EUROPEAN FOREIGN POLICY SCORECARD 2013

Trade liberalisation and overall relationship

2 - Investment and market access in China

Grade: B-
Unity 3/5
Resources 4/5
Outcome 4/10
Total 11/20
Scorecard 2010/11: B- (12/20)

Chinese investments in the EU reached new records. Negotiations on an investment treaty that could improve market access for Europeans inched forward.

In 2012, Chinese investment in Europe hit another record of $10 billion. The Chinese wealth fund CIC was behind several large deals in the UK, including the purchase of a £600 billion stake in Thames Water in January and a £450 million stake in Heathrow Airport in November.After another agreement with CIC, the head of the Polish investment agency said that “the sky is the limit”. The challenge for Europeans is to leverage this increase in Chinese investment in Europe to improve their own access to China’s market. In particular, Europeans aim to open up new sectors of the Chinese economy in which foreign investment is not permitted, such as finance, services, strategic industrial sectors, and key infrastructure.

Since the Lisbon Treaty gave the European Commission competence over investment policy, it has taken the lead on a new EU investment treaty to supplant bilateral treaties with China. In 2012, it completed an internal assessment and is due to present its confidential negotiation directives to the member states at the beginning of 2013. China agreed to start negotiations at the EU–China summit in September.It hopes an investment treaty will protect China’s own growing investments in Europe. This Chinese interest is illustrated by the international arbitration claim filed in November by Chinese insurer Ping An against Belgium due to its losses on its investment in the Belgian bank Fortis.

The main thing member states can do to support the European Commission as it negotiates the treaty is to reiterate in their bilateral discussions with China that the treaty is a top priority. 2013 will show if member states will do this as negotiations start. However, there still seems to be some reluctance to get behind the European Commission: the UK still seems to regret that competence has been moved to the EU level; Germany worries that, despite its greater size and power, the EU might deliver an investment treaty that is weaker than its own. 

Improving the vetting of Chinese investments in Europe
Leaders: -
Slackers: -