The European Union is very open to foreign direct investment. By comparison, despiteconsiderable liberalisation in the past two decades, foreign investors in China’s markets stillface significant restrictions, especially in services sectors. Given this imbalance, the EU haslong sought to improve the situation for its companies operating or wanting to operate inChina.

After eight years of negotiations, the EU and China concluded in December 2020 abilateral Comprehensive Agreement on Investment (CAI). The text awaiting ratificationaims to give foreign investors greater market access, enforceable via state-to-state disputesettlement. It does not yet, however, cover investor protection (such as against expropriation).Meanwhile, investor protection is covered by bilateral investment treaties between EUcountries and China, which remain in force.