After seven years of negotiations, the European Union and China agreed in principle on a landmark investment treaty that the 27-member bloc says will level the playing field for European investors in China.
The agreement was reached on Wednesday after a final call between Chinese President Xi Jinping and European leaders including German Chancellor Angela Merkel and French President Emmanuel Macron.
The EU says that China has made significant commitments to allow European investors greater access to its manufacturing sector, as well as in cloud services, financial services, and private health care.
Plus: Alibaba stock suffers record fall after antitrust probe in China
The deal also provides a boon for Chinese investors in Europe.
China will have to usher in new rules for its state-owned enterprises, including transparency over subsidies and prohibiting forced technology transfers.
Still, the deal was cheered by Chinese markets, with the Shanghai Composite Index
climbing 1.7% on Wednesday to its highest level since early 2018.
Brussels is strengthening relations with Beijing at a critical moment for China. President-elect Joe Biden is set to implement his own tough-on-China policy when he enters the White House, and the EU would be pivotal to any democratic coalition against China.
Also read: China caps year with more manufacturing growth
Dedication to human rights is “at the heart” of the EU’s foreign relations, according to the bloc, but activists are already criticizing the deal.
While the EU says it has secured new commitments from Beijing on workers’ rights, there are widespread allegations that detained Uighur Muslims in the Xinjiang region are being used as forced labor. China denies those allegations.