China and EU can 'strike bargain'

Mr Mandelson says Europe and China must respect their interests

Europe and China could strike a "grand bargain" by agreeing to accommodate each other's commercial interests, EU Commissioner Peter Mandelson has said.

Speaking ahead of an EU-China trade conference in Brussels, Mr Mandelson said China must abide by world trade rules and be more open in its dealings.

In return, Europe must accept the "challenge" posed by China's economic strength and adapt to better compete.

Relations between the economic powers have been soured by trade disputes.

'Chinese wall'

Brussels has accused China of "dumping" cheap leather shoes on the European market and has imposed temporary tariffs on imports.

It is currently examining other cases of possible trade distortion involving items such as plastic bags, with a view to similar action.

As a member of the World Trade Organization and a key player in the global economy, China must respect trade rules, Mr Mandelson said.

China sometimes talks as if it is at the edge of the WTO system looking in. But China now is the system Peter Mandelson

This required it to give fair treatment to European firms doing business there and honouring intellectual property laws.

Failure to act by Beijing in this area would only fuel calls for greater protectionism in Europe, Mr Mandelson warned.

"China sometimes talks as if it is at the edge of the WTO system looking in," he said. "But China now is the system."

"Too often Europe's businesses meet a Chinese wall rather than an open door."

Accepting reality

The EU is China's largest trading partner, while China is the EU's second largest trading partner after the United States.

However, the relationship has become increasingly unequal with the EU's trade deficit with China growing to more than 100bn euros (£70bn).

Brussels has called for action to tackle counterfeiting

In return for China accepting the responsibilities that come with being a global economic power, Mr Mandelson suggested that Europeans needed to turn down the rhetoric over cheap imports and unfair competition.

He said many European firms now used China as a low-cost manufacturing base to export to the rest of Asia, while complaining about the threat to jobs in their own markets from Chinese goods.

"Europe must accept the Chinese challenge to adapt and compete.

"What do we mean when we say that cheap Chinese exports are threatening European livelihoods?"

Friday's conference - addressing the challenges posed to Europe by China's economic growth - will be attended by Chinese vice minister of commerce YU Guangzhou.