EU Lawmakers to Freeze China Investment Deal, Politico Says

European Union lawmakers will vote to formally halt an investment agreement with China in response to sanctions against members of the bloc, Politico reported, adding to growing tensions between Brussels and Beijing.

The motion freezing the Comprehensive Agreement on Investment is expected to pass Thursday, the news outlet said, citing a draft of the document. It will demand China lift sanctions before any progress is made on the deal, which took seven years to negotiate, and urge the bloc to better cooperate with the U.S., Politco reported.

The agreement is balanced and mutually beneficial, and both parties should work toward its early ratification, Chinese Foreign Ministry spokesman Zhao Lijian said in a regular briefing Wednesday in Beijing.

China had to impose sanctions on European individuals and institutions to safeguard its interests, Zhao said, adding: “We hope the European side could take a lesson from this.”

Worries over ratification of the investment deal arose in March, when China retaliated against the U.S., U.K. and EU over sanctions related to allegations of human rights abuses in the western region of Xinjiang. Beijing said at the time it would punish 10 individuals and four entities in the EU, saying the measures “harm China’s sovereignty and interests.”

“The European Parliament action will just put a label on what was already clear since China imposed supersized sanctions on European parliamentarians,” said Joerg Wuttke, head of the European Union Chamber of Commerce in China. “The CAI took seven years to negotiate. Unfortunately, it might take another seven to be ratified.”

China has been criticized by Western governments over its treatment of Muslim Uyghurs and other minorities in Xinjiang. A panel of UN experts in 2019 said an estimated 1 million people have been sent to counter-terrorism internment facilities in the region, part of a set of policies the U.S. has said amount to genocide.

EU Lawmakers to Freeze China Investment Deal, Politico Says

China has hit back at the charges, saying it’s addressing a terrorism issue that reached its peak around 2014 when knife-wielding attackers killed and injured dozens of people in a train station in the southwestern city of Kunming. That incident startled the nation, prompting state media to compare it to the Sept. 11 terrorist attacks on the U.S.

Beijing says its activities in Xinjiang are aimed at building infrastructure, and providing economic and educational opportunities.

The move by the EU lawmakers comes just before President Joe Biden attends a U.S.-EU summit in Brussels in June, marking his first foreign trip as the nation’s leader. Biden and his European counterparts are set to discuss trade cooperation, the White House has said.

It’s also likely that China will come up in the talks. Beijing’s ties with Europe have been deteriorating recently, with Italy blocking planned acquisitions by Chinese firms and France’s junior minister for European affairs saying his country won’t tolerate “threats and intimidation” from China.

China-EU ties are in a stalemate now because it is politically impossible for either side to lift their sanctions, an academic at a Chinese government-affiliated think tank told Bloomberg last month.

While the EU made a mistake by taking the initiative imposing them, China’s retaliation only added fuel to the fire, said the Chinese academic, who is not authorized to comment publicly due to rules on speaking to foreign media.

The parliament’s motion also says that any trade agreements with Taiwan “should not be held hostage” by the deal with China, Politico reported. It also repeats a request that Europe “swiftly finalize a supply-chain business advisory with guidance for companies on the exposure to risk of using Uyghur forced labor,” the report said.

“These developments fuel the creeping politicization of business in China, which increasingly makes European companies in the market worry that they will someday find themselves between an unstoppable force and an immovable object,” Wuttke said.

©2021 Bloomberg L.P.

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