With due respect to sustainable development objectives, the envisaged investment agreement is expected to boost bilateral investment flows by opening up markets as well as by establishing a legal framework of investment protection in order to enhance legal certainty and predictability for long-term investment relations between the EU and China.
For the EU, an investment agreement with China is an important element for closer trade and investment ties between the economies. One of the EU's priorities in the negotiations will be to remove barriers to EU investors on the Chinese market. The two days of talks are expected to continue making progress in clarifying each side's approach to key elements of an agreement.
'Investment is one of the keys motors of any economy and is instrumental in generating growth and creating jobs, 'said EU Trade Commissioner Karel De Gucht. 'Securing an ambitious investment agreement with China will be an important step not just for getting better market access and protection for investors, but for strengthening our trade relations with China overall.'
The negotiations will be held against the background of economic reforms in China giving markets a decisive role. These include the decision to further open up China's economy to foreign investors in order to increase innovation and competitiveness by having more advanced industries and services on the mainland.
Background
Agreement to launch negotiations for an investment agreement was reached at the EU-China Summit of February 2012. In October last year, the EU's Member States adopted the negotiating directives proposed by the European Commission and on 21 November the launch of negotiations was announced at the 16th EU-China Summit.
China is the EU's biggest source of imports and has also become one of the EU's fastest growing export markets. China and Europe now trade well over €1 billion a day.
EU imports from China are dominated by industrial and consumer goods with bilateral trade in services amounting to just one tenth of total trade in goods. Of the EU's exports to China, only 20% are of services.
Investment flows show great untapped potential, especially considering the size of the two respective economies. China accounts for just 2-3% of overall European investments abroad, whereas Chinese investments in Europe are rising, but from an even lower base. The comprehensive EU-China Investment Agreement aims to tap into this potential to the benefit of both sides.
