Image of German Chancellor Angela Merkel and French President Emmanuel Macron, by Presidential Administration of Ukraine, available at Wikimedia Commons under CC license.

The EU-China Comprehensive Agreement on Investment (CAI), agreed on December 30, and characterized by the European Commission as “the most ambitious agreement that China has ever concluded with a third country,” has unleashed a wave of criticism in Europe.

The agreement has yet to be signed, and a number of European parliamentarians have pledged to oppose it. Reinhard Bütikofer, MEP for the German Green party and leader of its China delegation – who wrote on December 29 that “[it] is already clear that the outcome of the negotiations misses an essential criterion set by the European Parliament” – suggested a tough fight ahead: “There is no deal until the European Parliament says it is a deal,” he said.  

While the text of the agreement has not yet been published — and it is unclear when this will happen — many European experts have said already that the agreement is a strategic win for China. Writing in The Diplomat, Theresa Fallon, director of the Centre for Russia Europe Asia Studies (CREAS) in Brussels, said that the CAI “will legitimize the regime in the eyes of domestic and international public opinion (despite recent behavior in Hong Kong, Taiwan, Xinjiang and elsewhere).”

MEP Reinhard Bütikofer shares a photo on Twitter on December 31, 2020, showing Xi Jinping in the strategic center as the CAI is agreed. The photo was distributed by China’s Xinhua News Agency.

Noah Barkin, a senior visiting fellow in the Asia Program at the German Marshall Fund, characterized the decision to rush through the CAI as a case of one step forward and two steps backward in EU policy toward China, and said it risked “upsetting the geopolitical landscape only weeks before Joe Biden enters the White House.” “China seems to be the only country that is crystal clear about what just happened,” Barkin wrote. “After a year in which it showed a disturbing face to the world with its COVID-19 cover-up, its security crackdown in Hong Kong, its Xinjiang denial, and the bullying of too many countries to count, it has been given the biggest Christmas gift of all.”

Deepening the sense that the CAI deprives the EU of its teeth in terms of a tougher strategy toward China on a range of key issues, Foreign Minister Wang Yi (王毅) referred directly to the EU’s 2019 strategy paper on China when he said in an interview with the official Xinhua News Agency that, “The two sides are comprehensive strategic partners, not systemic rivals” (双方是全面战略伙伴,不是制度性对手). The labelling of China as a “systemic rival” in the 2019 paper apparently signaled greater wariness in the EU about China’s ambitions in the region and in the world.

How has the conclusion of negotiations for the CAI been portrayed inside China?

Official Reactions

Much of the coverage of the CAI in China’s official state media has harped on the essential themes conveyed by Xi Jinping during the video call with European leaders – that China is committed to economic globalization, free trade and creating “win-win” opportunities that will ultimately help to stabilize a flailing global economy.

Here is the summary from the official Xinhua News Agency:

Xi Jinping pointed out that 2020 was a special year for the world, and for both China and Europe. The global pandemic of Covid-19 has come with profound changes such as have not been seen in a century, and factors of instability and uncertainty are on the rise. Against this backdrop, China and the EU have risen to these challenges, working together to promote fruitful progress in China-EU relations. The two sides achieved the expected goal of completing negotiations for the CAI within the year, as scheduled, and the result was a balanced, high-level, mutually beneficial and win-win investment agreement, demonstrating China’s determination and confidence in promoting high-level opening up. This will provide greater opportunities for mutual investment between China and the EU, a more mature business environment (更高水平的营商环境), stronger institutional guarantees, and brighter prospects for cooperation. This in turn will provide a strong stimulus for the recovery of the world economy in the post-pandemic period, and will strengthen the international community’s confidence in economic globalization and free trade – and important contribution made by China and Europe to the building of the world economy.

Along these themes, an article on page six of the CCP’s official People’s Daily on December 31, 2020, the day after negotiations were concluded, bore a bold headline stacked with official buzzwords denoting fairness and “win-win:” “A Balanced, High-Level, Mutually Beneficial and Win-Win Investment Agreement”  (平衡高水平互利共赢的投资协定). An article directly below this one had a virtually identical headline, again touting the “balanced,” “high-level,” “mutually beneficial and win-win” nature of the agreement – and precisely again in that order.

A pair of page six articles in the People’s Daily on December 31, 2020, tout the CAI as “mutually beneficial and win-win,” with nearly identical headlines.

As an official from the Ministry of Commerce addressed the CAI on December 31, the buzzwords trailed along in exactly the same order. The agreement was 1) “balanced,” 2) “high-level,”and, you guessed it, 3) “mutually beneficial and win-win.”

Asked by the Xinhua reporter to reflect on the “character” of the CAI, the official said, and Xinhua paraphrased (quotes and paraphrasing often overlapping in the Chinese media): “The EU-China Comprehensive Agreement on Investment (CAI) is a balanced, high-level, mutually beneficial and win-win agreement that is based on international high-level economic and trade rules and focuses on institutional openness.”

Each of these three aspects was then broken down, not exactly with specifics, but with enough verbiage to give us a better sense of what China officially understands by these terminologies.

The balanced [nature] is chiefly reflected in the fact that the two parties placed great priority in retaining the necessary regulatory powers while making commitments to openness. Secondly, both parties focused on promoting bilateral investment cooperation and emphasizing that investment needs to be conducive to sustainable development.    

The high-level [nature] is chiefly reflected in the fact that both parties are committed to promoting investment liberalization and facilitation, and reached a high-level of negotiation results. The scope of the agreement goes far beyond traditional bilateral investment agreements, and the results of these negotiations cover four aspects: market access commitments, fair competition rules, sustainable development and dispute settlement.    

The mutually beneficial and win-win [nature] is chiefly reflected in the high-level and mutually beneficial market access commitments made by both parties, and in the fact that all rules apply in both directions, which will create a level playing field for companies, benefitting Chinese and European companies and even global companies.

Those who wish to know more about the official Chinese view of the CAI, or other expert views, will find little of value on the “high-level of negotiation results” emerging on December 30. Meaningful discussions seem essentially not to be had — at least not openly — on a matter of such strategic importance to China.

Over at the Institute of European Studies at the Chinese Academy of Social Sciences, which is behind China’s European think-tank based in Budapest, the China-CEE Institute, researcher Huang Ping (黄平) responded to a single question from the Shanghai-based online outlet Guancha Syndicate (观察者网), asking for his input on the significance of the CAI.

In his response, essentially an article framed as an odd Q&A, Huang’s logic essentially follows the official position outlined above, that the CAI – and China’s role generally across the world – is “mutually beneficial and win-win” (互利双赢), and that China’s vital economy raises up other economies facing a host of challenges, demonstrating China’s global leadership.

A translation of the first portion of Huang’s interview-essay follows:

Did China Give Up Too Much to the EU? Integrating with the World Accords With China’s Development Interests

Guancha Syndicate: Can you talk about the impact, significance and possible future developments now that negotiations for the EU-China Comprehensive Agreement on Investment (CAI) have been concluded?

Huang Ping: Without a doubt,the conclusion of negotiations for the CAI are mutually beneficial and win-win for both sides. In terms of economic strength, Britain’s exit from the EU notwithstanding, the EU is now one of the largest economies in the world, and to complete investment negotiations with such a strong and highly development economy shows a mutual understanding and consensus between China and Europe. And in terms of the scope of the agreement, the CAI can be said to be one of the most comprehensive investment agreements negotiated by China to date.

This is significant not only for China and the EU, for the deepening of China-EU cooperation and for China’s greater opening up, but it is also a positive development given current uncertainties for the world economy. Since 2007 and 2008, the world economy has been shrouded in growing uncertainties of all kinds. In 2020, we experienced the Covid-19 pandemic, and over the past four years the United States, the world’s largest economy, has continued to advocate withdrawal and “decoupling” (脱钩). In this context, the significance of the completion of the negotiations for the CAI goes beyond the level of bilateral cooperation.

It can be said that after conclusion [in November 2020] of the Regional Comprehensive Economic Partnership (RCEP), this is another stabilizer injection (一针信心稳定剂) into the world economy, lending a bit of hope for certainty amid many lingering uncertainties.

Although the European Parliament and various national parliaments still must approve the agreement before it can be formally signed, the completion of the agreement at last, after seven years of effort, is already itself an historic event.

We can anticipate that there will be a great deal of follow-up to the agreement in 2021, including the process of approval within EU member states. Germany ended its rotating presidency of the EU on December 31, 2020, and the CAI must still be signed. We cannot rule out that it will take another full year, up to the time that France assumes the rotating presidency in 2022, to formally sign the agreement, and that would be great.

Regarding the economic difficulties and challenges facing Europe in recent years, we can say that the CAI is for Europe like a delivery of coal in the harshness of winter (雪中送炭). In 2020, China was the only major economy in the world to achieve positive growth. Moreover, the negative economic growth experienced by Europe was not just about Covid-19. Europe has for some time already been trapped by weak economic growth. Speaking of the concluded negotiations on the CAI, the first sentence of the EU’s own information release [on the agreement] said that China is the world’s largest market, and that it has the largest number of consumers in the world. And so, economically speaking, the negotiation of the agreement has direct and positive significance for the EU.

CMP Staff

The China Media Project

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