The EU Chamber would like the Comprehensive Agreement on Investment (CAI) between China and the EU to be signed by 2017, said the president of the Chamber at a press conference on Sept. 1.
The EU leadership expresses its hope that China would further ease limitations on foreign capital to be invested in areas like finance and culture, and further shorten the negative list in order to provide a better atmosphere for European companies to do business in China, said Chamber President Joerg Wuttke.
Echoing Wuttke's words, Liu Ying, a fellow at the Chongyang Institute for Financial Studies at Renmin University of China, said in an exclusive interview with People's Daily Online that she does not think the CAI can be signed by the end of 2016, but that the two sides might reach a consensus on core issues by that time.
There have been 10 rounds of negotiations between China and the EU on the bilateral investment treaty since it was first announced in 2013 by China's Premier Li Keqiang, together with the presidents of the European Council and European Commission.
"We cannot do business in China like what China does in Europe because of those limitations," claimed Wuttke. He nevertheless expressed the EU's hope to increase its participation and presence in China.
On Aug. 28, China's top legislature began its first reading of a draft amendment to the four laws regarding foreign investment. The amendment will offer a legal basis for a nationwide negative list, which constitutes a "great reform" of China's management system for foreign investment.
Discussing the recent news that China may consider foreign capital investment in areas like finance and culture, Wuttke praised China's movement toward a more open market. However, he emphasized that they will still "wait for the amendment and announcement to be put into practice."
Apart from the negative list and limitations on investment, overcapacity is also an obstacle for bilateral negotiations over CAI.
In "Elements for a New EU Strategy on China", published in June 2016 before the 18th EU-China summit, the EU urged China to assemble a more “ambitious, measurable and transparent” restructuring plan to reduce capacity. Both the EU and U.S. have imposed anti-dumping and anti-subsidy policies on China's steel to protect the local industry.
"These actions have no substantial impact on the exports of Chinese enterprises," said Liu.
Liu also said that China has made great progress in its overcapacity reduction. China cut 21.67 million tons of capacity in the steel sector in the first seven months of 2016, which is equivalent to around 47 percent of the yearly target, said former Vice Minister of Industry and Information Technology Feng Fei in an interview with China Daily.
Wuttke also applauded China's determination to reduce overcapacity and admitted that steel demand in Europe is weak. Europe and the U.S. have long criticized China's overcapacity in the steel and iron industries. However, Liu holds the opinion that there is no absolute overcapacity, but rather a structural capacity insufficiency.
China and the EU have decided to form a joint working group to monitor China's steel export volume and to solve the country's overcapacity issue, announced Jean-Claude Juncker, president of the European Commission, at a press conference on July 13. Liu predicted that the group will conclude that the Chinese government has no engagement in the export process of steel and iron after examining current production costs and operations.
Global trade faces a severe fragmentation problem, as there are more than 3,200 CAIs globally. With the 2016 G20 summit around the corner, Liu remarked on the urgent need to form a unified investment treaty.
Furthermore, according to "Elements", the EU came up with the idea of establishing a Free Trade Agreement (FTA) between China and the EU. In previous days, the EU gave no assertive answers about whether it will form an FTA with China. Liu said that the EU's main motivation to do so is its economic slowdown. An FTA with China could energize its economy by increasing trade and investment. Liu also said that an FTA would promote the flow of capital, technology and labor forces between China and EU.
