European Union leaders sat down last week for what was supposed to be a summit meeting to discuss China, perhaps the biggest external economic and diplomatic challenge currently facing the EU.

Instead, they ended up talking about Brexit, again.

That UK lawmakers have spent the last 33 months since the country voted to leave the EU failing to agree on how to do so has thrown multiple spanners into the complicated workings of the bloc, whose leaders desperately need to hash out unified policies on a number of issues, but are instead constantly derailed by the one member state who, at least in theory, doesn't want to be there.

Next month, Chinese Premier Li Keqiang will visit Brussels for a summit with European leaders, before heading for Croatia for a meeting with representatives of a organization of 16 central and eastern European countries, just the kind of grouping some fear could be used to split the wider EU.

Ahead of last week's summit meeting, the European Commission said that China "is simultaneously a cooperation partner with whom the EU has closely aligned objectives, a negotiating partner, with whom the EU needs to find a balance of interests, an economic competitor in pursuit of technological leadership, and a systemic rival promoting alternative models of governance."

China is the EU's largest trading partner, while Europe is China's second largest after the US, with over $1 billion in trade between the two parties done every day on average. Crafting a unified policy on how to interact with Beijing is a key issue for Brussels, and one the EU can hardly afford to screw up.

But there is considerable disagreement within the bloc on how to go about finding this balance, with some members, notably Germany, increasingly hawkish with regard to Beijing, both as an economic and security challenge, while other countries remain eager to embrace Chinese investment.

Italy and China

That eagerness was on show in Rome this month, as Italian leaders rolled out the red carpet for Chinese President Xi Jinping, after becoming the largest European economy, and first G7 member, to sign up to his Belt and Road trade and infrastructure initiative.

Italy's participation in Xi's project is not only an economic win for Beijing, but potentially creates a wedge for use against the wider EU on key issues in future, said Lucrezia Poggetti, a research associate at the Berlin-based Mercator Institute for China Studies (MERICS).

"China is very keen to deal with EU nations separately, rather than as a bloc," she said. "In bilateral relations, China has the upper hand because of its huge economic power compared to individual European countries."

She pointed to a move by Greece and Hungary -- both key allies of China's on the continent -- to water down criticism of Beijing over its behavior in the hotly disputed South China Sea, and Athens' intervention in 2017 to block an EU statement critical of China's human rights record.

"In both cases, Greece feared upsetting the Chinese government and potentially losing access to economic opportunities promised by Beijing, so it broke ranks with the EU instead," Poggetti said. "Hungary has also been more openly close to China politically."

At a meeting in Brussels this month, Chinese Foreign Minister Wang Yi said Beijing "firmly supports the European integration process, firmly supports the EU in staying united and becoming stronger, and firmly supports Europe in playing a more important role in international affairs." (CNN)