The European Union and China aim to reach an investment accord by the end of 2020 that would grant European companies greater access to the Chinese market after six years of talks, officials and diplomats said on Friday.
Potentially a big step in repairing Sino-European ties after the coronavirus outbreak in China and Beijing's crackdown in Hong Kong, the EU-China Comprehensive Agreement on Investment would put most EU companies on an equal footing in China.
It would end what the EU says is discrimination and unfair state subsidies for local firms.
"Negotiations are now in their final stages," Wang Wenbin, a spokesman at the Chinese foreign ministry, said on Friday.
An EU official also said a deal was close after a push from Germany, which holds the EU presidency until the end of the year and is the biggest European exporter to China.
Launched in 2014, negotiations were stuck for years. The EU complained that China was failing to make good on promises made to lift restrictions on European investment, despite its promises to open up the world's second largest economy.
China already has broad access to the EU's market of more than 450 million people. The European Commission, the EU executive, has said the investment pact is "a key tool to address this lack of balance."
A deal would be a turnaround from the pessimism of earlier this year, when the president of the European Union Chamber of Commerce in China said in June that he doubted a deal could be done by the end-2020 deadline agreed by both sides in 2019.
China fears being isolated from the West as the United States steps up its trade war with Beijing and Brussels has taken steps to monitor Chinese investment in strategic European sectors more closely, a second EU official said.
The biggest sticking point in sealing the investment pact relates to sustainable development, said a senior Western diplomat in Beijing, noting labour issues.
China has yet to ratify four of the eight main International Labour Organisation conventions, including those on forced labour and the right to collective bargaining, which the EU says must be approved before any trade agreement.
China was very ambitious in the deal, the diplomat in Beijing said. "They are asking impossible things," the diplomat said. "They are asking for openings for Chinese investment in Europe in sectors that are not open to anyone such as energy, water treatment, public utilities."