China, EU to step up talks to seal investment treaty

Business people from Europe purchase hair accessories at the Guangzhou Trade Fair. Zou Zhongpin / China Daily

Both sides determined to surpass speed of US treaty negotiations

Negotiations on an investment treaty between China and the European Union "is still at the beginning stage", a senior official said on Thursday, but both sides are committed to achieving the level of or surpassing the progress of Sino-United States investment treaty talks.

"As Brussels supervises the investment policies of the 28 members, an overall investment pact between China and the EU will have very significant influence on Chinese investment in the bloc," Sun Yongfu, general director for European Affairs of China's Ministry of Commerce, told reporters.

The talks are still in their infancy, at only a technical level, but both sides are determined to expedite the pace to level or even outrun the China-US investment treaty negotiations," Sun said.

He added that a third round of talks for the China-EU investment treaty will take place in Beijing early next month.

"The difficulties mainly lie in the degree of opening markets. The EU expects China to open more, and China, vice versa. Meanwhile, departments have different views on the agenda," Sun said.

China started negotiating the investment pact with the EU in January. The country is also in talks with the US for a bilateral investment pact, which started much earlier. The two countries concluded a 12th round of talks in Washington, DC, in early March with substantial progress reported on their framework. The two high-profile pacts are important initiatives with which China's new leadership plans to open up the world's second-largest economy.

"China is likely to make breakthrough on the investment pact talks with the EU, as the country reached investment agreements with many members of the European Union," said Huo Jianguo, president of the Chinese Academy of International Trade and Economic Cooperation, a think tank at the commerce ministry.

"China and the EU are also key trade partners for each other, and the slow recovery in the 28-member bloc has forced the EU to further tap the Chinese market. Meanwhile, Chinese enterprises this year will continue to invest heavily in the EU," Huo said.

He added that the US will probably "remain strict on some new issues, such as standards, during the talks".

The EU is China's leading investment destination among developed economies. From January to April this year, China's outward direct investment in the bloc rose 2.2 percent to $700 million, Sun said.

The two-way investment between the world's two key economic blocs lags their bilateral trade. The value of goods and services traded daily between the EU and China are worth well over billion euros. The EU is also China's largest trade partner.

"China-EU trade has done well in the first four months of this year, which drove up overall trade. We hope bilateral trade expands 10 percent this year, which will help China reach its 7.5-percent growth target of overall trade for the year," Sun said.

Bilateral trade between China and the EU increased 11.3 percent year-on-year to $188 billion in the first four months, while China's overall trade declined 0.5 percent, according to the General Administration of Customs.

Sun attributed it to the EU's economic improvement since last year, which increased demand for Chinese exports. In addition, China is further opening its market to European products.

"Bilateral trade will continue to grow as long as we control trade friction," Sun said. "Both sides are willing to resolve friction through discussion. We are in the process of setting up an early warning mechanism overseen by the trade ministers," he added.

The mechanism will be responsible for looking into reports of export surges and low pricing. Industrial representatives from both sides will monitor unordered export growth or low pricing competition through consultations and information exchange.

In addition to the EU, China is also strengthening economic ties with the 16 countries in Central and Eastern Europe (CEE), of which 11 are also EU members. China and the CEE will hold a ministerial meeting on economic promotion and trade from June 8-9 and an expo of products from the CEE will run from June 8-11 in Ningbo, Zhejiang province.

China's trade with the CEE, which rose 5.9 percent year-on-year to $55.1 billion in 2013, "has great potential and is likely to surpass $60 billion this year", Sun said. China's investment in the 16 countries has reached $5 billion, covering such things as machinery, chemicals and agriculture.