The EU-China treaty is being negotiated at a time of uncertainty in global economics and politics and also in the EU-China relationship. A key policy aim of the CAI is to increase investment flows between the EU and China, but it has the potential to reach beyond this basic goal in its significance. One aspect of wider importance for the CAI may be that the agreement itself could encompass innovations in the governance of FDI when compared to those contained in similar existing bilateral and regional agreements. In this sense, the CAI may be able to stake a claim to global leadership in the governance of FDI. But the economic and political context surrounding the agreement may determine how the possibility for leadership in the area of FDI governance will be realized.
The need to resolve overcapacity problems in domestic industry is frequently cited as a key reason for the Chinese government’s promotion of its Belt and Road Initiative (BRI). This chapter analyses the relationship between industrial overcapacity in China and the BRI. It assesses the degree to which the BRI and the related policy of “production capacity sharing” has had or may have an impact in overcapacity in China, and whether this domestic factor can explain China’s apparent attempt to reshape the global economic order through the BRI. The chapter uses trade and investment data and policy documents to analyse the relationship between the BRI and overcapacity, focusing on the steel and cement sectors as key inputs to infrastructure, which is central to the construction of the BRI. It argues that while overcapacity is a key domestic policy concern, the BRI can have only marginal impact even if reducing overcapacity were its goal. In this regard the BRI makes no global governance contribution to resolving the overcapacity problem, which, from a Chinese perspective, is dependent largely on domestic policy measures.