The negotiations for an investment treaty between China and the European Union are being hampered because China wants so many sectors to be exempt from the treaty, sources have said. The EU was not satisfied with China’s offer of market access because of the number of opt-outs it was seeking as well as the other restrictions it wanted to place on European investors. The EU was also disappointed at the slow pace that the financial services sector was being opened up, but expected that China would speed up the process to push forward the talks.

Beijing and Brussels started talks on the Comprehensive Agreement on Investment in January 2014. The two sides will hold the 16th round of talks next month. The European Chamber of Commerce in China wants a simplified regulatory environment, freedom to enter into new business areas or product segments and fewer barriers to acquisitions in China. The French Ambassador to China Jean-Maurice Ripert told a financial forum that he hoped EU partners including China “can offer the same level of openness as the EU and a level playing field”. Foreign companies have frequently complained about the lack of market access in China, and the issue has affected China’s relations with the United States and the EU.

As Beijing announced it would loosen the ceiling on foreign investment in financial sector, Germany’s Ambassador to China Michael Clauss said that – while the announcement was welcome news – there has been no shortage of such kind of announcements in recent years. “What we rather see is that the implementation very often leaves much to be desired,” he said. “In many cases the alleged opening up of the market is being foiled by bureaucratic barriers and red tape. “That might be one of the reasons why the share of foreign banks in the Chinese finance sector over the last 10 years decreased to less than a meagre 2%,” he added.

The EU is increasingly discontented about the lack of investment access and is drawing up investment screening regulations owing to concerns about China’s strong appetite for European technology. China’s investment in the EU rose by 77% last year to €35 billion, while EU investment into China fell for the fourth year in a row to €8 billion, down 23% on the previous year, the European Chamber said in a report. During the first half of this year, China’s investment in the bloc remained stable at USD10.4 billion, while the EU’s investment in China fell to USD3.7 billion from USD4.8 billion compared with the previous year, the South China Morning Post reports.

China’s outbound direct investment (ODI) from non-financial sectors dropped 40.9% year-on-year to USD86.31 billion between January and October. Companies from China invested in 5,410 companies in 160 countries and regions in the first 10 months of the year and signed USD184.3 billion in new contracts for overseas projects, a rise of 11.3% year-on-year. No new projects were reported in property, sports or entertainment. Outbound investment in 53 economies related to the Belt and Road Initiative stood at USD11.18 billion, accounting for 13% of total ODI, up 4.7 percentage points year-on-year.