THE European Union and China worked hard at mending fences at a summit in Prague recently in what policymakers describe as a bid to strengthen a relationship threatened by differences over human rights, climate change and bilateral trade.

The summit, initially scheduled to be held last year but postponed over Beijing's opposition to a meeting between Tibet's spiritual leader the Dalai Lama and French President Nicolas Sarkozy, did manage to give the appearance that both sides were back to “business as usual”.

The only trouble is that “business as usual” between the EU and China means volatile ties the relationship has always been marked by periods of calm and cooperation, interspersed with anger, tensions and strain. After a cooling-off period following the postponement of last year's EU-China summit, both sides have once again embarked on the path of reconciliation. Earlier this year, a high-ranking Chinese buyers' mission toured Europe as part of a government-sponsored shopping spree cum charm offensive designed to defuse tensions with the EU.

But as an increasingly self-confident and assertive China seeks a stronger voice in global affairs — including through a change in representation and voting rights in bodies like the International Monetary Fund and the World Bank where Europeans are over-represented — the EU remains uneasy, and divided, over dealings with Beijing. Europeans in turn wax lyrical about China's “responsible contribution” to easing the global crisis through domestic financial stimulus packages and contributions to regional and global financial institutions but then voice fears that China does not pay enough attention — or show enough respect — to Europe.

Many former communist eastern European states are more critical of China on issues like human rights while France, Germany and Britain try and tread a fine line between their commercial interests and pro-democracy concerns. Any talk of a 'G2' bringing together the US and China — and excluding Europe — is shrugged off as “nonsense” by EU policymakers. Europe, they insist, is still the world's leading trader, huge economic power and an important global player. “Do not underestimate Europe,” a senior EU official recently told this correspondent.

To some extent, Europe's mangled response to China's emerging clout is due to wider European fears and worries about globalisation and the threat it poses to Europe's political standing and economic prosperity. For many in Europe, China symbolises globalisation and all the dangers of job losses, diversion of investments and increased competition that go with it. Chinese policymakers, meanwhile, rage against Europe's focus on human rights and its tendency to lecture partners on the virtues of democracy and the rule of law.

At the same time, however, Chinese officials are eager to learn from Europe's experience in dealing with challenges Beijing also faces as regards regional inequalities, poverty alleviation, health-sector deficiencies and environmental pollution. Still, the focus is more often on where the two sides do not see eye to eye Brussels and Beijing have been at odds over Europe's criticism of China's human rights record, Beijing's policies towards Sudan's Darfur region and Burma/Myanmar. A spate of trade squabbles have also rankled relations between the two major trading powers.

However, with the worst economic downturn in nearly 80 years affecting both sides, the EU and China are struggling hard to upgrade their relationship. Embattled European exporters still need access to Chinese markets and for all their complaints about the surge in Chinese exports to the EU, competitively-priced Chinese products have acted as a brake on EU inflation and interest rates, provided cheap inputs for European manufacturers and remain a boon to European consumers and retailers.

As EU external relations commissioner Benita Ferrero-Waldner said recently, “the increasing Chinese middle-class is an attractive market for EU goods”. China, meanwhile, is equally dependent on its sales in Europe and European investments — as well as European technology.

EU exports to China rose to 78bn euros in 2008 from 26bn euros in 2000, while imports from China rose from 75bn euros to 248bn euros over the same period. As Chinese Premier Wen Jiabao said after the Prague meeting, “we both recognise that it is important for us to work together, to ride out the storm and make our contribution to an early world economic recovery”.

Seeking to allay European fears about being left out as the new US administration cosies up to China, Wen Jiabao insisted “It is impossible for a couple of countries or group of big powers to resolve all global issues. Multipolarity or multilateralism represent the larger trend. Some say that world affairs will be managed solely by China and the United States. I think that view is baseless and wrong.”

The EU Commission president said he had used the meeting to press Beijing on green issues — but major decisions have been left until another summit later in the year in Beijing which comes just weeks before talks in Copenhagen aimed at reaching a global climate deal to succeed the UN's Kyoto protocol from 2012. Barroso wants all major economies, including China, to disclose their negotiating positions before Copenhagen.

EU policymakers say China must commit to significantly reducing its carbon dioxide emissions by 2020 through cleaner energy. But Beijing is demanding that tougher targets are set for developed nations and is seeking aid from countries such as those in Europe to fund any new green technologies. As Premier Wen insisted after the Prague meeting, all countries should “stick to the principle of common but differentiated responsibility”.

China has its own long list of demands in dealings with the Europe. In Prague, Wen urged the EU to recognise China's market economy status, lift its arms embargo against Beijing, relax restrictions on exports of high-tech products to China and politely asked Brussels to refrain from criticising China's foreign and human rights policies.

“The most important thing is to stick to the principles of mutual respect and non-interference in each other's internal affairs, accommodate each other's major concerns and properly handle sensitive issues and ensure that our relationship will not be adversely affected by individual incidents,” Wen said.

The EU stance, however, is different friends should be able to criticise and advise each other. Even on politically sensitive questions.

The writer is Dawn'scorrespondent in Brussels.