The European Parliament halted on Thursday ratification of a new investment pact with China until Beijing lifts sanctions on EU politicians, deepening a dispute in Sino-European relations and denying EU companies greater access to China.
The resolution to freeze ratification passed with 599 votes in favour, 30 votes against and 58 abstentions.
The EU-China Comprehensive Agreement on Investment, agreed by negotiators in December after seven years of talks, aimed to put EU companies on an equal footing in China and cement Beijing's status as a trusted trading partner.
But Beijing imposed sanctions in March on 10 EU politicians, as well as think-tanks and diplomatic bodies, in response to Western sanctions against Chinese officials accused of the mass detentions of Muslim Uyghurs in northwestern China.
China's sanctions include five members of the EU assembly and its human rights sub-committee.
"With its sanctions, China has miscalculated. They should learn from their mistakes and rethink. Because of China's sanctions, the Comprehensive Agreement on Investment has been put into the freezer," said Reinhard Butikofer, a German EU lawmaker who Beijing targeted with its sanctions.
EU lawmakers say the Chinese sanctions are not based on international law, while the bloc's measures, like those of Britain and the United States, tackle abuses of human rights upheld in United Nations treaties.
Beijing denies any wrongdoing.
The parliament "demands that China lift the sanctions before dealing with (the investment accord)", it said in its resolution, which is not legally binding but is now the assembly's official position. "EU-China relations may not continue business as usual," it said.
In response to the resolution, China's mission to the EU said the investment agreement was "mutually beneficial" and not a "favour" from one side to the other. China's sanctions were a legitimate response to EU actions, it said.
"China has all along sincerely promoted bilateral cooperation and hopes the EU will meet us half way," the mission said in a statement posted on its website on Friday.
The impasse is a setback for both China and the EU. Ratification of the pact would allow greater protection of European investment and intellectual property rights in China. China was hoping for improved international standing as a fair and respectful trading partner, European diplomats say.
Activists and UN rights experts say at least 1 million Muslims are detained in camps in Xinjiang. The activists and some Western politicians accuse China of using torture, forced labour and sterilisations. China denies rights abuses in Xinjiang and says its camps provide vocational training and are needed to fight extremism.