SOURCE / ECONOMY
Uncertain outlook for China-EU BIT
Nation may re-evaluate negotiation strategy based on fallout of coronavirus: analysts
Published: Feb 20, 2020 11:58 PM

File photo

The onslaught of the coronavirus may delay planned China-EU bilateral investment treaty (BIT) talks due to difficulties in scheduling face-to-face negotiations, industry insiders said. China may also re-evaluate how it wants to open its economy to European firms based on the impact of the coronavirus.

But as nothing is finalized until a formal text, Chinese observers warned that the EU should never use the virus as a bargaining chip to pressure China into making unreasonable concessions. Both China and the EU are being urged by analysts to take a practical approach in heading toward the treaty. 

EU trade chief Phil Hogan said on Tuesday that the BIT may be held up due to the outbreak of coronavirus in China, Reuters reported on Thursday. 

According to Hogan, Chinese and EU leaders are scheduled to sign the deal in September on the sidelines of a summit in Leipzig, Germany - an ideal situation. Ahead of that, senior EU and Chinese officials are scheduled to meet in late March. Hogan said that as the March meeting would probably not happen, he is pessimistic that the BIT could be signed in September.

China and the EU are supposed to sign the treaty before the end of 2020, a goal top officials from both sides set in April 2019.

Analysts said that whether the deal will get on track to meet the timetable largely depends on how fast the epidemic is put under control in China, and whether the two sides take a pragmatic approach to narrow their divergences.

"From a technical perspective, the coronavirus has forced China to postpone much of its diplomatic agenda. People-to-people exchanges are also hindered, posing barriers to a new round of negotiations between China and the EU," Chen Fengying, a research fellow at the China Institute of Contemporary International Relations in Beijing, told the Global Times on Thursday. 

While such a postponement could be made up for by ratcheted-up efforts from both sides afterwards, analysts stressed that the extent to which the Chinese economy is taking a hit from the virus will weigh more on further BIT talks.

"If the inflection point for the epidemic is not within sight in a couple of days, Chinese negotiators need to take account of medium- to long-term economic prospects," Cui Hong, director of EU Studies at the China Institute of International Studies in Beijing, told the Global Times on Thursday. 

Some top economists estimated that China's GDP growth may drop below 5 percent in the first quarter due to the coronavirus outbreak. 

Cui stressed that regardless of how Brussels broadsides Beijing, Chinese trade officials need to be sufficiently flexible and adjust their negotiation strategy accordingly.

For example, Chinese trade teams could offer more opening-up in sectors that are immune to or less affected by the coronavirus, while securing "the bottom line" for industries that are suffering a lot from the epidemic's fallout, according to Cui.

The sincerity and goodwill displayed by EU negotiators is also critical to fast-track the agreement, according to analysts. 

"The EU should not take the virus as leverage to get more concessions from China. Otherwise, it is up to the bloc to bear all the responsibility for not delivering the deal on time," Cui stressed. 

China and the EU held the 26th round of BIT talks in January, since the talks were launched in 2013. Negotiations started to speed up last year amid rising US-led unilateralism, but differences still reportedly linger on negative lists and the level of equal opening-up. 

It is important that communication between both sides continues and is not disrupted by the coronavirus, Cui noted. 

In a sign of closer bilateral economic ties with China, some major European economies such as Germany and the UK parted ways with the US and greenlighted Chinese tech company Huawei in the construction of local 5G rollouts in recent days.  

"The rising pressure from the US and a sluggish economy also creates an urgency for EU to tilt toward China and sign an investment treaty," Chen said.
blog comments powered by Disqus