The agreement, if it takes place, will likely be based on Cardinal Parolin's model implemented in Vietnam back in 1996: the Holy See proposes a set of three bishops to the Hanoi government, and Hanoi makes its choice.
Problems with this model do exist, however, including that the Vietnam administration often delays its approval, leaving dioceses vacant for years. Then, when they make the choice, they usually prefer a pro-government candidate.
Ever since the communist victory in the Chinese Civil War, the Holy See has had a reduced diplomatic presence in Beijing, with the nunciature being moved to Taiwan in 1951.
China-Vatican relations have been cool, with some apparent thaws. Benedict XVI wrote a letter to Catholics in China in 2007, after which followed a series of bishops' appointments approved both by the Chinese government and the Holy See.
The Church in China is in a difficult situation. The government of the Chinese People's Republic never recognized the Holy See's authority to appoint bishops. Instead, it established the Chinese Catholic Patriotic Association, a sort of ecclesiastical hierarchy officially recognized by the Chinese authorities.
For this reason, Chinese bishops recognized by the Holy See entered a clandestine state, thus giving life to the so called "underground Church" that is not recognized by the government.
Cardinal Joseph Zen Zekiung, archbishop emeritus of Hong Kong, disapproved of the potential agreement between the Chinese government and the Holy See regarding bishop appointments.
In a long open letter, he lamented that nothing would change in terms of religious freedom in China. He expressed his concern that this path would be a return of the "Ostpolitik," the Cold War policy put into action under Pope Paul VI by the Holy See.
The Vatican made reciprocal concessions with countries on the other side of Europe's Iron Curtain in order to guarantee a peaceful life to Christians in the countries under Soviet communist domination.
Cardinal John Tong Hon, Cardinal Zen's successor as Archbishop of Hong Kong, responded to Cardinal Zen. He specified that final choice on a bishop's appointment was always the Pope's. He highlighted the fact that papal nuncios themselves can seek opinions from external lay people when they are examining candidates for the episcopate.