Chinese and European leaders agreed on Wednesday to make it easier for enterprises to operate on each other’s territory is a significant geopolitical victory for China at a time when criticism of its human rights record and the handling of the pandemic have increasingly isolated it.
However, the rural treaty is faced by political opposition in Europe and Washington that could eventually derail it, illustrating the difficulties of dealing with an authoritarian. superpower that is both an economic competitor and a profitable market.
A large faction in the European Parliament, which must ratify the agreement before it can enter into force, is against the agreement on the grounds that it does not do enough to stop the violation of human rights in China. In addition, a top aide to President-elect Joseph R. Biden Jr. indicated that the incoming government is not satisfied with the agreement.
German Chancellor Angela Merkel has made the deal a priority because of its importance to German carmakers and other large-scale manufacturers in China.
The treaty loosens many of the restrictions imposed on European companies operating in China, including the requirement that they operate through joint ventures with Chinese partners and share sensitive technology.
The agreement also opens China to European banks and contains provisions intended to curtail secret government subsidies. Foreign companies often complain that the Chinese government is secretly subsidizing domestic companies to give them a competitive advantage.
The agreement will “significantly improve the competitive environment for European companies in China,” Hildegard Müller, president of the German Automobile Industry Association, said in a statement prior to the announcement. “It will provide new impetus for a global, rules-based framework for trade and investment.”
China’s leader Xi Jinping also made reaching an agreement a priority, authorizing negotiators to make enough concessions to persuade Europeans to move on.
Wednesday’s announcement was preceded by a video call that Mr. Xi and Ursula von der Leyen, the President of the European Commission, included to agree in principle on an agreement.
European officials said a breakthrough came in mid-December when China, in a significant concession, agreed to make a stronger commitment to meet international standards for forced labor. China has also agreed to step up its efforts to combat climate change.
Mrs. Von der Leyen said the agreement would “provide unprecedented access to the Chinese market for European investors, enabling our businesses to grow and create jobs.”
“It will also commit China to ambitious principles of sustainability, transparency and non-discrimination,” she said in a statement.
The conclusion of the treaty is now a diplomatic victory for China, which has seen its international position maintained over the handling of the coronavirus pandemic and its repression in Hong Kong and the predominantly Muslim province of Xinjiang.
These issues – and the caution of Chinese promises to really open up to foreign investment – have become the focus of opposition to the deal, as the final details have been ironed out. For the Chinese, the agreement showed that the country does not have significant diplomatic isolation over the handling of human rights.
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China also appears eager to reach an agreement before Mr. Biden took office in January, calculating that closer economic ties with Europeans could prevent the new government’s efforts to advance an allied strategy to challenge China’s trade practices and other policies.
Mr. Biden said in a speech on Monday that the United States is stronger and more effective on any issue relevant to the relationship between the US and China if we are flanked by countries that share our vision for the future of the world. ”
“Currently, there is a huge ‘vacuum’ in the US leadership, he said. “We will have to regain the trust and confidence of a world that has begun to find ways to work around us or without us.”
The White House also opposed the agreement, but there was little influence among Europeans. The Trump administration has been trying for months to isolate China and its companies – announcing new restrictions on those imposed on the People’s Liberation Army this week – only to be rejected by countries still willing to involve the Chinese.
The decision of the Europeans to ignore objections from the Biden camp was an indication that relations with the United States would not automatically revert to the relative bonhomie that prevailed during the Obama administration.
President Trump’s penchant for burning bridges with longtime allies inspired Europe to largely ignore the United States as it pursued trade agreements with countries such as Japan, Vietnam and Australia. European diplomats said this week that while hoping for a more cooperative relationship with the Biden government, they could not submit their interests to the US election cycle.
Members of the European Green Party, among others, say the agreement does not do enough to open up China’s markets, to fulfill previous promises on trade and the environment, or to address human rights violations, including forced labor and the mass internment of Uighurs and other Muslims in the far western region of Xinjiang.
Opponents could possibly muster enough votes to block ratification in the European Parliament.
Negotiators for China and the European Union have been working on an agreement for almost seven years, but progress has suddenly accelerated after Mr. Biden mnr. Trump defeated in the election.
Unlike mr. Trump, who was often hostile to Europe, said Mr. Biden is expected to try to work with the European Union to curb Chinese ambitions, but it could take many months to realize.
U.S. law prohibits members of the incoming government from negotiating directly with foreign officials until Mr. Prayers will be sworn in on January 20. In an interview in early December, Biden said he plans to conduct a full review of trade relations with China and consult with allies in Asia and Europe to develop a coherent strategy before changing America’s terms of trade.
“I’m not going to move right away,” he said.
In the meantime, the advisers of Mr. Biden uses public statements to warn European officials of any hasty action, and to try to convince them of the benefits of waiting to coordinate with the new US government.
Mr. Biden’s choice as national security adviser, Jake Sullivan, wrote this month on Twitter that the new government will “welcome early consultations with our European partners on our general concerns about China’s economic practices.”
Chinese officials in recent weeks have insisted on keeping the agreement on track, especially after opposition in Europe spread publicly.
As the talks escalated last week, the Chinese Ministry of Commerce said in a statement that the agreement would “have great significance for the recovery of the world economy”. It said both parties should be prepared to meet ‘halfway’, but that China would protect ‘own security and development interests’.
Despite the terms of the forced labor agreement, Chinese officials have repeatedly denied that the country practices the practice – in Xinjiang or elsewhere – despite the contrary. The severity of the denials raises questions about how China can be expected to honor commitments to protect workers’ rights.
“The so-called forced labor in Xinjiang is a complete lie,” Foreign Ministry spokesman Wang Wenbin said recently. “Those responsible for such contempt must be condemned and held accountable.”
The European Chamber of Commerce in China welcomed the agreement, albeit with a warning, saying it could still face obstacles before the two countries ratify it. “A strong agreement would be a powerful statement to show that constructive engagement can yield results,” the chamber’s president, Jörg Wuttke, said in a statement.
Ana Swanson reporting from Washington, Keith Bradsher from Beijing and Monika Pronczuk from Brussels.