German Chancellor Angela Merkel has warned that Europe will start limiting Chinese companies’ access to the single market if China does not agree to a major opening up by the end of this year.

The European Union on Friday formally agreed to restrict “high-risk” vendors from building next-generation 5G mobile technology, a move that brings the bloc closer to the US, which has been lobbying its allies to exclude Huawei.

The EU has toughened its stance on China in recent months as the coronavirus outbreak, the situation in Hong Kong, and the continuing stalemate over a proposed investment agreement that would give European businesses greater access to China have all weighed on relations.

“If there is no market access from the Chinese side for certain areas, this will of course also be reflected in the fact that market access to the European market will be narrower,” Merkel said in a press conference in Brussels after a two-day special EU summit.

“We naturally expect reciprocity for the investment agreement with China,” Merkel said. “We find that the barriers to entry with regard to China are still too high. This will now be discussed further.”

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