Beautiful Virgin Islands

Monday, Sep 01, 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
Chinese and Indian Leaders Pursue Amity Amid Global Shifts
European Union Plans for Ukraine Deployment
ECB Warns Against Inflation Complacency
Concerns Over North Cyprus Casino Development
Shipping Companies Look Beyond Chinese Finance
Rural Exodus Fueling European Wildfires
China Hosts Major Security Meeting
Chinese Police Successfully Recover Family's Savings from Livestream Purchases
Germany Marks a Decade Since Migrant Wave with Divisions, Success Stories, and Political Shifts
Liverpool Defeat Arsenal 1–0 with Szoboszlai Free-Kick to Stay Top of Premier League
Prince Harry and King Charles to Meet in First Reunion After 20 Months
Chinese Stock Market Rally Fueled by Domestic Investors
Israeli Airstrike in Yemen Kills Houthi Prime Minister
Ukrainian Nationalist Politician Andriy Parubiy Assassinated in Lviv
Corporate America Cuts Middle Management as Bosses Take On Triple the Workload
Parents Sue OpenAI After Teen’s Death, Alleging ChatGPT Encouraged Suicide
Amazon Faces Lawsuit Over 'Buy' Label on Digital Streaming Content
Federal Reserve Independence Questioned Amid Trump’s Push to Reshape Central Bank
British Politics Faces Tumultuous Autumn After Summer of Rebellions and Rising Farage Momentum
US Appeals Court Rules Against Most Trump-Era Tariffs
UK Sought Broad Access to Apple Users’ Data, Court Filing Reveals
UK Bank Shares Dive Over Potential Tax on Sector
Germany’s Auto Industry Sheds 51,500 Jobs in First Half of 2025 Amid Deepening Crisis
Bruce Willis Relocated Due to Advanced Dementia
French and Korean Nuclear Majors Clash As EU Launches Foreign Subsidy Probe
EU Stands Firm on Digital Rules as Trump Warns of Retaliation
Getting Ready for the 3rd Time in Its History, Germany Approves Voluntary Military Service for Teenagers
Argentine President Javier Milei Evacuated After Stones Thrown During Campaign Event
Denmark Confronts U.S. Diplomat Over Covert Trump-Linked Influence in Greenland
Starmer Should Back Away from ECHR, Says Jack Straw
Trump Demands RICO Charges Against George Soros and Son for Funding Violent Protests
Taylor Swift Announces Engagement to NFL Star Travis Kelce
France May Need IMF Bailout, Warns Finance Minister
Chinese AI Chipmaker Cambricon Posts Record Profit as Beijing Pushes Pivot from Nvidia
After the Shock of Defeat, Iranians Yearn for Change
Ukraine Finally Allows Young Men Aged Eighteen to Twenty-Two to Leave the Country
The Porn Remains, Privacy Disappears: How Britain Broke the Internet in Ten Days
YouTube Altered Content by Artificial Intelligence – Without Permission
Welcome to The Definition of Insanity: Germany Edition
Just a reminder, this is Michael Jackson's daughter, Paris.
Spotify’s Strange Move: The Feature Nobody Asked For – Returns
Manhunt in Australia: Armed Anti-Government Suspect Kills Police Officers Sent to Arrest Him
China Launches World’s Most Powerful Neutrino Detector
How Beijing-Linked Networks Shape Elections in New York City
Ukrainian Refugee Iryna Zarutska Fled War To US, Stabbed To Death
Elon Musk Sues Apple and OpenAI Over Alleged App Store Monopoly
2 Australian Police Shot Dead In Encounter In Rural Victoria State
Vietnam Evacuates Hundreds of Thousands as Typhoon Kajiki Strikes; China’s Sanya Shuts Down
UK Government Delays Decision on China’s Proposed London Embassy Amid Concerns Over Redacted Plans
A 150-Year Tradition to Be Abolished? Uproar Over the Popular Central Park Attraction
×