PREVIEW: China, EU to discuss eurozone, bolster economic links

By Bill Smith Feb 13, 2012, 10:26 GMT

Beijing - Despite differences on several key issues, China and the European Union are forging a pragmatic relationship based on growing economic interdependence, officials and experts said before an EU-China leaders' summit scheduled for Tuesday.

'Especially from the political and diplomatic perspectives, European countries are our strategic partners,' Xing Hua of the Beijing-based China Institute of International Studies told dpa.

'The economic interdependency between China and Europe is increasing,' Xing said. 'Under the current situation of Europe facing its intractable sovereign debt crisis, Europe's lacklustre economy also affects China's exports to Europe.

'Under such circumstances, it is in China's interests to strengthen cooperation with EU countries and put China's ability to use in solving the debt crisis,' he said.

China's potential to increase its support for the eurozone is expected to take centre stage at Tuesday's summit.

The European Union is keen to win China's verbal, and ideally practical, support for its handling of the debt crisis.

During talks in Beijing in October, Klaus Regling, the head of the eurozone's bailout fund, said he was optimistic about long-term cooperation with China.

Regling said the world's largest exporter and second largest importer 'must invest every month' because of its large annual trade surplus, which totalled 155 billion dollars last year.

But Chinese Foreign Ministry spokesman Liu Weimin on Monday suggested that China would remain cautious until the EU had improved its financial policies and instigated 'fundamental reform' of its economic structure.

'The crisis is now at a key stage,' Liu told reporters. 'China hopes the EU can take some positive measures to maintain the stability of its economic situation.'

Markus Ederer, the EU ambassador to China, said EU officials would send 'a message of confidence' to China, adding that the European Financial Stability Facility (EFSF) and the International Monetary Fund would be on Tuesday's agenda.

'Europe welcomes China's constructive approach and response to the debt crisis,' Ederer told reporters.

He said Brussels would 'welcome any initiatives that underpin (China's) declarations' of intent to help the EU politically, with the debt crisis and with investment in Europe.

Premier Wen Jiabao, who will co-chair Tuesday's summit, told German Chancellor Angela Merkel recently that China was considering 'more participation' in the EFSF and the European Stability Mechanism (ESM), which is scheduled to replace the EFSF in July.

But in a commentary on Merkel's visit, state media said China needed to make 'thorough investigations before announcing concrete moves' to help the eurozone.

Xing said China's priority was to 'keep such financial investment safe and avoid risks.'

'We hope first to see the EU countries show more confidence in the EFSF and ESM ... and guarantee their support for those two funds,' he said.

Chinese officials have denied demanding political or economic concessions in return for greater support for the eurozone.

The government has expressed frustration over the EU's refusal to recognize China as a full market economy, its insistence on keeping a 20-year-old arms embargo, and its regular criticism of China's human rights record.

A more recent spat followed the EU's imposition of a tax on carbon emissions by international flights using EU airports.

But Xing said China would not link such issues to its support for the eurozone. The granting of market economic status, for example, was 'not an essential condition for China to provide aid to Europe,' he said.

He said the EU arms embargo, in force since the Chinese Communist Party's 1989 military crackdown on democracy protesters, was 'out of date and unreasonable.'

Tuesday's summit was scheduled for October but postponed because EU leaders needed to discuss measures to tackle the debt crisis.

It takes place against the backdrop of escalating persecution of rights activists and dissidents, and security cordons around restive Tibetan areas.

EU officials also criticized China for postponing a scheduled bilateral dialogue on human rights late last year and failing to agree a new date for the talks.

Rights groups have urged the EU to focus on human rights issues on Tuesday, but Xing said the critics failed to respect China's 'development model' and its need for 'social stability.'

Some European politicians had supported 'illegal actions that undermine social stability by a few people' out of China's 1.3 billion population, he said.

'If European countries always take themselves as teachers, and put themselves in a guiding position, it will be very difficult to carry out the (human rights) dialogue,' Xing said.

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