Escalating EU-China tensions could jeopardize new investment deal

Flags of the European Union (left) and China.

Nelson Ching | Bloomberg | Getty Images

Worsening tensions between the European Union and China could jeopardize an investment deal that the two sides recently negotiated.

The EU on Monday imposed sanctions on four Chinese officials and one entity for human rights abuses in China's northwestern Xinjiang region. The move was part of a coordinated action against Beijing by the U.S. and its allies including the U.K. and Canada.

China swiftly retaliated against the EU, announcing its own blacklist of 10 individuals — including European lawmakers — and four entities.

Beijing's response in turn prompted warnings from several members of the European Parliament or MEPs, saying they would not ratify the EU-China investment deal that was agreed to in December.

"The lifting of sanctions against MEPs is a pre-condition for us to enter into talks with the Chinese government on the investment deal," said Kathleen van Brempt, an MEP from the left-leaning Socialist and Democrats group.

S&D is the second-largest political grouping in the European Parliament, with 145 MEPs.

Those targeted by the Chinese sanctions also weighed in.

Reinhard Bütikofer, a German MEP, said in a Twitter post that ratification of the EU-China deal "is not becoming more probable" after Beijing imposed sanctions to "punish" free speech.

Bütikofer is a lawmaker from the Greens/European Free Alliance group and chair of the European Parliament's China delegation.

Meanwhile, Slovakian MEP Miriam Lexmann from the center-right European People's Party group said in a tweet that China's actions "will make clear that it is not interested in being a partner but rather a systematic rival that undermines fundamental values and principles."

The European Parliament is set to vote on the EU-China investment deal in early 2022, said S&D. Negotiations took seven years and the deal, if ratified, would allow European investors "unprecedented access" to the Chinese market, European Commission President Ursula von der Leyen said in December.

But even before Monday's retaliatory sanctions, some European lawmakers raised three big concerns about the deal, casting doubt on its passing.

Beijing summons EU ambassador

Beijing said in a statement that its Vice Foreign Minister Qin Gang summoned Nicolas Chapuis, EU ambassador to China, on Monday night to protest sanctions by the EU.

The Mandarin-language statement released on Tuesday said EU sanctions targeted at China were based on "lies and disinformation" about Xinjiang, according to a CNBC translation. It also warned the EU not to further worsen Europe-China relations.

Human rights groups like Amnesty International and international organizations including the United Nations have accused China of holding more than 1 million Uyghur Muslims and other minorities in detention camps.

In a joint statement released Monday, the U.S. secretary of State as well as the foreign ministers of Canada and the United Kingdom alleged "China's extensive program of repression includes severe restrictions on religious freedoms, the use of forced labour, mass detention in internment camps, forced sterilisations, and the concerted destruction of Uyghur heritage."

China has repeatedly denied charges of forced labor, and claimed that the camps are re-education camps to weed out extremism and teach people new job skills.

— CNBC's Evelyn Cheng and Silvia Amaro contributed to this report.

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