Q+A-China-Europe seek to bolster ties at summit

Reuters, Friday November 27 2009
By Chris Buckley
BEIJING, Nov 27 (Reuters) - Currency tensions and climate change will feature in talks over the weekend and on Monday between Chinese and European Union leaders in Nanjing, capital of east China's Jiangsu province. Here are some questions and answers about the summit and the state of EU-China relations.
WHO'S MEETING WHOM?
The EU will be chiefly represented by European Commission President Jose Manuel Barroso and Swedish Prime Minister Fredrik Reinfeldt, whose country holds the EU's rotating presidency. On Monday, they will meet Chinese Premier Wen Jiabao.
Before the summit, central bank and financial officials from each side will meet over the weekend in Nanjing. European Central Bank Governor Jean-Claude Trichet is due to hold talks with Zhou Xiaochuan, governor of the People's Bank of China.
WHAT ARE THE MAIN ISSUES TO BE DISCUSSED?
Both sides have said the topics in focus are the global economy, climate change and strengthening ties. But China and the EU will bring different priorities to the table.
(1) The economy and trade. For Brussels, the priorities will be pressing China on currency and trade. China has been holding its yuan currency virtually pegged to the dollar even as the dollar has weakened against other key currencies. That has meant the yuan has dropped 15 percent against the euro since March.
That angers Europe, which has been trying to narrow its big trade deficit with China. In 2008, the EU imported Chinese-made goods worth 247.6 billion euros and exported to China goods worth 78.4 billion euros.
European officials also believe a stronger yuan is essential to global rebalancing efforts as the United States consumes less. Without it, they fear that the euro zone will bear most of the burden of a weaker dollar.
China has its own worries about EU anti-dumping actions aimed at its exports, steps Beijing has decried as protectionism.
(2) Climate change. The summit takes place just over a week before negotiations open in Copenhagen on a new international pact to fight climate change.
The EU and China will be key players in those negotiations, and the summit is a last chance to assess and test positions.
On Thursday, China announced goals to cut carbon intensity -- the amount of carbon dioxide emitted to make each unit of economic value -- by 40 to 45 percent by 2020 compared with levels in 2005. But it also said those were purely domestic commitments and would not be part of any internationally binding commitment.
(3) Market economy status and an EU arms embargo. China may press the EU to recognise it as a "market economy", and end an embargo on arms sales imposed after the 1989 crackdown on pro-democracy protests in Beijing.
Granting "market economy status" would limit some anti-dumping and other trade protection measures taken by Brussels against Chinese goods.
WHAT WILL THE MEETINGS ACHIEVE?
The summit is unlikely to produce substantive agreements on any of these issues. It will give leaders from both sides an opportunity to set priorities as the EU seeks to lift its diplomatic profile after the Lisbon treaty reforms.
As for Europe's plea for a stronger yuan, the issue that will garner the most interest from global financial markets, leading euro zone officials have said they expect no immediate results from the talks.
HOW GOOD ARE CHINA-EU RELATIONS?
China and the European Union have been seeking to revive ties after a rough patch in 2008 stoked by friction between Beijing and EU member states, especially France and Germany, over Tibet.
Tensions peaked late in 2008, when French President Nicholas Sarkozy met the Dalai Lama, the exiled Tibet Buddhist leader who Beijing calls a "separatist".
France held the six-monthly rotating presidency of the European Union at the time, and China withdrew from a planned summit with the EU.
Relations would not have been so vulnerable if broader ties were more robust. But relations have been sapped by trade imbalances and disputes, slow progress in negotiations for a new treaty to steer relations, and the unwieldiness of dealings between an often opaque China and the EU and its 27 sometimes fractious member states. (Editing by Ken Wills and Dean Yates) ((chris.buckley@thomsonreuters.com; +86-13501014479)) ((If you have a query or comment on this story, send an email to newsfeedback.asia@thomsonreuters.com))