Europe's much-criticized pursuit of Chinese cash may be starting to unravel

Chinese President Xi Jinping, European Council President Charles Michel, European Commission President Ursula von der Leyen, French President Emmanuel Macron and German Chancellor Angela Merkel (clockwise from top left)  during a video conference on the China-EU pact in December 2020.

(CNN)The European Union has a China problem. The bloc, for financial and strategic reasons, wants to build strong economic ties with Beijing that bolster Brussels' desire to be a serious player on the world stage as the leading light of Western values.

The problem is, doing so in any serious way means turning a blind eye to China's well-documented human rights violations.
For much of the past decade, the world's largest trading bloc has gone out of its way to establish an economic partnership with Beijing that doesn't conflict too aggressively with Brussels' lofty values. The EU was criticized from both in and outside the bloc when it announced last December the conclusion in principle of negotiations with the Chinese government on its "Comprehensive Agreement on Investment" (CAI).
    According to EU Commission President Ursula von der Leyen, the agreement, if ratified, "will provide unprecedented access to the Chinese market," while also committing "China to ambitious principles on sustainability, transparency and non-discrimination."
      Any agreement like this needs to be approved by the EU's 27 member states and ratified by the European parliament.
        Precisely how bound China would be to any of the EU's redlines was an immediate cause for concern. "The deal makes statements about human rights and forced labor, but there is no way of forcing China to do anything," says Samira Rafaela, a member of the EU parliament who sits on the international trade committee.
        Many of Rafaela's colleagues across the political spectrum clearly agree. Last week, the parliament voted on a motion to freeze the CAI until further notice. Ostensibly, this was in protest at China placing sanctions on five MEPs who had criticized China's treatment of Muslim Uyghurs in Xinjiang among other things.
          However, in reality the sanctions were really the final straw for some who couldn't stomach Brussels striking a friendly deal with a government in Beijing that allegedly imprisons people in forced labor camps, undermines democracy in Hong Kong and is increasingly hostile in its own region.
          "The statement we are sending with this motion isn't simply, if China lifts the sanctions then CAI is back on the table," says Reinhard Bütikofer, chair of the parliament's delegation on China relations. "If sanctions are lifted, we will look at the detail, but it's currently far from satisfactory. It's weak on forced labor, weak on sustainability, weak on dispute resolutions. These problems will still exist even if we resurrect the agreement."
          Given the chances of China lifting these sanctions any time soon is virtually zero, this creates a problem for the top brass in the EU Commission, who have invested a lot of political capital in the deal.
          For the EU's increasingly political executive branch, China formed a key part of its plan to become a bigger player on the global stage and become diplomatically independent of its most important ally: the United States.
          "Strategic autonomy," as Brussels calls it, has been a priority for EU officials who are concerned about Europe's inherent vulnerabilities, be they from Russian aggression in the east, over-reliance on China for medical supplies or the risk of another president like Donald Trump pulling American troops out of Europe.
          "The China agreement was a big plank in that strategy," says Steven Blockmans, director of research at the Centre for European Policy Studies. "If the Chinese and European parliament don't move, the EU risks losing a deal that would have cemented the idea it can make decisions to defend its own commercial interests, without having to call the White House first."
          Despite the European parliament's protests, the commission still thinks the deal is right for the EU. Officials who spoke with CNN explained that they understood the parliament's concerns and that the political conditions didn't exist at the moment. One official even lauded the parliament's action, saying it provided proof that "economic interests will not prevent the EU from standing up for human rights."
          However, they also said this was a rare window of opportunity to get China committing to something on paper, and that window could run out for political reasons -- most notably after upcoming elections in France and Germany, the two member states most supportive of the deal.
          It's at member state level that the apparent split between parliament and commission gets interesting. It's been known for some time that locking in some kind of formal relationship with China was a big priority for Angela Merkel as she tries to nail down her legacy. The German Chancellor will stand down after 16 years in power this autumn, as Germany holds federal elections.
          Chinese Premier Li Keqiang (R) and German Chancellor Angela Merkel attend a joint news conference at the Great Hall of the People in Beijing on May 24, 2018.
          As things stand, it's likely that Merkel's party -- no longer with a leader who holds as much political capital as her -- will have to enter a coalition with the anti-Beijing Greens. This could significantly soften German support for the deal.
          The other key sponsor of the deal was French President Emmanuel Macron, a man who also faces re-election next year. The fact that Macron's biggest rival is far-right Marine Le Pen has led some to think he might, in the coming months, cool on globalist policies.
          As for the other member states, diplomats who spoke to CNN pointed out that the CAI is not a full trade deal and that there was no urgent need to rush anything through. As one diplomat put it, "there is an awakening in Europe about the real character of its relationship with China and governments don't like it. This will be parked for a while is my guess."
          The commission remains convinced that its political capital was well spent and that member states will ultimately choose their economies over other priorities. "Even if leadership changes, the economic reality in Germany and France isn't going to change, and economics has a habit of trumping other concerns," the diplomat said.
          Philippe Lamberts, a senior Belgian MEP, disagrees: "I think EU-China relations are going to get worse before they get better. Even if they lift their sanctions, what message does it send on European values if we agree a deal with such weak provisions on human rights, democracy and sustainability?"
          The EU's record on human rights, critics argue, is already patchy. While last week the European parliament did stand up to both China and Turkey -- calling for the suspension of talks with Ankara to join the bloc over its own human rights record -- campaigners say that the EU is not doing enough to uphold its own standards on human records inside or outside the bloc.
          Chinese President Xi Jinping and French Emmanuel Macron (taste wine as they visit France's pavilion during the China International Import Expo in Shanghai on November 5, 2019.