China | EU-China Comprehensive Agreement on Investment: a game-changer to superpower game

EU and China announced the accomplishment of a long-awaited EU-China Comprehensive Agreement on Investment (EU-China CAI) on December 30 2020, in a move to open up more investment opportunities between the two economies.

Key points

• Key points:
• EU-China CAI will guarantee an unprecedented level of access to EU investors in China, allow EU companies to buy or establish new companies in key sectors, help level the playing field for EU companies in China and commit China to rules on state owned enterprises and transparency in subsidies.
• There are two main categories: market access commitments by China and commitments on fair competition.
• Economically, the meanings of the EU-China CAI are multi-faceted, from alleviating China-US tensions to constructing an EU-China reciprocity investment relation, from prompting China’s domestic structural reform and opening-up policy to stimulating bilateral economic growth.
• Some caveats are still noteworthy: First, the agreement may create frictions with the incoming US Biden administration, which has emphasized the multilateralism for rallying with the traditional transatlantic allies to put pressure on China; Second, regarding the scope of the EU-China CAI, it only covers a subset of a possibly future free trade deal between the two sides. Third, the true success of the EU-China CAI hinges on the implementation.

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