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European companies will have to wait longer for the removal of market access restrictions as well as better investment conditions in China. This is largely because the CAI investment agreement between the EU and China is on thin ice. On Tuesday evening, EU Commission Vice-President Valdis Dombrovskis voiced what has been making the rounds in Brussels for days: The environment “for ratification of the agreement is not favorable at the moment”. Finn Mayer-Kuckuk has the background information.
The fact that a stronger China calls the self-confidence of the Western democracies into question became clear once again at the meeting of the G7 foreign ministers in London. As a reminder, the G7 are a bulwark of the old world order. They date back to the days of the Iron Curtain and Mao. In view of the provocations by Vladimir Putin and Xi Jinping, a new front of Western democracies is now forming against the authoritarian-ruled countries in the East. In any case, Heiko Maas and his US colleague Antony Blinken were in agreement in a way we’re no longer used to after four years of Trump.
How well does Sinovac work? Experts from different parts of the world have been dealing with this question ever since the vaccine was launched. Chinese vaccines work, but the high-tech competition from Europe and the US has set the bar very high for the efficacy rate. The European Medicines Agency, among other agencies, must now check on whether China has deliberately quoted higher efficacy rates than the vaccine actually achieves. A formal approval procedure for the Chinese vaccine is beginning at the agency in Amsterdam.
The agencies Moody’s and Fitch downgraded the credit rating of asset manager Huarong last week. Now the company reigns in state ownership and reassures foreign investors. That’s because they expect Huarong to repay about $3.7 billion in bonds this year, as Ning Wang reports.
EU Commission: Sanctions jeopardise Ratification of the CAI
The EU-China Comprehensive Agreement on Investment (CAI) was supposed to facilitate European companies’ access to the Chinese market (China.Table reported) and is considered a precursor to free trade. Now its coming into force has been postponed indefinitely. With Valdis Dombrovskis, Vice-President of the EU Commission, the first high-ranking EU politician openly voiced on Tuesday evening what had long been clear in Brussels: with regards to the mood against the agreement, it hardly stands a chance in Parliament anyway.
The signing of the agreement by the Commission in December was initially a PR success for Beijing: While the US put the country under pressure with trade sanctions, the EU opened itself up to far-reaching economic cooperation. While the CAI addresses critical issues such as human rights and labor conditions, it does not provide for a real monitoring mechanism to enforce EU standards. Germany was one of the supporters of the agreement. Indeed, the ratification of an investment treaty has been one of the German government’s explicit wishes vis-à-vis Beijing for a decade.
Sanctions are the main reason for the U-turn
Dombrovskis cited recent diplomatic rifts with Beijing as the reason for his fears. In view of mutual sanctions, the environment is “not favorable for ratification of the agreement at the moment”, he told the AFP news agency on Tuesday evening. In doing so, he clearly relates the suspension to the sanctions China has imposed on European politicians and academics.