A European Union delegation is in Beijing for a first summit with the new Chinese government, which took up office earlier this year. The summit's main focus will be trade, but military and security issues, including North Korea's stand-off with the US over nuclear arms and human rights are also on the agenda.

President Hu Jintao and Prime Minister Wen Jiabao are hosting European representatives including Italian Prime Minister Silvio Berlusconi, whose country holds the rotating EU presidency, Romano Prodi, the President of the European Commission, and Javier Solana, the EU foreign policy coordinator.

Nuclear stand-off with North Korea

The EU is expected to ask Beijing to exercise its influence over North Korea to help resolve the ongoing international dispute over Pyongyang's nuclear weapons program. Reuters news agency reports that Pyonyang has told Beijing that the stand-off is entering "an unpredictably difficult phase".

Reuters also cites Japanese media reports as saying North Korea was no longer demanding a non-aggression treaty with the US and would settle instead for a letter of assurance on its security from President George W. Bush.

Beijing, North Korea's biggest aid donor and one of its few international allies, has denied pressuring Pyongyang to go back to the negotiating table, saying this was not its diplomatic style.

Human rights abuses

Silvio Berlusconi is expected to address human rights abuses in China, especially the number of executions carried out there. The human rights organization Amnesty International says 15,000 people per year are executed in China, but the official figure given by Beijing is 1,000.

Chinese Prime Minister Wen Jiabao is expected to press for a lifting of the international arms embargo imposed on his country after the massacre at Tiananmen Square in 1989. The EU's ambassador to China, Klaus Ebermann, told DW-RADIO this is a long way off.

The two sides want to take measures to curb illegal immigration from China to the EU. They include setting up a mechanism allowing European countries to send home illegal Chinese immigrants.

At the same time, they are aiming to make travel between China and the EU easier. Beijing says it is willing to simplify visa application procedures for travel to China, and the EU wants to give selected travel agents in China the opportunity to organize group tours in Europe.

Exchange rate debate

EU delegates are expected to urge China to adopt a more flexible approach to currency exchange rates. The Yuan is currently pegged to the dollar, but many economists believe the Chinese authorities are keeping it artificially weak to make their exports more competitive.

Last year, China had a €47 billion ($53 billion) surplus in its trade with the EU, and almost double that in trade with the US ($103 billion). The US has been pressing hard for Beijing to reduce the surplus by revaluing the Yuan, but Brussels says it will be adopting a softer approach. Romano Prodi is expected to push for a gradual "unpegging" of the currency, while recognizing that any such move cannot happen overnight.

Another way to address the imbalance would be for China to open up its markets more. Brussels says it will urge China to meet the obligations it assumed by joining the World Trade Organization, or WTO. European chambers of industry and commerce have complained that Beijing has been even more protective of its industries and markets since it joined up, and say there is no fair competition in areas such as car manufacture, construction and telecommunications.

Piracy problem

Another major bone of contention is posed by copyright infringements and bootlegging in China. Jan Borgonjon, head of the European chambers of industry and commerce in Beijing, told DW-RADIO that this is the biggest single problem in trade relations between China and the EU. He added that there are still far too many obstacles to European firms who wish to open up branches in China.

But it's not all one-way traffic. Romano Prodi and Wen Jiabao are expected to sign an agreement regulating the manufacture and sale of European cars in China. The German car-maker, BMW, has just launched production and sale of its cars in China, and VW subsidiary Audi is already well established on the market there. It expects to sell 60,000 cars in China this year.

European enlargement is also playing a role in the trade talks. The EU market will grow considerably when it admits ten new members in May next year. China will be looking for guarantees that customs and tariff regulations in the new member states will be brought into line with EU law as quickly as possible.

Satellite deal

China has pledged to invest 200 million euros in the European satellite navigation system, which is expected to pose stiff competition for the American Global Positioning System, or GPS. Washington has already expressed its displeasure at this particular agreement.