EU and China leaders to talk trade and climate

EU and Chinese leaders will meet in Brussels on Monday (29 June), with the EU hoping for Chinese investment in its new growth fund as well as support for a global climate deal.

Much has changed in EU-China relations in the past years.

Last year, the EU imported Chinese goods worth €302 billion, more than double 10 years before. EU countries’ exports were to the tune of €164 billion, compared to €48 billion in 2014. Only 20 years ago, the two blocs barely traded at all.

“We have obviously a strong interest in reinforcing our engagement with China in order to promote growth on both sides”, a senior EU official said ahead of the 17th EU-China summit.

China will be represented by prime minister Li Keqiang, on his first official visit to the EU capital. He will meet for half an hour with EU Council president Donald Tusk i and European Commission president Jean-Claude Juncker i.

There will also be a plenary session and a working dinner.

EU foreign policy chief Federica Mogherini i, Juncker's deputy Frans Timmermans i, jobs and investment commissioner Jyrki Katainen i and trade commissioner Cecilia Malmstrom i will also participate.

The EU wants China to invest in its newly set-up investment fund, which the commission's flagship project to return the EU to growth.

“Contrary to press speculation we do not expect precise details [on China's involvement in the fund] to be unveiled at the summit. We expect that China expresses its interest in principle in participating”, the EU official noted.

Earlier this month, Reuters reported that China may invest billions in the so-called Juncker fund.

The two parties are also expected to “reaffirm high-level support” for negotiations on a broader investment agreement, on which talks started early last year.

Both topics will be further discussed at the next round of talks, likely to be held in September in China, where commissioner Katainen is expected to participate.

EU-China free trade agreement?

If the talks are successful, they may provide a basis for a farther-reaching free trade agreement (FTA).

“The Chinese have clearly a keen interest to make progress on this issue”, said a source from the EU commission.

“A successful conclusion of the investment negotiations would certainly send a positive signal that would allow us to consider broader ambitions in the longer perspective which might include an FTA", the official added.

Another trade-related issue that is playing in the background, is whether the EU will grant China market economy status.

According to China, the agreement it signed when it joined the World Trade Organisation in 2001, requires countries to grant it market economy status by the end of 2016.

The Wall Street Journal recently reported that an internal commission paper noted “it would be unwise not to grant market-economy status to China”, but according to a commission source it is too early to say if the EU will do it.

“We of course are aware that the Chinese are highly interested in discussing market economy status”, the contact said.

"But given the fact that it's still December 2016 when China expects to be granted market economy status, we on our side are still in the process of analysing all the implications of the WTO accession protocol. So there is on our side not much to discuss at this summit".

Climate change

One thing that will be discussed is how to fight climate change. After the summit, there will not only be a general declaration on EU-China relations, but also a separate statement on climate.

Key will be China’s level of detail on a commitment to reduce greenhouse gases.

The EU had asked China, as well as other countries from the G20, to submit their contribution to the United Nations before 1 April this year.

Mid-April, the EU stated in an internal document that it expected China to submit its climate targets “by June”.

Last November, China for the first time said its greenhouse gas emissions would peak, around 2030 at the latest. “We hope they commit a more ambitious target in their [UN submission]”, a commission source said.