EU-China Summit will assess the geopolitics and trade against the backdrop of rising tensions

EU leaders are set to hold virtual talks with Chinese President Xi Jinping on Monday (14 September), hoping to make progress on trade and investment, even as tensions mount between Beijing and the West over Hong Kong and treatment of the country’s Uighur Muslim minority.

The September summit was meant to be a landmark event of Germany’s six-month EU presidency, with European leaders meeting their Chinese counterpart physically in Leipzig, Germany.

But initial plans had to be postponed due to the COVID-19 pandemic and the summit switched into a video call involving Xi, German Chancellor Angela Merkel, European Commission chief Ursula von der Leyen and European Council president Charles Michel.

Snails pace on investment deal

Both sides are hoping to make progress on trade and investment, although a previous summit in June had produced no tangible progress on several key issues.

Attempts to finalise a long-negotiated investment pact, which China insists can be done by the end of the year, have so far failed.

Speaking to reporters on Friday, senior EU officials said “significant progress” has been made since the last summit in June, voicing hopes for a “roadmap” to be agreed by December.

However, they also warned Beijing needs to do more to improve market access for European companies – something the Chinese side had promised in April last year – and put an end to a practice forcing foreign firms to share know-how when operating in China.

“Significant obstacles remain,” a senior EU official told reporters ahead of the meeting, citing calls to end forced technology transfers and the establishment of a level playing field for European companies competing with subsidised state-owned Chinese firms.

Europe will not agree to unfavourable terms to “simply cut a deal,” the official warned. “Even if there is a political objective to accelerate negotiations and conclude them by the end of the year, we will have this only if it is something worth having,” the same source added.

Ahead of the leaders’ meeting, the EU and China have signed a bilateral agreement to protect 100 European Geographical Indications (GIs) in China and 100 Chinese GIs in the European Union against usurpation and imitation.

This agreement, first concluded in November 2019, should bring reciprocal trade benefits as well as introducing consumers to guaranteed, quality products on both sides. A press release and a factsheet are available online.

But the Europeans are not as united as they would like to be seen. Indeed, a storm is brewing as member states like Greece, Portugal and Italy have openly embraced China’s Belt and Road Initiative (BRI) to attract investment, irritating Brussels and many EU partners.

Fifteen EU member states have breached bloc-wide rules in agreeing bilateral commercial deals with China as part of Beijing’s ambitious belt and road initiative (BRI), according to a damning report published by the European Court of Auditors.

Fifteen EU member states have breached bloc-wide rules in agreeing bilateral commercial deals with China as part of Beijing’s ambitious belt and road initiative (BRI), according to a damning report published by the European Court of Auditors on Thursday (10 September).

EU caught between Washington and Beijing

“For a long time, Europeans were convinced that China had no interest in undermining the EU or its voice on the global stage – primarily because of its position as a major trading partner for Beijing and its ability to serve as a counterweight in the growing rivalry with the US,” said Janka Oertel, Asia Director at the European Council on Foreign Relations (ECFR).

However, according to Oertel, Europeans are becoming “more distrustful of China’s economic policy,” as a consequence of COVID-19.

EU leaders should be “decisive and clear” in their dialogue with Xi and “signal Europe’s willingness to use its competitive strength,” she added.

More recently, member states have called for a rethink of EU-China relations as the country takes an increasingly aggressive foreign policy stance.

At the same time, ties between China and the US have significantly deteriorated, with both sides locked in fierce recriminations over trade disputes, human rights and the origins of the COVID-19 pandemic.

Both Washington and Beijing have sought to involve the EU in their spat.

In recent months, the EU’s approach towards China has shifted to forging a middle path, designating Beijing as both a potential partner and “systemic rival”.

EU’s chief diplomat Josep Borrell in May admitted that the bloc had been “a little naive” in its relationship with Beijing in the past and was now adopting a more realistic approach.

After a visit by US Secretary of State Mike Pompeo in June, Borrell however rejected to forge a “common transatlantic front” against China.

“The EU stands firm on its interests and values, but also wants to cooperate with China,” a senior EU official told reporters when asked about voices from Washington demanding a more firm stance towards Beijing.

“What is important is that the EU won’t become a battleground for these tensions,” the same official added.

The EU must adopt a “more robust” strategy to deal with an increasingly assertive China, the EU’s chief diplomat Josep Borrell said on Monday (25 May), ahead of a scheduled meeting of EU foreign ministers meant to discuss EU-China strategy later this week.

Hong Kong and human rights

EU officials are set to press Xi on Hong Kong, where Beijing has imposed a controversial new security law, denounced by the West as a major assault on the city’s freedoms.

After the June summit, von der Leyen warned China would face “very negative consequences” if it pressed ahead with the law. A month later the EU agreed to limit exports to Hong Kong of equipment that could be used for surveillance and repression.

German Chancellor Merkel had backed a common EU response but warned against severing dialogue with Beijing.

However, the past few weeks have seen tensions flare up over a high-profile visit to Taiwan by Czech Senate speaker Milos Vystrcil.

China considers Taiwan a breakaway province ineligible for state-to-state relations and sees any official visit to Taiwan by foreign politicians as a challenge to its sovereignty.

The move angered Beijing, with the Chinese government’s top diplomat saying Vystrcil will “pay a heavy price” for making the trip.

German foreign minister Heiko Maas, during a visit of Chinese foreign minister Wang Yi, said that Europe would not countenance threats, “no matter what direction” they come from, an apparent reference to Beijing.

He also called China out over Hong Kong and its prosecution of the Uighur Muslim minority.

“We need to make sure no such bilateral pressure can be exerted against an individual member state – threats are unacceptable,” a senior EU official said, adding that Germany’s reaction “was very much reflecting the thinking inside the EU”.

However, the official added that the incident “has not put into question the One-China policy the EU and member states are pursuing”.

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