The European Commission has suspended its efforts to get member states and parliament to ratify an investment agreement reached with China at the end of 2020, after seven years of talks, following differences over human rights in the Muslim-majority region of Xinjiang.
With relations cooling, the EU also decided in May to "readjust" its position towards China to reduce its economic dependence at a time when Beijing is suspected of giving Moscow tacit support for its war in Ukraine.
"I'm sorry to say that we have a dialogue on economic (issues) and trade which has not made any progress, or at least substantial progress, in the last four years," EU Ambassador Jorge Toledo said at a forum in Beijing.
"We want to engage with China, but we need progress, and we need it this year," Toledo said, adding that a high-level economic dialogue between the two sides would be held in September.
For the EU, China is "simultaneously a partner, a competitor and a systemic rival", he said.
The European Commission unveiled a strategy last month to respond more decisively to economic security risks, with China in particular in its sights.
The Commission put forward proposals in March to secure supplies of materials, such as lithium or nickel, needed for the production of key technologies such as batteries and solar panels.
Germany, France and Italy said last week they would cooperate more closely on the procurement of raw materials as Europe aims to reduce its reliance on imports from countries such as China.
One of the most contentious issues between the EU and China relates to Beijing's ambiguous position on Moscow's invasion of Ukraine.
While China does not recognise the territories annexed by Russia in Ukraine, it also has not condemned Moscow's invasion.
"Ukraine, for instance, (is) the issue which can make or break relations between the European Union and China," Spain's ambassador to China, Rafael Dezcallar Mazarredo, said at the same forum.
"It can improve them substantially, or it can send them down a very negative path."
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