Policy Dialogue

China has highlighted access to arms technology and less criticism on human rights as two priorities on a visit to the EU capital by its new-leader-in-waiting, Li Keqiang.

The country's ambassador to the EU, Wu Hailong, in a statement circulated to press ahead of Li's arrival on Tuesday (2 May), said the two sides "must respect each other" and "properly handle and manage [their] differences" in order for relations to "prosper."

For his part, Li in an op-ed in the Financial Times on 1 May noted they should "strive to build an equal partnership of mutual respect and trust." He added that "relaxing control over high-tech exports is ... conducive to strengthening China-EU economic ties."

Human rights "differences" between China and the EU came to the foreground in recent days over the case of Chen Guangcheng.

The blind activist last week fled house arrest and took shelter in the US embassy in China. The EU delegation in Beijing in a communique on 30 April urged authorities to "exercise utmost restraint" in its handling of the diplomatic crisis and to stop harrassing Chen's family members.

In what is becoming standard practice on high-level Chinese visits, EU institutions have not planned any press events during Li's three-day-long stay in the EU capital, ensuring that there are no embarassing questions for their guest.

A Chinese diplomat told EUobserver on Tuesday morning the Chen problem will definitely come up in behind-closed-talks, however. He added that Li's remark on high-tech exports refers "mostly" to the EU arms embargo on China, in place since the 1989 massacre in Tiananmen Square.

Li is expected to become China's next leader in 2013. His European tour saw him visit Moscow and Budapest earlier in the week. The 56-year-old Chinese first vice premier met US President Barack Obama in Washington in February.

Other niggling problems in EU-China ties include CO2 emissions, China's alleged dumping of under-priced products on EU markets and its own restrictions on exports of "rare earths" - a set of 17 minerals, such as praseodymium or yttrium, used by EU countries in the manufacture of electronic equipment.

The state-linked newspaper China Daily in an article on Tuesday cited an "official source" as saying that "Beijing is keen on negotiating with Brussels on the market economy status issue. But if the cost is too high, Beijing will not accept the conditions."

If the EU grants China market economy status, it will give it less leeway to impose so-called "anti-dumping" measures on cheap Chinese exports. On rare earths, the EU filed a fresh complaint with the World Trade Organisation last month. Meanwhile, China has joined a league of countries - together with India, Russia and the US - trying to scupper an EU law forcing foreign airlines to pay a CO2 tax on flights in and out of Europe.

Li's Financial Times op-ed envisaged future economic ties based on continuing mass-scale exports to Europe. "When 'designed in Europe' is combined with 'made in China' and when European technologies are applied to the Chinese market, there will be amazing results," he said.

He added that Beijing is ready to do more to "make a joint contribution to addressing the issue of Europe's sovereign debt" - a reference to EU requests for Chinese money for EU and International Monetary Fund bail-out mechanisms.

According to Professor Dent, the EU has no choice but to become closer to China. In this video, he talks about the interdependency between the EU and China and the need to bridge the cultural gap.

In a room behind closed doors in the European Commission headquarters in Brussels, the EU and China on Wednesday (18 April) declared their mutual intent to bolster cultural ties between average people.

"Both sides would like to upgrade their co-operation ... to enhance international understanding and friendship through educational, cultural and humanitarian activities involving the exchange of ideas and experiences," the joint declaration, signed by EU education and culture commissioner Androulla Vassiliou and China's state councillor Liu Yandong, says.

"Deepening understanding and mutual trust [is] vital to EU-China relations," it adds.

The scheme makes it easier for Chinese and European students, academics and artists to work overseas by boosting mutual recognition of qualifications and subsidising language training.

At a day-long forum with Chinese officials and academics from both sides of the globe, Vassiliou said: "our work here today is of the highest global importance."

Despite the top billing, there was no press conference to let journalists quiz China's top delegate, state councillor Liu Yandong - one of the 24 members of the Politburo, the governing body of the Communist Party, which includes President Hu Jintao and Prime Minister Wen Jiabao.

Liu's visit comes amid one of the biggest scandals in the contemporary history of Chinese politics.

He former Politburo colleague, Bo Xilai, was removed from his post earlier this month and his wife was charged with the murder of a British businessman who is suspected of helping them transfer large sums of money abroad.

EUobserver understands that the Chinese delegation was reluctant to meet the Brussels press corps amid efforts to stop talk about division in its top ranks. "The Chinese are very attached to protocol," one EU official told this website.

Speaking on the record, Chinese diplomat Wang Xining blamed lack of time. Vassiliou spokesman Dennis Abbott said there was no press event "for logistical reasons."

It is not the first time that the commission and Chinese VIPs have side-stepped media in the EU capital.

In November 2010, EU officials tried to block four government-critical Chinese journalists from entering the EU Council building for a post-summit press conference for "security" reasons. They were let in after other reporters complained, but China cancelled the press event.

"The Chinese impose media censorship everywhere they go. But what surprised me was that it [happened] in the Council, an EU building," one of the Chinese reporters, Lixin Yang, told EUobserver at the time.

An EU official later admitted the affair was "embarassing."

China's economy so far this year grew slower than ever in the last three years, spelling bad news for its biggest trading partner, the European Union.

The second-biggest economy in the world grew by a mere 8.1 percent on a one-year-basis during the first quarter of 2012, the country's national statistics bureau announced on Friday (13 April), down from 8.9 percent during the last quarter of 2011 and "significantly lower than expected," Maarten-Jan Bakkum, emerging market analyst at ING, told EUobserver.

Faced with a fragile global recovery and hesitant demand, China's famously export-driven economy has been abating for several years now. Early last month, the country's leadership lowered its 2012 growth target to 7.5 percent, down from 8 percent last year.

The new numbers, however disappointing, are still high and relatively stable. By comparison, the EU's economy grew by only 1.5 percent last year and is expected not to grind to a halt this year, while the eurozone is already in recession.

For the long term, then, these figures may not be of much significance. China is widely believed to remain a strong driver of global economic growth as its billion-strong population begins to buy products on the world market.

"We believe the economy will continue to maintain a moderately steady growth in the future," Sheng Laiyun, a spokesman for the national statistics bureau, told state press agency Xinhua.

But for the short term, experts say, the numbers are bad news for Europe, whose economy is closely interlinked with that of China. They not only confirm Europe's own fragile recovery as it imports less from China, but also indicate a future withering demand for European products.

"The news is very relevant for Europe," says Bakkum. "The little amount of good news coming from Europe comes from Germany, which is highly dependent on the export to China."

Europe's main export product group are machinery and transport equipment. "All factories in China are filled with European equipment," says Bakkum. A slump in production in China, then, would result in a slump in demand from Europe.

The European Commission, for its part, refused to comment. "We don't comment every time there is a new statistic," Olivier Bailly, a commission spokesman, told reporters in Brussels.

Chinese, Russian or Brazilian companies bidding for public contracts in Europe may face restrictions if their governments do not open up their own state-run projects to European firms, the EU commission said Wednesday (21 March).

Under the new bill, local and state authorities in the EU overseeing tenders for public transport, railways, medical equipment or IT services amounting to more than €5 million can ask the EU commission to impose restrictions for a certain company coming from a country where EU firms have no access to public tenders.

"The EU opened up more than 80 percent of its public procurement sector through multilateral and bilateral agreements. But our partners apply a lot of protectionist measures - the US, Japan and emerging countries where we have no secure access to tenders for highways, urban buses, construction projects - all is closed," internal market commissioner Michel Barnier said during a press conference.

He noted that some 32 percent of US public tenders are open to EU-based companies, 28 percent in Japan and 16 percent in Canada.

But in China, Russia and Brazil the percentage is "zero." "These are completely closed markets. We are trying to open them up in a reciprocal, fair fashion," the French commissioner said. EU companies are estimated to lose some €12 billion annually due to these restrictions.

His Belgian colleague Karel De Gucht in charge of trade added that the proposal was about "encouraging - and that's a very diplomatic term - our partners to open up their public procurement markets."

"A carrot is always better received when the counterpart knows there can be a stick, too," De Gucht said.

Asked whether he did not fear retaliatory measures from other countries, the trade official quipped: "If you are afraid of retaliation, you have to do something different than politics."

If approved, the bill is estimated to trigger claims for market restrictions worth about €250 billion a year, with the EU commission bound to approve or reject them on a two-month notice.

China

China, whose officials are denying that their public tenders are closed to EU companies, is "a very special case," EU officials say.

Wu Hailong, China's new ambassador to the EU on Tuesday rejected claims of protectionism: "We treat companies from all countries equally. We do not exclude."

Any preferential treatment of Chinese companies is due to "consumption habits" - the fact people simply prefer domestic firms - he argued during a conference at the Madariaga Foundation in Brussels on Tuesday.

The EU is currently negotiating an agreement with China to grant European companies access to public procurement tenders, but Beijing is "very reluctant to open up," the EU official said. With this proposal, Brussels aims at having more negotiation leverage, the official added.

If the bill passes, Chinese companies will also have a hard time bidding much lower than their competitors in Europe, as national authorities will be allowed to reject "abnormally low" bids which cannot meet the required quality standards.

The EU already saw a case in Poland where a Chinese consortium won the bid for the construction of a highway at a price 40 percent lower than its competitors only to admit later on they could neither meet the deadline nor the quality standards.