April 14. 2024. 5:58

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German business calls for renegotiation of China investment agreement

The Federation of German Industry (BDI) effectively called for a renegotiation of the frozen EU-China investment deal in a somewhat surprising statement on Wednesday (5 April).

“With its stance in Russia’s war of aggression against Ukraine, China has lost a lot of trust in Germany and Europe,” BDI Managing Director Tanja Gönner said in the statement.

German industry expects European Commission President Ursula Von der Leyen and French President Emmanuel Macron, who are visiting Bejing this week, “to insist on the Chinese leadership’s reliability, and compliance with international rules,” the industry body said, calling out Russia and China.

This would include a renegotiation of the landmark trade deal with China, the Comprehensive Agreement on Investment (CAI), which was penned down in 2020 but was then blocked in the European Parliament after some of its lawmakers were sanctioned by Beijing.

“Much has changed in China and the rest of the world since then. Before resuming the ratification process, a reassessment of the agreement would first be necessary,” the BDI said.

The German industry initially welcomed the deal, Gönner said, “even if the agreement left open many essential points such as reciprocity of market access and investment protection”.

With this, it effectively seems as if German industry was suggesting that the deal would need to be renegotiated, independently of whether Chinese sanctions against Europeans would be dropped.

The BDI statement came as Macron and von der Leyen embarked on a joint visit to Beijing, which is set to become a delicate balancing act between ‘de-risking’ economic dependencies and broaching thorny issues like Ukraine.

Von der Leyen’s speech last week seemed to imply that the EU could also fully terminate the trade and investment deal with China.

“We know there are some areas where trade and investment pose risks to our economic or national security, particularly in the context of China’s explicit fusion of its military and commercial sectors,” von der Leyen said.

“This is true for certain sensitive technologies, dual-use goods or even investment which comes with forced technology or knowledge transfers,” she added.

EU officials have in recent weeks increasingly pointed out that China’s position has radically changed since negotiations for the landmark agreement commenced in 2013.

Since then, European companies have faced an increasing lack of market access and privileging Chinese over foreign companies, the officials said.

At the same time, the bloc has since 202 developed a series of autonomous trade tools.

The EU’s re-evaluation of its trade ties with China comes as the bloc has become increasingly aware of its trade imbalance with Beijing, as well as its current and future economic dependencies in several crucial sectors.

Von der Leyen and Macron face diplomatic balancing act in China

European Commission President Ursula von der Leyen and French President Emmanuel Macron seek to represent a united European front during the trip to China on Wednesday (5 April), while Europe struggles to define its relations with Beijing between ‘de-risking’ economic dependencies and broaching thorny issues like Ukraine.