By Li Hongmei
China and the European Union began talks on a landmark investment agreement yesterday, a positive move amid lingering trade tensions between the two sides.
"We have made a substantial step forward today by launching negotiations on an investment agreement, covering both investment protection and market access," said Herman Van Rompuy, president of the European Council, after a China-EU summit in Beijing.
"Both the EU and China believe that it is the right time to go ahead," he said. Van Rompuy said the accord would increase investment flows.
"Our bilateral investment flows are still far too low, given the level of integration taking place between our economies. This agreement will achieve more two-way investments between the EU and China," he said.
China is the world's second largest economy and the relationship between the two, while sometimes troubled, is hugely important for world trade.
The 28-nation EU is China's largest trading partner, and China is the EU's second biggest. Trade between the two amounted to US$546 billion in 2012.
Van Rompuy was accompanied at the summit by Jose Manuel Barroso, president of the European Commission.
Premier Li Keqiang called the talks "friendly, candid, in-depth and broad."
He said the two sides "reached important consensus on how to further deepen China and the EU's comprehensive strategic partnership in the future." Li added: "The meeting, it could be said, was rich in achievements."
The summit marked the 10th anniversary of what China and the EU call their "comprehensive strategic partnership."
Last month, the EU agreed a negotiating mandate for talks on an investment protection accord, aiming to bolster legal certainty for European firms in China and widen their access to its market. But an investment protection accord falls well short of the extensive free trade agreements Brussels is negotiating with other major partners such as the United States.
The EU is reluctant to go that far while the Chinese government retains such a major role in the country's economy.
Beijing and Brussels have locked horns over a string of commercial issues this year, including at the World Trade Organization.
Disputes have ranged from solar panels to nuts and bolts.
The two sides reached agreement to avoid a trade war over cheap imports of Chinese solar panels, but other disputes, including on Chinese rare earth minerals, are still simmering.
Li said the two sides will "work to increase trade to US$1 trillion by 2020."
Li said there was also discussion on a "2020 strategic agenda" covering cooperation in areas including space, anti-piracy and urbanization.
Van Rompuy also praised China for "lifting millions of people from poverty" and welcoming "important progress" on human rights issues.
The Party announced last week it was abolishing its labor camp system and easing its one-child policy and would gradually reduce the number of crimes punishable by death.
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