The annual EU-China Summit held in Beijing October 30 boasted that the relationship was a "mature" one and that the two sides had an objective of becoming "strategic partners" but the participants also struggled below this surface to contain continuing sources of disagreement and frustration.

Prime Minister Wen Jiabao hosted the EU delegation headed by the Italian Presidency Silvio Berlusconi and Commission President Romano Prodi and President Hu Jintao also met the visiting EU leaders. EU High Representative for Foreign and Security Policy Javier Solana and Italian Foreign Minister Franco Frattini and Trade Commissioner Pascal Lamy were also involved in discussions with the Chinese Foreign, Science, Reform and Trade Ministers or agency heads. In this regard, it was perhaps noteworthy that EU External Relations Commissioner Chris Patten, who has aroused ambiguous Chinese reactions since his service as the last British Governor of Hong Kong before its session to the PRC, was not a member of the EU delegation although he has visited the country since.

Talks were also the occasion for the signature of bilateral accords negotiated beforehand by diplomats and technicians on aerospace collaboration in the EU's Galileo satellite navigation system and a so-called approved destination status which was regarded as facilitating Chinese tourism in Europe. Of potential key importance, although such intentions have sometimes failed to materialise in the past, the two sides expressed their wish to become each other's largest trading partner.

The new Prime Minister of China Wen Jiabao was invited to visit the EU in the coming year following in the tradition of his predecessor Zhu Rongji.

They discussed and said they would intensify their work in such sectors as industrial policy, global policy issues, human rights, culture, trade and investment and nuclear energy, among others.

Differences said to remain

But in private, officials, diplomats, academics and other informed analysts also noted remaining problems and discussions on such subjects as the EU arms embargo applied since the 1989 Tienanmin uprising and tragedy, human rights differences, the balance of trade between the two and the thorny issue of currency exchange rates. While each side was too polite to directly confront the issue, a difference of views was evident in the EU references to the need for China to fulfil its obligations and responsibilities to the WTO and Chinese emphasis was on China obtaining its full rights in the international organisation.

Key participants in the preparations and meetings from either side cautiously hinted at such remaining divergences in a follow-up seminar conducted in Brussels November 6. The talks were jointly organised by the Konrad Adenauer Foundation, the Hans Seidel Foundation and the European Institute for Asian Studies.

Ma Zhao Xu, Minister Counsellor, at the People's Republic of China in Brussels, while referring to the Beijing talks as "one of the most successful summits," also alluded to protracted negotiations on lifting the EU embargo on sales of defence equipment to China and to the delay in recognising China as a market economy, which would ease some trade issues. But he hastened to add that "China-EU relations are in their best period ever."

A similar note was struck by Cristina Ravaglia, Head of the Northeast Asia Section at the Italian Foreign Ministry, who remarked the event was "positive for everyone." She noted that Berlusconi and Prodi had stressed China's increasing status in international political and economic relations and that the two sides has stressed their attachment to multilateral approaches to global issues. While the direction did not seem to vary from that of the previous Chinese leadership, the adherence to such principles by the new team is also noteworthy.

Political Issues

The meeting was laden with declarations and agreements designed to reinforce their bilateral relationship and to underline their cooperative approach to certain policies and visions. In addition to pledging to extend their contacts to additional issues of international strategy and relations and declaring their strategic partnership, China and the EU also possibly took the initial steps toward implementing joint strategies. They jointly stressed their belief in multilateral solutions and in reinforcing of international institutions. Whether this involves, as they declared in Beijing, joint positions on such issues as reform and strengthening of the UN could be indicated in coming agendas and meetings. This dialogue was said to be visualised in exchanges of visits by Premier Wen Jiabao and EU Security Representative Javier Solana. Their declaration stated that the two policy papers issued just before the meeting set a broad agenda. In this respect it was noted that the EU document even visualised closer military and defence contacts. Their declaration also pointed to the EU proposed Strategy Document, currently under discussion in the EU, as noting that China was a key partner along with the US. They discussed such specific issues as North Korea, the Middle East, Iraq and Burma-Myanmar, although on some of these issues both have not taken initiatives and contented themselves to the sidelines. A more extensive statement on North Korea, for example, did not seem to point to any such initiatives. On the Taiwan issue, the EU, which recently decided to open an office in Taiwan, restated a commitment to the policy of one China and peaceful reunification. In the human rights field, they issue a statement pointing to progress and further cooperation to "more meaningful and positive results on the ground." Verbally they also noted the extensive number of meetings on the subject, but some impatience on both sides was also expressed. And they envisaged some additional work in connection with reforms in China regarding support for NGOs and illegal migration.

Economic Issues

In the field of economic, trade, financial and industrial issues the declarations and reports also seemed to indicate a desire to intensify their cooperation. At the bilateral level Prime Minister Wen Jiabao was reported by Italian sources to have said that more reforms were needed in China, including compliance with WTO rules and the related attraction of foreign direct investment. They made no reference to the large EU trade deficit with China reaching some 50 billion annually, or ongoing trade squabbles over the EU use antidumping measures against China and seemed to address this in references to balancing trade and consultations in certain sectors. Nor did they refer directly to the request made by the EU and other countries regarding the belief that China should consider allow the Yuan to rise to a less advantageous competitive level, but they referred obliquely to the need for " smooth adjustment to imbalances in global trade and capital flows." They made almost ritualistic declarations about the need to relaunch the deadlocked Doha Round of WTO negotiations, but fell short of any details, which was not surprising given the fact that the two were on different sides of this global debate. There were also references to subjects such as sustainable development, nuclear energy, the maritime transport agreement signed in 2002, civil aviation and other areas of cooperation.

Galileo Satellite Cooperation

Potentially the most far-reaching element of the meeting was the signature of the agreement on China's participation and contribution to the planned EU Galileo satellite navigation system. The move could be of major importance to both sides since the EU has been at pains to underline the international need and interest in such a system in view of the American hostility to competition or duplication of what has heretofore been their monopoly situation in this sector. It also represents another element of China's entry into prominence in the aerospace sector, following its launching of a manned orbital mission just a few weeks earlier.

The agreement had been negotiated and announced earlier and is joined by a similar accord between the EU and India, to give additional international support for this new system deemed necessary because the American GPS has as its first priority service the national security needs of that country rather than its international clients.

Both China and India have said they would contribute some 200 million euros to the project. The participation of these two countries lends the project a global dimension which assists the EU financial burden and could provide important technological know-how and transfers to the Asian partners.

But European political sources also noted there exist some major hurdles to overcome in connection with data access and security and potential US concerns regarding the planned EU-China cooperation. Brigitte Langenhagen, a Member of the European Parliament who is both a member of the Parliament delegation to China and the Rapporteur on the Galileo project, noted that the signature of the cooperation agreement was "exceptional in the history of EU-China relations in that China was the first state ready and willing to sign an accord" in this new technology. But, speaking at the post-summit seminar, she added that there were "concerns" regarding the issue of access and security of data which were also "great interest" to the US. She also said that extensive coordination would be required because "we don't want to cause any trouble on the left and on the right."

In fact the continued existence of the EU ban on sales of military equipment to China could also have a bearing on some dual-use technology linked to the Galileo project.

Agreed Destination Status-Tourism

Also possibly of major importance signed at the meeting was the so-called Agreed Destination Status, said to be expected to ease visa constraints on the expanding market for Chinese tourism. The accord would make acquisition of tourist visas easier.

Although, some EU countries had hesitated in the past out of concern over the fear of illegal immigration, Germany had reversed this attitude by signing a separate bilateral agreement, which undermined the other EU members' reticence because of the free access afforded by the Schengen agreement on free movement inside the EU.

With a rising standard or living and an expanding middle class Chinese tourism is expected to rise markedly in the coming years. Statistics from the World Tourism Organisation indicated that some 16.6 million Chinese travelled abroad in 2002, a 37% increase in one year and the expectation is that the figure will reach 100 million by 2020. Some 85% travelled in Asia, with Hong Kong the favourite destination for about half. Also in 2002, 700,000 visited the EU, according to officials, which is said to underestimate the true figure, a 19% increase for France and Germany and 44% for Britain.

China is also a major tourist attraction, both for its own citizens and for the rest of the world, generating some $6-7 billion in revenue in 2002 and growing faster than the already rapid economic growth rate. There were some 36 million foreigners visiting China in 2002 and the level is expected to rise to 130 million by 2020.

Some problems persist

Placing the accent on the positive results, a characteristic also displayed by both sides in relations with other important partners such as the US and Russia, has the advantages of dealing in calmer and cooperative terms with difficult issues without public scrutiny and troubling "megaphone diplomacy" but also the disadvantage of sometime retarding confronting real issues.

In closed diplomatic encounters and technical negotiations, it is often difficult to understand what the major issues and real results were and whether the positive outweighed the divisive.

Officials in private or private individuals do point to difficulties in the relationship or in the perception by one side toward the other.

Perhaps the lengthiest irritant voiced is the Chinese impatience with the continuing EU embargo on exports of defence equipment enacted in following the 1979 Tienanmin massacres. While a number of EU countries have succeeded in getting around the restriction because some sales have been classified as part of earlier existing contracts, or spare parts, or as civilian technology, Chinese diplomats have said the measure is of symbolic importance.

They also underline that some EU countries continue to link the ban to the country's human rights practices. These Chinese say the EU has established specific channels and dialogues on human rights which meet regularly and should not be associated to defence relations. They regard such an attitude as contradictory with the emerging bilateral strategic dialogue and relationship.

On the European side, beyond the preoccupation of certain EU members about the human rights situation in China, there is the unease about the mounting EU trade deficit with China and its connection with Beijing policy of maintaining the peg to the US dollar. Although, there is a tendency for understanding and patience that the trade deficit could be changed in the longer term and acceptance in some quarters that continued monetary stability and growth is necessary for the Chinese economy, the problems have not improved in the past two years.

There also exists some criticism on each side relating to the other's use of unfair trade advantages or practices in general, such as the EU use of anti-dumping actions.

Fundamental discord in policy papers

There are also some major contradictions in the two EU and Chinese official policy papers released recently, which could indicate diametrically opposed views of the relationship, according to Suzanne Weigelin-Schwriedzik of the University of Vienna speaking at the post-Summit seminar in Brussels. She said a comparative study of the two policy documents indicates fundamental disagreement in the two sides' views regarding reform and change in China. She pointed out that the EU paper seeks to combine a concern with stability to a successful transition toward democracy, while she adds that the Chinese paper is "very sensitive" about reference to regime change in China. She notes that the latter emphasises a partnership based on mutual respect, respect for differing opinions and other principles indicating a desire for economic development, but not necessarily political reform. In such circumstances, she suggests a "very clear conflict of interests" despite "a lot of common interests in global cooperation."

As an illustration, she notes that in the EU document there are numerous references to issues of governance, such as the rule of law, civil society, workers' rights or grassroots democracy. In China, however, the very translation of the world for governance is difficult and ambiguous. She adds that the concept of academic discussion and civil society are just emerging in China. On the other hand, some of the proposals made by the EU could, in Chinese eyes, translate into worrisome decline in the rule of the Party, deterioration of state capacity and rising tensions.