President Xi Jinping won a promise from the European Union yesterday to consider a multibillion-dollar free-trade deal with his country, a long-held goal for Beijing which divides Europe.
Xi, the first Chinese leader to visit the EU institutions in Brussels since ties were established in 1975, pressed senior EU officials to consider such a pact, despite European concerns that Chinese state-owned firms flout international trade rules.
The 28-nation EU committed for the first time to opening talks on a free-trade accord (FTA) if current negotiations on an "investment agreement" to improve business ties are successful.
"Concluding such a comprehensive EU-China Investment Agreement … will convey both sides' joint commitment towards stronger co-operation as well as their willingness to envisage broader ambitions including, once the conditions are right, towards a deep and comprehensive FTA, as a longer-term perspective," the two sides said in their summit statement.
Talk of a free-trade deal, which would create a market of almost two billion people, seemed unthinkable just a year ago, when Brussels prepared to levy punitive import duties on billions of dollars of Chinese solar panels, setting off the biggest yet trade dispute between the two partners.
Relations have improved since the sides defused the row, setting a minimum price for exports of Chinese goods to the EU.
Both China and the EU have something to gain from increased trade. Europe's economy is barely growing after years of recession, while China's much faster growth is cooling.
British Prime Minister David Cameron expressed strong support during a trip to Beijing in December for such a deal, but many other EU members including France, Italy and Spain are wary, saying China tries to dominate European markets with cheap, subsidised exports.
According to one EU official at the summit, Xi pushed hard for the EU to consider the free-trade pact. "China wanted to go further on an FTA," the official said after Xi's meeting with European Council president Herman van Rompuy and European Commission president Jose Manuel Barroso. "Europe agrees to go ahead with this target in the medium term. We prefer to go ahead first with an investment agreement."
Talks towards such an investment agreement are under way and should make it easier for EU countries to do business in China, a big step that many see as a potential forerunner to a trade deal. Trade between the two has doubled since 2003 to more than €1 billion (HK$10.54 billion) a day.