Europe News

The EU wants to revive investment talks with China while stepping up scrutiny on Chinese firms

Key Points
  • The EU has argued that European companies working in China don't enjoy similar levels of transparency and fair competition as those given to Chinese firms in the European Union.
  • Ensuring a level-playing field is a key aim for the European Union.
  • The European Commission opened a process last week that could restrict Chinese government-backed firms from operating in the EU.
Nelson Ching | Bloomberg | Getty Images

The European Union (EU) is hoping to revive investment talks with China on Monday, as it hosts calls with the Chinese President Xi Jinping and Premier Li Keqiang.

The two sides started negotiations for an investment agreement back in 2014, which Europe hoped would ultimately grant easier access to the Chinese market for European investors.

The EU has argued that European companies working in China don't enjoy similar levels of transparency and fair competition as those given to Chinese firms in the European Union. However, negotiators have not made significant progress and there are questions if they will reach a deal by the end of year, as had been planned.

The EU wants "to give a new political impetus" to its relationship with China, an EU official, who didn't want to be named due to the sensitivity of the talks, told CNBC Sunday.

Ensuring a level-playing field is a key aim for the European Union. To this end, the European Commission, the EU's executive arm, opened a process last week that could restrict Chinese government-backed firms from operating in the EU.

"We need the right tools to ensure that foreign subsidies do not distort our market, just as we do with national subsidies," Margrethe Vestager, the vice president for the European Commission, said last week.

The institution already oversees state aid granted by European governments to corporates, but it wants the same tool to oversee foreign state subsidies too. This could be a problem for many Chinese giants such as Huawei, given its links to the Chinese government.

The EU also wants to take stock of the Covid-19 pandemic, discuss China's climate goals, security policy and human rights. The European Commission said in May that it has "grave concerns" about Chinese plans for a national security law in Hong Kong.

The meeting takes place at a time of heightened tensions in international politics and a health emergency that has translated into an economic crisis too.

The same EU official told CNBC that there won't be a written statement between China and the EU on Monday, suggesting there won't be any concrete measures taken.

The EU-China summit is the first for the European Commission President Ursula von der Leyen and European Council President Charles Michel, who both started in their new roles last December.