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EU-China summit timing is tricky

The window of opportunity for both parties to collaborate may not remain open indefinitely.

Chinese President Xi Jinping arriving at the Sicilian parliament building during a private visit at the end of his trip to Italy, in Palermo, Italy, on March 23.

THE EU-China summit kicks off on Tuesday amid growing bilateral tension. Europe is becoming increasingly important for Chinese foreign policy and this is fuelling concerns in Brussels that Beijing is "dividing and ruling" to undermine the continent's collective interests.

Take the example of Chinese President Xi Jinping's trip last month to Italy where he signed a landmark Memorandum of Understanding (MOU) for the Belt and Road (BRI) initiatives. Brussels has long had reservations about BRI, not least given frustrations over Beijing's perceived slowness to open up its own economy, and a wave of Chinese takeovers of European firms in key industries.

To be sure, numerous EU states have already signed such BRI MOUs, including Croatia, Czech Republic, Hungary, Poland, Greece, Malta, and Portugal. But Italy is the first G7 state to endorse the US$1trillion plan to boost trade and stimulate economic growth across Asia, Africa and Europe by building massive amounts of infrastructure and connecting it to key nodes around the globe.

Italy's decision is only the latest one which has underlined Beijing's growing influence across the continent, which EU officials are increasingly conscious of. Another example is the so-called annual "16+1" meeting initiative of China and key countries in Eastern and Central Europe.

The 16+1 format is an initiative by Beijing aimed at intensifying and expanding cooperation in the fields of investment, transport, finance, science, education, and culture with 11 EU member states and five Balkan countries. Namely: Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Montenegro, Poland, Romania, Serbia, Slovakia, and Slovenia.

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China has defined three potential priority areas for economic cooperation here: infrastructure, high technology, and green technologies. The next 16+1 meeting starts on Friday in Croatia and follows a successful seventh event last July in Bulgaria which focused on Beijing's growing regional investment with around 250 Chinese businesses and representatives of some 700 European firms attending.

Key trends are increasingly apparent in China's external interventions in Europe. For instance, it is becoming increasingly clear that Beijing is tailoring its approach around bespoke needs of individual states or blocs of countries such as 16+1. Further, Chinese overtures to Europe are coming with a clear quid pro quo as underlined by Italy's signing up to BRI in exchange for China's investment.

And this is concerning not just Brussels, but also Washington too. Last month's Italy-China agreement, for instance, was slammed by Garrett Marquis, a National Security Council spokesman, who asserted that there is "no need for the Italian government to lend legitimacy to China's infrastructure vanity project".

In this context of bilateral angst between Brussels and Beijing, Tuesday's summit will be an opportunity for both sides to stress areas of common interest and cooperation. Here the EU co-hosts, European Commission president Jean-Claude Juncker and European Council president Donald Tusk, alongside Chinese Premier Li Keqiang, will stress a range of issues from the importance of an open, multilateral trading system, to tackling climate change.

Global warming, for instance, is one where both sides have long had a fruitful bilateral dialogue. Under the terms of the 2015 EU-China climate change declaration, both parties cooperate on developing a cost-effective low carbon economy which is especially important in the light of the Trump team's abdication of the climate agenda.

Collectively, the EU and China account for around one third of global greenhouse emissions - which grows to one half when the United States is added into the picture. And the 2015 bilateral climate change declaration was one of the key drivers, along with the Obama administration's diplomacy, of the Paris deal.

The reason why EU-China discussions on climate change are so cooperative is that, fundamentally, both share a vision of a prosperous, energy-secure future in a stable climate and recognise the need for bilateral collaboration to realise this agenda. Their 2015 agreement, for instance, agreed to intensify cooperation in domestic mitigation policies, carbon markets, low-carbon cities, greenhouse gas emissions from the aviation and maritime industries, and hydrofluorocarbons.

With appropriate vision, both sets of leaders recognise that there is a massive 'win-win' opportunity on the horizon from accelerating the transition to a low carbon future, and bolstering economic growth in both China and Europe. And this collaboration looks set to only deepen in the coming year, including on emissions trading, with Beijing's plans to establish a nationwide emissions trading system.

China's planned investment in the green economy is huge, a fact that the EU is increasingly recognising. This investment is buttressed by Beijing's policy commitments on the climate, clean air and energy agendas. In recent Five Year Plans, for instance, a strategic direction has been set for the economy with determination to change the country's development model from low-grade labour-intensive manufacturing towards a greater emphasis on services and innovation.

Another signal of the seriousness of Beijing's climate ambitions is the fact that it is using the experience of its sub-national pilot trading schemes to inform development of its future national model. Here, Beijing is proving open and willing to learn from Europe's extensive experience in this area, while adapting its models for China's domestic circumstances.

Europe has clear strengths in areas that China needs here. As the latter continues on a trajectory to potentially become the world's largest economy, there are thus substantial commercial opportunities for European technology and science firms that are leaders on much of this clean technology agenda.

Importantly, this collaboration will not just be one-way traffic. Indeed, China is already the world's largest manufacturer and user of solar panels and the biggest investor in renewable energy, and it is increasingly possible that technology transfer will be a two-way process.

To be clear, there is still a way to go before China has a fully-fledged carbon market, and both parties have yet to develop new low carbon standards in key industrial sectors. However, the direction of travel is clear: cooperation could build low carbon industries in a range of sectors, and also align Europe more closely to the world's future largest economy.

Taken overall, despite lingering tensions over issues such as BRI, it is clear that both the EU and China have much to potentially gain from a deeper partnership on issues from international trade to climate change. Yet the window of opportunity to collaborate may not remain open indefinitely. Now is thus the time to intensify cooperation to bolster growth, and help define the landscape of international relations in the 21st Century alongside the United States.

  • The writer is an associate at LSE IDEAS at the London School of Economics.

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