MNI: China, EU CAI Hopes Fade, Focus Shifts To Green, AI

China’s hopes of reviving the Comprehensive Agreement on Investment (CAI) with the EU are fading, as Brussels focuses on derisking supply chains and is more likely to pursue targeted cooperation in areas like green industry and artificial intelligence, policy advisors told MNI.

Beijing had hoped that U.S. trade pressure would push Brussels to revive the CAI, concluded in 2020 but never ratified by the European Parliament, but Chinese advisors now say it is clear the EU is unlikely to agree to a broad deal, despite a revival of legislative ties earlier this month.

Separately, EU officials have told MNI that the bloc, which become unpleasantly aware of the fragility of its supply chains during the Covid pandemic, would be wary of doing deals with China which might anger Washington, with which it is also prepared to cooperate in responding to Chinese competition in industries such as steel, pharmaceuticals, cars, and semiconductors. (See MNI: EU To Keep China Option In Reserve As Seeks US Deal)

Chinese advisors still see room for cooperation on a sector-by-sector basis, with one noting that some of CAI’s objectives, such as the opening up of China’s services sector have already been achieved in practice.

SECTOR COOPERATION 

The two sides could work together in areas such as the regulation of artificial intelligence, said Wang Yiwei, director of the Institute of International Affairs at Renmin University and a former diplomat at the Chinese Mission to the EU, saying that the old CAI’s terms now seem outdated anyway, particularly that China has begun aligning with higher standards as part of its application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

Cooperation on green transformation could usefully contain industrial competition between the blocs, said Cui Hongjian, professor at the Academy of Regional and Global Governance at Beijing Foreign Studies University. He pointed to ongoing negotiations over price commitments for electric vehicle imports into the EU as a potential model for broader green-sector engagement.

China cannot rely solely on a U.S.-EU rift to strengthen ties with Brussels, Cui said, though he said he hoped for some progress in the second half of the year and that both sides felt a sense of urgency. Wang said he was cautiously optimistic despite it being clear that the EU viewed China as a competitor.

“We need a new, innovative model to deepen China-EU cooperation as the bloc seeks to recalibrate its China approach,” Cui said. (MNI: U.S. Policies Will Push EU, China Closer - Senior Advisor)