In a few weeks, the EU-China Comprehensive Agreement on Investment (CAI), drawn up at the end of 2020, is being submitted for ratification by the European Parliament. Theoretically, the agreement creates a level playing field for Chinese and European companies, opens up new investment opportunities, improves consumer and worker protections and brings clarity regarding certain sectors open to cross-border investors. Ideally, it will allow Chinese investment flows to major European (strategic) sectors, such as air transport, cloud computing and financial services, in exchange for supposedly increased European access to the Chinese market.

However, tensions recently arose as a result of sanctions for alleged human rights and forced labor issues in Xinjiang. Accordingly, on March 23, the European Parliament canceled its review meeting for the agreement. Beyond the content and literal objectives set out in the agreement, a double reading is possible: although it appears to have two official intentions, namely to facilitate an equal economic relationship between the two trading partners while also serving as an instrument for asserting the governing principles of the European strategy for sustainability and social rights, presumably neither the level of commitment nor the revenues are what the EU is expecting.

While it is noteworthy that China has committed itself to international standards on climate change and labor rights, at the same time, it must be recognized that it did so through an agreement that makes it difficult to force the country to adopt international standards in the field of human and labor rights. Recent developments are a clear example of this. It is therefore to be expected that, true to what is becoming its form, it will not budge an inch on what it considers a sovereign right; namely, to reaffirm its own values within its borders, particularly when it comes to its own minorities. Not even for an investment agreement, however beneficial that may be, can we believe that it will yield to the prerequisites of the agreement. Ultimately, it will be merely for the sake of appearances to close the deal without any genuine intention to adhere to its terms, as it did when it joined the WTO.

In saying this, I do not mean that China doesn’t have a very strong interest in closing a deal with the EU, but rather that perhaps its reasons are not only those that have been articulated. Hence the second reading. For China, the CAI is much more than an economic agreement, as its ratification may be a hindrance to the fostering of closer ties between the EU and the US. Indeed, a climate of tension already prevails, given Biden’s insistence that both the US and the EU wait for a review of the matter in the multilateral spirit promoted by the new US administration. Germany, the main promoter of the CAI (being by far China’s largest trading partner in the EU) has clarified, in an example of strategic autonomy, that it does not require Washington’s approval.

Therefore, despite the doubts that have arisen in recent weeks, there is no doubt that for some European companies the CAI would also be a way of mitigating the impact of the pandemic and offsetting their low return on investment in other markets. For this reason, governments must assess the consequences of the decision that is taken in the next few weeks. Let me say that I have no doubt that given Germany’s interest, the agreement will go ahead in one form or another. We shall soon see.