China, EU in need of raising mutual investment

China and the European Union (EU) need to work together to increase Foreign Direct Investment (FDI) flows in both directions, which remain at a fraction of their potential, delegates at the Hamburg Summit were told Saturday.  [Special coverage]

"Investment from both sides is rather limited," commented Stefan Sack, Vice President of the European Union Chamber of Commerce in China, even though there is sometimes a perception that China is making big investments in Europe. And European FDI into China is currently falling.

A key factor will be the EU-China Investment Agreement, which is currently being negotiated and will replace various bilateral agreements that China has with individual EU countries.

A number of difficult trade issues are still on the table. The EU has a long list of topics to discuss, such as the ones related to joint venture requirements, technology transfer, and sustainable development.

"It will be quite a long haul," said Peter Berz, Head of Unit, DG Trade of European Commission, though he has high expectations that an investment agreement will be signed, and will put the EU on what it views as a level playing field doing business in China.

Reinhard Butikofer, German MEP, said that the European Parliament will be watching the sustainability chapter in the investment agreement very closely.

He noted that the United States is also negotiating its own bilateral investment agreement with China, but that the United States is "not as eager as we are about adding such a chapter."

From the Chinese side, one panel member expressed the view that anti-dumping cases such as the one involving solar panels were an example of Europe simply trying to shut the door to lower priced but high quality imports.

Yi Xiaozhun, Deputy Director General at the World Trade Organisation, noted that since the EU and China are major players in WTO, other members want to ensure their agreements do not dilute multilateral agreements for everyone else.

He stressed that China remains committed to multilateral agreements at the WTO.

"China is trying to work together with other members, including the EU, to work out a successful conclusion of the Doha Round of trade negotiations," said Yi.