Beautiful Virgin Islands

Tuesday, Oct 07, 2025

Analysis: China may just have doomed its trade deal with Europe

Analysis: China may just have doomed its trade deal with Europe

China and the European Union rang in the new year by striking a major investment deal intended to strengthen their trade ties. A contentious spat over human rights could now doom the agreement.

The European Union joined the United States and United Kingdom this week in punishing Chinese officials with sanctions over alleged human rights abuses in the country's Xinjiang region. Beijing fired back with sanctions of its own on 10 EU politicians, including members of parliament and four entities, for "maliciously spreading lies."

Valdis Dombrovskis, the European Union trade commissioner, said the fate of the investment agreement, which has not yet been ratified by the European Parliament, is now in doubt.

"China's retaliatory sanctions are regrettable and unacceptable," Dombrovskis told the Financial Times in remarks confirmed by his spokesperson. "The prospects for ... ratification will depend on how the situation evolves."

The European Commission, which negotiates trade deals for the 27 EU countries, had already come under fire from members of parliament and activist groups for moving ahead with the investment agreement without securing stronger commitments from China on labor and human rights protections.

China's dramatic response to sanctions means the investment deal now faces an even tougher path to ratification, underscoring just how difficult it will be for the European Union to balance its economic interests with human rights concerns, especially as the United States wants to work with allies to challenge Beijing.

"The lifting of sanctions against [members of the European parliament] is a pre-condition for us to enter into talks with the Chinese government on the investment deal," said Kathleen van Brempt, a member of the European Parliament and spokesperson for the Socialists and Democrats. "We will not be intimidated, we will not be silenced."

Guy Verhofstadt, a member of European Parliament and the former prime minister of Belgium, said that China's decision to fire back over sanctions had "killed" the deal.

A complicated deal


The investment agreement — which aims to promote sustainable development, and improve access for EU investors to China's economy in areas such as health, financial services and electric cars — was always going to be tricky to finalize.

Increased tensions between the United States and China are one major reason. Washington is confronting China on a range of economic issues including market access and trade, and it has even accused Beijing of carrying out "genocide" against Uyghurs and other ethnic and religious minority groups in Xinjiang. That's forcing other countries to pick sides.

EU and Chinese leaders meet via video conference to approve the investment pact in 2020.


"The China-EU investment deal has always been a long-shot," said Alex Capri, a research fellow at Hinrich Foundation and a visiting senior fellow at National University of Singapore.

Capri said concessions China made to the United States as part of last year's trade truce with the Trump administration had pushed Europe to revive its own agreement. But while Brussels wants to keep up a "robust" trading relationship with Beijing, he said, the bloc will "continue to pivot" to the United States on many issues, including alignment on artificial intelligence and strategic supply chains.

"It'll be awkward for the European Parliament to ratify an investment deal with a country that's sanctioned several," of its members, said Nick Marro, the lead for global trade at the Economist Intelligence Unit, in a commentary published Tuesday.

Not dead just yet


Marro said that the investment deal isn't "dead on arrival" just yet. And several experts have pointed out that it's in Beijing's best interest to bolster economic ties: China is the European Union's second biggest trading partner behind the United States, while the European Union is China's largest trading partner, according to the European Commission.

"The biggest risk to the [investment deal] is not Beijing pulling out, but unleashing an aggressive response that undercuts European support for the pact," wrote analysts at Eurasia Group in a research note published late last week.

Some influential voices in China appear to understand that, too. Hu Xijin, the editor of the state-run tabloid the Global Times, played up the "symbolic" nature of the sanctions Tuesday on his Weibo account.

"Please note that the mutual sanctions didn't touch trade and the economy, so it's mainly just a verbal fight," Hu wrote on the Chinese social media platform.

"The essence of China and the West's relations are business. That's the real interest."

A 'costly' approach


Brussels and Beijing have huge incentives to preserve their overall economic relationship and prevent further deterioration.

Still, China may have miscalculated its response. Its new sanctions ban several EU politicians from entering mainland China, Hong Kong and Macau. And their related companies and institutions will be restricted from doing business with China.

"Chinese diplomacy seems incapable of taking a measured approach when it comes to responding to perceived public affronts," said Capri, who added that the reaction "will prove to be costly."

Daniel Gros, a distinguished fellow at the Centre for European Policy Studies, said China has "a bit overreacted." But he added that ratification of the investment deal is still a long way off, and the spat may not jeopardize it in the long run.

Even so, geopolitical tensions could increase over the coming year. Gros pointed to Beijing's crackdown on pro-democracy activists in Hong Kong and China's confrontational diplomacy as potential flash points.

"If there's more evidence of human rights violations against the Uyghurs, all these things could and would influence the final decision," Gros said.

Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
A Dollar Coin Featuring Trump’s Portrait Expected to Be Issued Next Year
Australia Orders X to Block Murder Videos, Citing Online Safety and Public Exposure
Three Scientists Awarded Nobel Prize in Medicine for Discovery of Immune Self-Tolerance Mechanism
OpenAI and AMD Forge Landmark AI-Chip Alliance with Equity Option
Munich Airport Reopens After Second Drone Shutdown
France Names New Government Amid Political Crisis
Trump Stands Firm in Shutdown Showdown and Declares War on Drug Cartels — Turning Crisis into Opportunity
Surge of U.S. Billionaires Transforms London’s Peninsula Apartments into Ultra-Luxury Stronghold
Pro Europe and Anti-War Babiš Poised to Return to Power After Czech Parliamentary Vote
Jeff Bezos Calls AI Surge a ‘Good’ Bubble, Urges Focus on Lasting Innovation
Japan’s Ruling Party Chooses Sanae Takaichi, Clearing Path to First Female Prime Minister
Sean ‘Diddy’ Combs Sentenced to Fifty Months in Prison Following Prostitution Conviction
Taylor Swift’s ‘Showgirl’ Launch Extends Billion-Dollar Empire
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
Supreme Court Extends Freeze on Nearly $5 Billion in U.S. Foreign Aid at Trump’s Request
Archaeologists Recover Statues and Temples from 2,000-Year-Old Sunken City off Alexandria
China Deploys 2,000 Workers to Spain to Build Major EV Battery Factory, Raising European Dependence
Speed Takes Over: How Drive-Through Coffee Chains Are Rewriting U.S. Coffee Culture
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Ringo Starr Champions Enduring Beatles Legacy While Debuting Las Vegas Art Show
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
FBI Removes Agents Who Kneeled at 2020 Protest, Citing Breach of Professional Conduct
Trump Alleges ‘Triple Sabotage’ at United Nations After Escalator and Teleprompter Failures
Shock in France: 5 Years in Prison for Former President Nicolas Sarkozy
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
BNP Paribas Abandons Ban on 'Controversial Weapons' Financing Amid Europe’s Defence Push
Typhoon Ragasa Leaves Trail of Destruction Across East Asia Before Making Landfall in China
The Personality Rights Challenge in India’s AI Era
Big Banks Rebuild in Hong Kong as Deal Volume Surges
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Arnault Denounces Proposed Wealth Tax as Threat to French Economy
Study Finds No Safe Level of Alcohol for Dementia Risk
Denmark Investigates Drone Incursion, Does Not Rule Out Russian Involvement
×