Sino-EU investment deal a work in progress

China-EU discussions to pave the way for leaders' summit in Beijing

Vice-Premier Ma Kai and his European counterparts are expected to start preparatory work in Brussels on Thursday and Friday to pave the way for a long-awaited investment agreement next month, when leaders from the two sides will hold a summit in China.

Ma — the most senior Chinese leader visiting Brussels this year — will also chair the High-Level Economic and Trade Dialogue on Thursday, a key bilateral exchange platform.

He will also meet European Commission President Jose Manuel Durao Barroso, and is scheduled to hold talks with Belgian leaders on Friday while visiting the factory of automaker AB Volvo in Belgium.

Ma's visit to the European Union headquarters will spur a series of high-level talks between Beijing and Brussels, in a bid to boost bilateral relations.

Next month, both sides will hold a summit in Beijing, in which they're expected to launch the investment agreement talks. Last week, EU member states gave a mandate to the EC to start the investment agreement talks with China.

Sources said the two sides are also comparing notes to hold high-level political and strategic talks between State Councilor Yang Jiechi and European foreign and defense chief Catherine Ashton soon in Brussels.

Analysts said that the intensive and high-profile arrangements can help boost trade and economic flow and build up mutual trust, which China said has been dented by Europe's punitive trade measures, the bloc's decision to not give the country market-economy status, and not lifting an arms embargo.

Although China's overseas investment potential is generally estimated to be very high, until now it represents only a small fraction of the EU's incoming foreign direct investment. China's cumulative share of FDI in the EU from non-EU member countries was less than 0.4 percent in 2011.

"This extremely low percentage should certainly assuage the fears expressed by some politicians and media about the growing influence of China on the European market and industries," said Zhang Haiyan, a professor at the Antwerp Management School.

Peter Ho, professor of Chinese economy and development and co-director of the Modern East Asia Research Center at Leiden University in the Netherlands, said economic and trade relations between China and Europe are solid and getting more intensive.

Ho said that challenges remain in the recurrent issues of the market-economy status and trade disputes.

"However, for China it might be important to see that from the EU's perspective there are also concerns over China's huge challenges in dealing with environmental problems, food safety, and product quality," said Ho. "These issues might have a huge effect on China's trade with the EU, if not properly addressed by China."

Giles Merritt, secretary-general of Friends of Europe, said that Brussels should embrace China's learning curve, as the country is now the bloc's second-largest trade partner behind the United States.

"I don't think there's very much that Europe can do to advise China. The story of the past decades has been how quickly China learns and adapts, much more quickly than others," said Merritt.

Fredrik Erixon, director of the European Center for International Political Economy, said both sides need to team up to boost mutual understanding.

"It's a fantasy to believe they (Europe and China) have a good understanding. Both sides don't really have excellent knowledge of each other," he said. "We know from the European Commission what they want to achieve, but we don't know so much what China wants to do."