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Last Updated: Tuesday, 12 June 2007, 17:18 GMT 18:18 UK
China 'changes its tone on trade'
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European Union Trade Commissioner Peter Mandelson has said that China had indicated it was willing to find common ground over trade issues.

The comments came after Mr Mandelson met China's Commerce Minister Bo Xilai amid concerns about Chinese exports.

Many politicians and firms have accused China of undervaluing its currency and flooding markets with its cheap goods.

Mr Mandelson warned that European consumers may lose patience with China and force politicians to take action.

The US Government has already reported China to the World Trade Organisation over copyright piracy and counterfeiting and Mr Mandelson has indicated the EU is on the brink of adopting a similar tough stance.

And a group of US Senators are planning to introduce legislation to force China to raise the value of its currency, which they believe is giving it an unfair trade advantage.

'Clear recognition'

Mr Mandelson said that he detected a change in China's tone during the talks on Tuesday.

"I felt that I heard for the first time at such a political level the clear recognition by China, in the words of Bo Xilai, that something must be done," Mr Mandelson said.

Mr Mandelson added that the discussion was "as frank, concentrated and prolonged a discussion as was necessary for such a serious topic as the growing trade deficit between the EU and China".

Ahead of the meeting, China announced that its trade surplus had increased by 73% to $22.5bn (11.4bn) in May.

The EU's trade deficit with China was 128bnn euros in 2006, and the European Commission said the shortfall could hit 170bn euros this year.

Mr Mandelson called China "the most sensitive and most challenging trade relationship that the EU has".

"It is also the most promising and I think the most important to get right," Mr Mandelson added.

Freer markets

Despite the comments, the talks failed to reach any concrete agreement between the two sides.

EU officials have claimed that the export potential of member states to China's growing market of consumers has been grossly impeded by trade barriers that cost European businesses up to 20bn euros a year.

Europe also wants assurances from Beijing that they will do more to target rampant copyright piracy and strengthen legal protection for foreign firms doing business in China.

China could also ease tensions by curbing the output of its steel makers to prevent overcapacity in the global market, EU officials said ahead of the talks.

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