The emergence of the COVID-19 pandemic in 2020, a "black swan" event, caused greater headwinds for economic globalization, and the simultaneous shrinkage of global trade, investment, and economic output has drawn widespread attention. The United Nations Conference on Trade and Development (UNCTAD), in its 2020 Trade and Development Report, urged that without radical policies to reactivate trade and capital flows, the recovery and resilience of the global economy will face immense pressure.

This call received a strong response at the end of 2020. Following the official signing of the Regional Comprehensive Economic Partnership (RCEP) on November 15, 2020, Chinese and European leaders jointly announced on December 30 the completion of negotiations on the China-EU Investment Agreement, injecting strong momentum into post-pandemic global economic development.

This will significantly strengthen trade, investment, and economic cooperation between the two largest economies in the world.

In recent years, bilateral trade cooperation between China and the EU has outpaced investment cooperation. In 2019, the EU surpassed the United States to become China's largest trading partner. However, in the same year, the EU's direct investment stock in China only accounted for 5.6% of China's total foreign investment stock, while China's direct investment stock in the EU accounted for 4.3% of its total outward investment stock.

The EU Chamber of Commerce in China believes that the technological advantages of both sides are complementary, and the potential for investment cooperation is enormous. The EU and China each have advantages in emerging fields such as artificial intelligence, 5G, and cloud computing, while both sides have strong demands for cooperation in industrial technologies. The EU Chamber of Commerce in China's Business Confidence Survey 2020 shows that 62% of its members said they would increase investment in China if China further expands market access; nearly half of the members are prepared to reinvest 5% to 10% of their annual income, and nearly one-third said they would invest even more. The breakthrough in the China-EU Investment Agreement negotiations will help create a transparent, consistent, and predictable business environment for both sides.

Looking ahead to the development trends of major global economies in 2021, major institutions are generally concerned that insufficient policy support may slow down the recovery process of major global economies. However, the breakthrough in the China-EU Investment Agreement provides more certainty for the uncertain global economy.

From the EU's perspective, the Asia Society Policy Institute believes that through this agreement, European businesses have gained important business opportunities, especially significant market access. In the foreseeable future, Europe will share the dividends of opening up in China's financial services, electric vehicles, and telecommunications sectors. Previous surveys by the EU Chamber of Commerce in China show that although global economic growth has slowed in recent years, European companies with operations in China have benefited significantly. 39% of members said their 2019 revenue increased by 20% year-on-year; 11% said the growth rate of their business in China was even higher. Therefore, the EU Chamber of Commerce in China believes that the Chinese market holds unlimited potential, and European companies hope to share in the development dividends. The subsequent conclusion of the agreement will undoubtedly benefit the post-pandemic recovery of the EU economy.

Reuters believes that China's breakthroughs in RCEP and the China-EU Investment Agreement at the end of 2020 reflect both China's determination and confidence in promoting high-level opening up and lay a solid foundation for China to build a new development paradigm. Banco Bilbao Vizcaya Argentaria (BBVA) believes that this breakthrough has multiple benefits for China. A more convenient, transparent, and open bilateral investment environment will effectively promote bilateral investment, adding new impetus to China's medium- and long-term economic development, and more EU companies investing in the Chinese market and the Chinese government's structural reform policy agenda will further enhance the international competitiveness of Chinese enterprises.

It is particularly important to emphasize that the spirit of cooperation demonstrated by both China and the EU in promoting the investment agreement is precisely what is urgently needed for the post-pandemic global economic recovery.

Following the completion of the negotiations, Jörg Wuttke, President of the EU Chamber of Commerce in China, expressed the hope that both sides would maintain the spirit and attitude of promoting the completion of the negotiations and reach the relevant agreements as soon as possible, stating that "a strong agreement would be a powerful statement that constructive engagement can deliver results."

The EU Chamber of Commerce in China previously stated that some people in the market are encouraging foreign companies to actively "decouple" from China, while European companies expect to further consolidate their position and compete for market share. The conclusion of a strong China-EU Investment Agreement shows that deepening cooperation remains the best path to development, which can also refute the international "zero-sum game" noise.

BBVA stated that in the post-pandemic era, the China-EU Investment Agreement will be a "game-changer," demonstrating that European and Asian countries have abandoned Cold War thinking and are using trade rules to seek closer relations. Under the new bilateral and multilateral trade and investment framework, promoting global recovery requires the unremitting efforts of all countries. (Wang Chutian)

Source: Economic Daily