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German Chancellor Angela Merkel after a meeting related to the China investment deal. Photo: Sean Gallup/Getty Images

The European Parliament voted overwhelmingly to freeze efforts to ratify a landmark investment deal with China until Beijing lifts sanctions imposed in retaliation for the EU's condemnation of China's human rights abuses.

Why it matters: It's a major blow to the relationship at a decisive moment, as tensions between Washington and Beijing have left Europe caught between the trans-Atlantic alliance and the economic temptations of greater access to the Chinese market.

Background: EU leaders and China finalized the long-delayed Comprehensive Agreement on Investment in December, appearing to defy resistance from the European Parliament and a request for consultations from the incoming Biden administration.

  • The deal would open up both markets to investment and commit Beijing to ending certain trading practices, thus strengthening economic ties between the EU and its second-largest trading partner.
  • The finalized agreement came at a time of increasing international scrutiny of China's abuses against Uyghur Muslims, including the use of forced labor.
  • The European Commission insisted to skeptical EU lawmakers that it would "remain uncompromising as to using all tools possible to eradicate any form of forced labour," and that the investment deal would play an important role in that effort.

Everything changed in March, when the EU joined the U.S., U.K. and Canada in imposing sanctions against several Chinese officials involved in the mass detention of Uyghurs and other ethnic minorities in the northwest region of Xinjiang.

  • China responded furiously, sanctioning 27 EU ambassadors, several think tanks and scholars, and prominent members of the European Parliament who had been critical of Beijing, accusing them of spreading "lies and disinformation" and meddling in China's domestic affairs.
  • For members of the EU Parliament, which had yet to ratify the agreement, the sanctions were a deal-breaker. “It seems unthinkable that our Parliament would even entertain the idea of ratifying an agreement while its members and one of its committees are under sanctions,” member of Parliament Marie-Pierre Vedrenne said at the time, according to Politico.

Between the lines: Despite the uproar in the European Parliament, German Chancellor Angela Merkel hailed the investment deal as a "cornerstone" of economic ties between China and the EU as recently as late April.

The bottom line, via Axios China expert Bethany Allen-Ebrahimian: The Chinese government has bungled its relationship with the EU, just as it seemed that Beijing had successfully driven a wedge between a Trump-weary Europe and the Biden administration.

Go deeper

Scoop: Bipartisan bill pushes Biden to act on Uyghur genocide

Photo by David Cliff/Anadolu Agency via Getty Images

A bipartisan bill being introduced in the House Wednesday would hold President Biden accountable for taking tangible steps to address the Chinese Communist Party's genocide of the Uyghur population, Axios has learned.

Why it matters: Amid concerns about a rapidly aging population, the government has begun encouraging Chinese women to have more children, after scrapping its previous "one-child" policy. But authorities in Xinjiang have implemented extremely restrictive new birth policies on Muslim ethnic minorities.

Dave Lawler, author of World
May 19, 2021 - World

Biden administration sends muddled message on Nord Stream 2 pipeline

Secretary of State Tony Blinken (L) meets Wednesday with Russian Foreign Minister Sergey Lavrov. Photo: Saul Loeb/POOL/AFP via Getty

The State Department on Wednesday waived sanctions on the corporate entity and CEO overseeing the construction of Nord Stream 2, a move widely interpreted as a signal that the U.S. will not stand in the way of the Russia-to-Germany pipeline's completion.

Yes, but: State Department officials told reporters that by listing several vessels and companies participating in the controversial project for sanctions, as mandated by Congress, they were in fact sending a "clear signal" to Russia — even contending that they would continue to employ sanctions "to try to stop this pipeline."

At least one person killed, 99 missing after deadly Miami-area condo collapse

A massive search-and-rescue operation is underway after a portion of a 12-story residential building in Surfside, Florida, collapsed at approximately 1:30 a.m. Thursday, according to AP.

The latest: Officials have accounted for 102 people who lived in the high-rise Champlain Towers South, but 99 people remained unaccounted for by midafternoon, said Mayor Daniella Levine Cava of Miami-Dade County at a press conference Thursday afternoon.