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A few weeks after the signing of the Comprehensive Agreement on Investment (CAI) with China, we take another look at the debate that has ensued. Initial reaction was of surprise at best, and disbelief at worst. Assessments of the deal ranged from a massive diplomatic win for China (implying a massive diplomatic loss for the EU), even by some EU policy makers policy themselves, to a kick in the teeth for Joe Biden or rather cynically, a rushed attempt to defend country interests by a German trio.

What do these assessments tell us?

Is this agreement a narrow German “deal”? The EU and China have been in talks for seven years trying to reach an agreement on investment. Germany has by far the greatest commercial interests in China among EU countries. But as my colleague Alicia Garcia-Herrero, a scholar specialising in China argues here, this agreement deals with the long-standing issue of subsidies in services and not in manufacturing, where Germany’s overwhelming commercial interests lie. In any case, it would be a mistake to consider this a zero-sum game, whereby defending German commercial interests necessarily negates benefits to the rest of the EU.

…and a kick in the teeth for Joe Biden? One can be forgiven for worrying about the timing of such a deal. Just as the US is about to turn friendly and cooperative again, the EU acts unilaterally, having spent the past four years seeking US cooperation. I cannot help but wonder about this myself. However, it would be naive for the US to assume that Europe will behave as if the last four years didn’t happen and that the EU discussions on strategic autonomy and geopolitics in the EU will not have changed its approach to global engagement. Moreover, we should be under no illusion that cooperative or not, the US will pursue its own interests first and foremost. The attempt to engage with China unilaterally, is at least in part also an attempt by the EU to exercise this geopolitical independence.

A massive diplomatic win for China then? Possibly yes, and at different levels. As long as the US and the EU do not agree, there is always scope for China to play the two against each other, and at the very least, prevent them from uniting against her.

But the CAI is also a vote of approval that demonstrates that China is a global player capable of cutting deals with the developed world, a fact that legitimises what it does also at home. No sooner had the agreement been signed and China arrested 53 elected pro-democracy officials in Hong Kong. This is a simple reminder for those who believe that engaging with China will edge it to reform, very much like the motivation for including it in the global multilateral system (WTO), only to discover 20 years later, that it has not really helped.

So, what is the end game here? Can we imagine a world with one global multilateral system, in which trade and financial flows benefit from free and open trade? Or is the world de facto moving towards two poles of attraction, one based on the western way, and one on the eastern? A world in which there are two multilateral systems in which trade within members of each group is seamless but with limited interaction between them?

For the moment, it does not look like we have the basis for greater and deeper economic relations with China. There are too many grievances, too many differences in the way that we actually do business.

However, dismissing China and the opportunities that it creates for global cooperation would also be a mistake. Our efforts should aim to identify the minimum that is acceptable for relations to be conducted in a sustainable manner. But if the EU ever has a chance of being a credible counterweight to China, it would need to nurture alliances with old and new partners starting with its oldest partner, the United States.

In the meantime, it would be important to understand the economic significance of the CAI and whether it stands a chance of being enforceable. We will need to have a third look when the text becomes available.