The second round of negotiations on the China-EU investment agreement started recently. China and the EU have exchanged views on a number of important issues of principle. A stable, transparent, balanced investment agreement will make an important contribution to enhancing economic and trading cooperation between China and the EU. It will also promote China-EU bilateral investment growth and help to reinforce the China-EU comprehensive strategic partnership.

Since China's accession to the WTO, China-EU trade and economic cooperation has seen a surge. EU-China bilateral trade has quadrupled in 10 years, reaching $ 559.1 billion in 2013. The EU has been China's largest trading partner for 10 consecutive years, and China has been the EU's second largest trading partner for 11 consecutive years. China-EU economic ties are one of the world's most dynamic economic and trade relationships.

In comparison with the significant growth in trade, investment between China and the EU is lagging. The scale of investment cooperation is far from what the two economies would wish. Official statistics from the EU show that Chinese investment in the EU accounted for only 1% of the total foreign direct investment in Europe, while the United States accounted for 21%; EU investment in China accounted for only 2-4% of its total overseas direct investment, while its investment in the United States accounted for 30%. The development of China-EU economic relations needs to be transformed and upgraded from a trade-led mode to an "investment + trade" driven mode.

The China-EU investment agreement will have an important impact on investment as well as on economic cooperation between the two parties. For the EU, although it is slowly emerging from the sovereign debt crisis, economic recovery remains sluggish. It has increasing capital and market demands from the emerging economies such as China. The Chinese economy is in a critical period of transformation and upgrading; it also needs to acquire leading technology, brand strength, and industrial design capabilities from Europe.

The signing of this China-EU investment agreement will not only be conducive to promoting China's opening-up process, but also in helping China to transform its economic growth mode.

The article is edited and translated from投资将成中欧合作新引擎 , source: The Economic Daily; Author: Chen Jian