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International relations

Xi calls for closer EU ties in push against 'systemic rival' label

Chinese leader urges 'opening-up' and 'multilateralism' in online summit

China's President Xi Jinping takes part in a virtual summit on Sept. 14 with European Council President Charles Michel, European Commission President Ursula von der Leyen and German Chancellor Angela Merkel.   © Reuters

SHANGHAI -- Chinese President Xi Jinping on Monday called for closer cooperation with his counterparts in the European Union amid growing distrust of Beijing in the bloc.

In an online meeting with the European Council President Charles Michel, European Commission President Ursula von der Leyen and German Chancellor Angela Merkel, Xi said China and the EU should join hands in beating the COVID-19 pandemic and lead the world economy to recovery.

"For China and Europe to steadily push for the sound development of the China-EU comprehensive strategic partnership, both sides must adhere to four principles: peaceful coexistence, opening-up and cooperation, multilateralism, as well as dialogue and consultation," Xi said.

But gaps in the bilateral relationship have widened with China harping on its success in containing the outbreak and its contribution of medical aids while shunning any discussion on the origin of the virus.

Xi's comments came after the EU unveiled a strategic document that categorized China as a "systemic rival" rather than merely a "competitor" and "partner."

Both parties are negotiating a so-called Comprehensive Investment Agreement, a precursor to a more ambitious free-trade deal, to address discrimination that its companies face in China.

"We need to step up and lift up the negotiation to a higher political level," von der Leyen said after the meeting, indicating a lack of consensus over the negotiation.

In a critical report on Sept. 10, the European Union Chamber of Commerce in China said new obstacles have emerged as the pandemic roiled on with European expatriates prevented from returning to China.

The chamber, which represents 1,700 member companies, questioned if the bureaucratic and ever-shifting requirements to qualify for a return are indicative of a broader mindset that while foreign capital and technology are desired in China, foreigners themselves are not.

While the Chinese market remains one of the "main rocks," the chamber said business prospects were also overshadowed by sensitive issues in Xinjiang and Hong Kong.

"China's small but highly conspicuous army of 'wolf warriors' in the Ministry of Foreign Affairs have done little to help this situation, instead preferring to fan the flames with decidedly undiplomatic rhetoric," Chamber President Jorg Wuttke said in the annual report.

China is the EU's second-largest trading partner after the U.S., and the EU is China's biggest trading partner with two-way trade totaling $710 billion in 2019.

Analysts were not optimistic about Monday's meeting, the second in three months, writing off any meaningful trade-off in trade, human rights and climate policies.

"The EU underscores its commitment to dialogue, but there is a growing sense of frustration across Europe with Beijing's current policies," Janka Oertel, director of Asia program at Berlin-based think tank the European Council on Foreign Relations, told the Nikkei Asian Review.

One of the main problems for European companies is the lack of market access in China, an issue they hope could be resolved through the investment agreement. They also complained that while Chinese state-owned enterprises are freely allowed in European markets, European companies are not allowed to participate in sectors that Beijing considers strategic in China.

Nora Schlenzig, a political risk analyst at  Australian think tank Lowy Institute, wrote in a report Monday that the prospects were dim for progress in addressing those "asymmetries in market access and reciprocity" between the two parties.

The investment agreement, which both sides started to negotiate in 2013 and hoped to conclude by this year, is unlikely to pull the EU and China any closer.

"Even if concluded, it would only be a small part of a broader set of measures needed to create actual reciprocity," said Oertel. The prospect for a more ambitious free trade agreement is unlikely for now, she added.

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