreed in principle to a Comprehensive Agreement on Investment (CAI). The agreement aims to balance the economic relationship between both parties, given that the EU market has always been more open to Chinese investment than the Chinese market has been to EU investment. It will ensure a better level playing field, which the Commission says will give European businesses a boost and will help them compete in China.

China has made market access commitments in a wide range of sectors, including the manufacturing, which is the most important sector of EU investment in China. In these areas, China will not be able to prohibit market access or introduce new discriminatory practices. Specifically, the agreement sets rules on state-owned enterprises, on the transparency of subsidies, and against forced technology transfers. It will also be easier for EU companies to obtain authorisations and complete administrative procedures, and they will now be able to access China’s standard setting bodies.

The agreement also contains provisions on sustainable development, whereby China commits to not lowering environmental and labour standards in order to attract investment. Other Chinese commitments include respecting international obligations, promoting responsible business conducts by Chinese companies, or implementing the Paris Agreement, among other things.

The agreement reached in principle is just the first step in the process, since now the text must be legally reviewed and then ratified by the EU legislative authorities (the European Parliament and the Council of the EU). More information on the agreement can be found here.