EU tells China to prove investment deal is worthwhile

But the pandemic changed plans.

In the videoconference, participation was reduced to Merkel, Xi, European Council president Charles Michel and EU Commission president Ursula von der Leyen.

The meeting marked piecemeal steps taken since leaders' last online meeting, in June, with regards to the investment negotiations in which European businesses strive for fair access to Chinese markets, and in the fight against climate change - where the EU wants more robust emissions-cutting from Beijing.

The two sides signed an agreement on geographical indications on Monday that is aimed at protecting agricultural products, which Michel described as a "a big step in the right direction".

"We want a more balanced relationship, which also means reciprocity and a level playing field," he told reporters after the meeting.

Is it worth it?

The EU and China aims to conclude the investment agreement by the end of the year.

Negotiations have been focusing on the transparency of subsidies, rules on state-owned enterprises and on the transfer of technologies.

"There is an enormous amount still to be negotiated on market access, where asymmetry between access to their market and ours is far too important, and sustainable development is a political must-have," one EU official said.

"Our investors face too many barriers. […] We need China to move on these two issues if we are to achieve our shared objective to conclude by the end of the year," von der Leyen told reporters after the meeting.

"In other words, China has to convince us that it is worth having an agreement," she added.

Merkel said discussions were "open and honest", and the EU did raise key human rights issues over Hong Kong, the Uighur minority and a detained human rights defender.

Merkel said Xi agreed to allow visits, including foreign diplomats, to Xinjiang province, where reportedly hundreds of thousands of Uighurs are held in camps.

"Democratic voices in Hong Kong should be heard, rights protected, and autonomy preserved. We called on China to keep their promises to the people of Hong Kong and the international community," Michel said.

The meeting came against what EU officials describe as "steadily growing tension between China and US".

US secretary of state Mike Pompeo visited several member states recently to lobby for a united, tougher stance on China, while Chinese foreign minister Wang Yi also travelled to several other EU countries to promote Beijing's views.

'Player, not playing field'

"The EU needs to be a player, not a playing field," Michel said after the meeting on Monday.

"What is absolutely important is that EU would not become a battleground for these tensions, but that the EU would be a stabilising factor and would defend its own interests and universal values effectively when engaging with China," an EU official said.

Officials are confident that Xi's participation in Monday's summit means that China's top leadership is "very interested" in having good and close cooperation with the EU.

"Several of the critical results we are striving for would only be possible if the top leaders provide the necessary political momentum and space for flexibility to the Chinese negotiators," the EU official added.

EU countries have been, nevertheless, divided on China, making it difficult to have one 'European voice' on the policies of Beijing.

The EU's China strategy described the country of 1.4 billion people as a "systemic rival" last year, and the commission is also addressing Chinese ambitions to exploit the pandemic's economic fallout by planning tougher checks on foreign subsidies to protect European companies.

But the pandemic also seems to have brought diverging EU positions closer.

In a new policy paper, the European Council on Foreign Relations (ECFR) think tank found that scepticism of China is on the rise.

"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 it of its position as a major trading partner for Beijing and its ability to serve as a counterweight in the growing rivalry with the United States," head of ECFR's Asia programme Janka Oertel said in a statement.

"Europeans are more distrustful of China' s economic practices and increasing infringements on human rights in Hong Kong or Xinjiang. They have concluded that, rather than being a constructive partner, China has increasingly become a rival that is acting against European interests," Oertel added.

A poll commissioned by ECFR found 62 percent of Europeans - across nine member states - see China in a "negative" light, while seven percent see Beijing as a "useful" ally in their fight with the coronavirus.