The European Union on Wednesday agreed a multi-billion-euro investment deal with China amid criticism about the country's human rights record.

Senior EU officials and leaders, including German Chancellor Angela Merkel and the president of the European Commission, Ursula von der Leyen, joined a conference call with Chinese President Xi Jinping to announce the pact.

Von der Leyen, the former German defense minister, wrote on Twitter: "The EU has the largest single market in the world. We are open for business, but we are attached to reciprocity, level playing field and values."

The trade term "level playing field" is used to describe rules that are designed to prevent unfair competition.

Xi said the EU will offer bigger markets and a better business environment for both Chinese and European investments, according to remarks published by the official Xinhua news agency.

The agreement shows China's determination and confidence in opening up, Xi said, adding that it would stimulate the global economy as it recovers from the coronavirus pandemic, as well as promote economic globalization and free trade.

The agreement has been painstakingly negotiated over the past seven years. Officials in Brussels feared outgoing US president Donald Trump's tough stance on Beijing could scupper any chances of a deal.  

But it will need the approval of the European Parliament next year if it is going to become law. 

What is the deal about?

The idea is that it will open up new business opportunities to European and Chinese firms in a wide range of sectors.

European companies will now gain better access to manufacturing, engineering, banking, accounting, real estate, telecoms and consulting.

It comes as Commission negotiators succeeded in inserting a clause that their investments should "be treated no less favorably" than domestic rivals.

EU officials also agreed that China needs to be more transparent about state subsidies.

In return for better access to the bloc's market, Beijing will be obliged to publish a list of subsidies provided to designated sectors every year.

What about EU's other partners?

Britain left the EU on January 31 and cannot benefit from any EU deals agreed during the transition period that ends on Thursday.

Sensitive industries such automotive, aviation and health care will face more restrictions, although Germany is keen to tap new opportunities for its car giants in the lucrative Chinese market.

The incoming US Biden administration has been keeping a watchful eye on the EU's negotiations with China.

The US president-elect is known to have concerns about whether Chinese companies gaining a strong foothold in the European market amid reports some firms have used Uighur slave labor to produce their products.

The South China Morning Post reported on Wednesday that the Chinese government has agreed to uphold the International Labor Organization's standards on human rights.

An EU official, speaking on condition of anonymity, told journalists on Tuesday that if China fails to implement parts of the investment pact, the bloc could retaliate by reducing market access.

jf/dj (AFP, AP, dpa, Reuters)