Brussels says "significant progress" has been made and officials hope to agree a "roadmap" to get a deal done by the end of the year, but they also warn Beijing needs to do more to improve market access for European companies.
EU leaders are set to hold video talks with Chinese President Xi Jinping on Monday, hoping to make progress on trade and investment, even as tensions mount between Beijing and the West over Hong Kong and the treatment of minority Uighurs.
The virtual meeting between top Chinese officials and EU Council President Charles Michel, European Commission chief Ursula von der Leyen and German Chancellor Angela Merkel, replaces a full summit with all 27 European leaders which had to be cancelled because of coronavirus.
China has said an investment deal already seven years in the making can be agreed by the end of the year, but EU officials warn significant obstacles remain and insist they will not agree to unfavourable terms simply to cut a deal.
"Even if there is a political objective to accelerate negotiations and conclude them by the end of the year, we will have this only if it is something worth having," an EU official said.
The EU and China will both play a role in defining how global technological developments will go forward.— European Commission 🇪🇺 (@EU_Commission) September 10, 2020
Dialogue is necessary to foster cooperation, but also to address divergences, like on reciprocity, data protection and fundamental rights: https://t.co/NsiyN1X9FK #DigitalEU https://t.co/K7kYjxJ4CN
Brussels says "significant progress" has been made in talks since a similar video summit in June, and officials hope to agree a "roadmap" to get a deal done by the end of the year, but they also warn Beijing needs to do more to improve market access for European companies.
Brussels wants to reinforce respect for intellectual property, end obligations to transfer technology and see a reduction in subsidies for Chinese public enterprises.
READ MORE: Is China losing its pull with Europe?
No major breakthrough is expected on Monday but the EU side hopes to persuade Xi, China's paramount leader, to give fresh political impetus to the talks – and to allow his negotiators more room to compromise.
The meeting comes as ties between China and the US deteriorate, with both sides locked in fierce recriminations over trade disputes, human rights and the origins of the coronavirus pandemic.
Washington and Beijing this week imposed reciprocal curbs on each other's diplomats, after another tit-for-tat in July when the two governments ordered the closure of consulates in Houston and Chengdu.
Both sides have sought to enlist the EU in their spat, and during a visit to Brussels by US Secretary of State Mike Pompeo in June, the EU's diplomatic chief Josep Borrell mooted talks to forge a common transatlantic front against China.
But little progress has been made on this initiative and broadly Brussels has preferred to forge a middle path, treating Beijing as both a potential partner and a "systemic rival".
"The EU stands firm on its interests and values but also wants to cooperate with China," a senior EU official said.
Pompeo and Chinese Foreign Minister Wang Yi have both toured European capitals over the summer seeking to drum up support.
"What is absolutely important in this is the EU would not become a battleground for these tensions, but the EU would be a stabilising factor and defend its own interests and universal values," the official said.
The EU is set to press Xi on Hong Kong, where Beijing has imposed a controversial new security law – a move denounced by the West as a major assault on the city's freedoms.
After the June summit, von der Leyen warned China would face "very negative consequences" if it pressed ahead with the law and a month later the EU agreed to limit exports to Hong Kong of equipment that could be used for surveillance and repression.
European concerns about China's rights record are growing: during a visit by Wang to Berlin earlier this month, German Foreign Minister Heiko Maas called China out over Hong Kong and its treatment of minority Uighurs.
But the EU is far from united on how to deal with China, with some member states urging a tougher stance to get Beijing to do better on rights and the environment and others favouring a gentler approach to boost trade.
Moreover, Beijing has used its mammoth "Belt and Road" infrastructure scheme to effectively pick off investment-hungry EU member states such as Greece, Portugal and Italy.
On climate change, Brussels hopes to press China to be more ambitious in its efforts to cut emissions.
"Our Chinese friends do have a habit of not wanting to overpromise and under-deliver," an EU official said.
"They have been extremely prudent in the commitments they have made... but this is no longer the time for excess prudence."
The EU wants a commitment from Beijing to peak its emissions in 2025 and achieve climate neutrality by 2060, as well as ending investment in coal power.