Because of tensions between Brussels and Beijing, the EU has abandoned attempts to approve an investment treaty with China. The deal was concluded in essence last December and had yet to be approved by EU institutions like the European Parliament.

"We have temporarily paused some political awareness efforts on the part of the Commission since it is obvious that, in the current situation, with EU sanctions toward China and Chinese counter-sanctions, even against Members of the European Parliament, the environment is not favorable for approval of the agreement," Valdis Dombrovskis, executive vice-president of the EU, informed French news agency AFP in an interview.

"We cannot neglect the broader sense of EU-China ties. In both cases, the fundamental reasons for the deal appear to be apparent, and ties with China are still asymmetric. This arrangement will aid us in mitigating the imbalance."

The deal's future has already been called into question after a recent diplomatic spat between Brussels and Beijing.

The European Union levied its first sanctions against China in more than 30 years in March. The slew of sanctions, devised in collaboration with Western allies, aimed at four Chinese officials and one entity suspected of committing human rights abuses against the Uyghur Muslin minority.

China responded quickly and angrily: The Chinese Foreign Ministry retaliated immediately, enforcing ten European citizens, comprising five Members of the European Parliament, and four bodies, including the European Parliament's subcommittee on humanitarian law.

Beijing has also blacklisted constitutionally elected politicians from the United Kingdom, the United States, and Canada. More than 30 people and companies are authorized.

Three of the major political parties in the European Parliament (S&D, Renew Europe, and Greens), all of whom occupy 45 % of the seats have declared that as long as the restrictions stay in effect, the parliament will fail to even begin the discussion on approval.

MEPs have the final authority on the resolution and they are co-legislators of the Council. An EU official attempted to explain Dombrovskis' terms.

"Before it could be submitted for approval and acceptance, the agreement must first be properly checked and translated. The investment deal approval mechanism cannot be distinguished from the changing complexities of the larger EU-China partnership,” Euronews was informed by the official.

"In this sense, Chinese retaliatory measures against European Parliament members and a whole parliamentary committee are both unfair and unforgivable. The chances for approval of the investment deal can be determined by how the situation develops. But it's not entirely stopped."

A contentious agreement

After seven years of talks, an understanding in principle of the investment contract was established at the end of December 2020.

The breakthrough was accomplished by Germany's determined and vigorous drive during the country's six-month presidency of the EU Council.

An eleventh-hour call between Chinese President Xi Jinping and European Commission President von der Leyen, European Council President Charles Michel, German Chancellor Angela Merkel, and French President Emmanuel Macron culminated the initiative.

The draught text seeks to achieve stable EU-China trading ties by requiring Beijing to agree to stronger access to markets for EU investors and fair opportunities for EU firms — what the European Commission referred to it as a "level playing field." Provisions on state-owned companies and tariffs are also included in the agreement.

According to the Commission, "for maybe the first time, China accepted the ambitious requirements on sustainable growth, including agreements on forced labor and adoption of related ILO (International Labor Organization) fundamental Conventions."

The hasty conclusion of the investment agreement, especially the guarantees about labor rights, drew condemnation, cynicism, and even doubt from the majority of European Parliament members.

According to the Commission, foreign direct investment from both the EU to China has totaled more than €140 billion in the last 20 years, whereas investment from China to the EU has totaled nearly €120 billion.

The automobile industry, raw materials (including chemicals), financial services, agriculture/food, and consumer goods are the primary industries in which EU companies invest in China.