The EU–China Comprehensive Agreement on Investment

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On December 30, 2020, the European Union and China concluded in principle the Comprehensive Agreement on Investment (CAI). Beijing’s sudden flexibility on the terms of the bilateral investment agreement is clearly part of an effort to pre-empt improving U.S.–EU relations. Essentially, the CAI gives European investors additional market access in China in exchange for access to markets that are already more open to China than China is to the EU. The deal will be a political win for China at a time when China’s diplomatic relationships around the world are worsening. Beijing has become increasingly belligerent toward countries that want greater transparency in areas like the use of forced labor and the origins of COVID-19. The U.S. and the EU must work together to address the China challenge. With the CAI, Europe is making a down payment on a separate peace that will do long-term damage to the transatlantic relationship.Download Report