A new year and a new start for EU-China ties

The European Union has frozen the ratification process of the Comprehensive Agreement on Investment since May 2021 due to so-called human rights issue in the Xinjiang Uygur autonomous region, reflecting its hardened attitude against China.

In Europe, the main drivers of the China-EU Comprehensive Agreement on Investment were former German chancellor Angela Merkel and French President Emmanuel Macron. In early July 2021, in a videoconference among Merkel, Macron and President Xi Jinping, the former German chancellor urged the EU and China to restart the CAI's ratification process "as soon as possible".

Sino-German relations have shown vitality and endurance since the establishment of diplomatic ties between the two sides in 1972, and still have much potential to be tapped.

During a recent phone conversation with new German Chancellor Olaf Scholz, President Xi stressed the importance of Sino-German ties. In addition, a few days ago, the German-Baltic Chamber of Commerce sent a letter to the Lithuanian government, warning that German enterprises may close their production units in Lithuania unless the Vilnius government finds "a constructive solution to restore Lithuanian-Chinese economic relations".

The EU and China have maintained economic cooperation for more than 40 years thanks to their common interests and goals. In 2020, China overtook the US to become the EU's largest trading partner, and the EU remains China's second-largest trading partner.

While many economies face supply shortages due to disruptions in international trade amid the COVID-19 pandemic, the EU and China have been working even more closely to overcome difficulties, and maintain the supply chains mainly through the China-Europe Freight Railway. According to Eurostat data, in the first half year of 2021, the EU's exports to China increased 20.2 percent year-on-year to €112.6 billion, and the EU's imports from China grew 15.5 percent year-on-year to €210.1 billion.

In fact, the EU and China both are playing a crucial role in stabilizing the global economy, especially the global industrial and supply chains. Still, the EU and China need to further deepen cooperation to boost the global fight against climate change, advance the digital economy, improve intelligent manufacturing, and increase cross-border electronic commerce.

For example, Europe's second-largest port in Antwerp, Belgium, and the China-Belgium Technology Center, the first technology center which China helped build in Europe, both have the potential to play bigger roles in expanding Sino-EU trade.

Besides, since the CAI will be beneficial for China, the European Union as well as the rest of the world, it is imperative that the EU and China revive its ratification process.

The CAI is based on three pillars: market access (pre-establishment sectoral opening up and access to foreign employees), a level playing field (facilitation of technology transfers and transparent subsidies for state-owned enterprises) and sustainable development (including labor and environmental norms and corporate social responsibility). The CAI is also the first economic and trade agreement in which China has committed to preparing a negative list for all sectors, including service and non-service sectors, showing China's determination to widen its opening-up.

There are many reasons for the EU and China to strengthen cooperation, and few to confront each other. As such, Germany and France might have to lead the European countries in improving the EU's economic relations with China.

If the EU is more realistic about its economic development, it would realize the importance of improving relations with China, which in turn would strengthen the EU's role in global economic governance. This would help the EU to not only maintain its leadership in global economic development, but also reinforce its core position in the global industrial value and supply chains.

Hence, the EU and China should strengthen dialogue and cooperation in trade under the framework of the Belt and Road Initiative. By doing so, the two sides can, to a large extent, offset the negative impacts of the pandemic and boost their development.

Furthermore, the EU and China should work together on a plan to finalize key regulations on market access, create a level playing field and promote sustainable development, in order to take forward the CAI ratification process. Hopefully, in the new year, the two sides will adopt more open trade policies that suit development in the post-pandemic era.

The author is an associate researcher at the China Academy of the Belt and Road Initiative, Beijing International Studies University.

The views don't necessarily reflect those of China Daily.

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