EU ramps up engagement with ChinaWed, 01 Sep 2010
Europe’s Anti-Fraud Commissioner Algirdas Šemeta is in talks with Chinese officials with a view to enhancing customs co-ordination and securing the supply chain between the two countries. Meanwhile Commission foreign policy chief Catherine Ashton has opened a fifth round of EU-China strategic dialogue with trade, climate change and nuclear proliferation all high on the agenda for discussion.
The European Union Chamber of Commerce in China in its annual survey out Wednesday (1 September) listed a series of technical barriers to EU investment in the airline reservation, automotive, construction, insurance, oil refinery, research and innovation and telecommunications sectors.
In one example, EU companies seeking a wholesale licence to sell petrol in China must first own a refinery and get an import licence. But another law forbids foreign firms from owning a majority stake in Chinese refineries, while in practice, Chinese bureaucracy has never issued an import licence to a foreign company.
In another example, Chinese state purchases of IT gives nakedly preferential treatment to products developed by native researchers.
As a result EU firms invested just €5.3 billion in the vast country last year, amounting to less than 3 percent of EU foreign investments, the study noted.
The paper took China's leaders to task for failing to live up to commitments in the World Trade Organisation. The business lobby's chief, Jacques de Boisseson, also gently criticised the authoritarian country's top economic official, Premier Wen Jiabao, who in April said foreign firms can compete on a level playing field with Chinese ones.
"I do believe the words of Premier Wen when he says that foreign investment is welcome," Mr de Boisseson told Reuters. "[But China] would probably be satisfied with a lower level of foreign investment and a higher share for Chinese companies."
The plea for help - which, among other things, called for "a more coherent approach" to China diplomacy from EU member states, whose policies it dubbed "fragmented and uncoordinated to the detriment of European business" - comes during a high-level visit by EU foreign relations chief Catherine Ashton to China.
Ms Ashton is not responsible for trade but did on Wednesday discuss a wide-ranging EU-China strategic partnership with the country's most senior foreign affairs official, Dai Bingguo, and will on Thursday meet Mr Wen.
"China expects the EU to treat it as an equal," Mr Dai told Ms Ashton, according to the Xinhua state news agency.
Ms Ashton so far on her trip has also visited EU pavilions, such as the Bulgaria and Romania stands, at the Shanghai "Expo 2010" fair and toured an ethnic Miao village in the country's Guizhou province. "I have seen the beauty of Beijing and the splendor of Shanghai, and I have the great opportunity to see this part of China," she told Xinhua.
The EU foreign affairs chief declined to go to the re-launch of Middle East peace talks taking place in Washington on Thursday in order to complete her China itinerary, attracting criticism from some quarters.
"If the EU wants to play an international role compatible with its political and economic weight, it must clearly understand its priorities!" Portuguese centre-right MEP Mario David said in a statement on Wednesday.
After a day spent visiting the EU pavilions at the World Expo in Shangai, Ms Ashton will co-chair the first EU-China high-level strategic dialogue with state councillor Dai Bingguo on Tuesday and Wednesday in the Guiyang region.
During the meeting they will "address issues of concern and mutual interest," Ms Ashton's office wrote in a statement. These include foreign and security matters such as the Korean Peninsula, Iran, Africa and piracy in the Gulf of Aden.
"Today, EU-China co-operation and exchanges form a rich tapestry of interwoven issues and interests. Inevitably, a relationship such as ours needs constant attention if we are to maintain and build confidence," Ms Ashton said in a written interview with a state-owned newspaper China Daily, published Sunday.
"We need to communicate to speak frankly to exchange ideas and to recognise there have been and will be some difficult moments as our relationship matures. That is why I am in China this week, to coordinate closely our policies and to develop further our cooperation on important international issues," she added.
She went on to highlight some of the areas of dispute including trade and the environment. The EU has upbraided China several times for not protecting intellectual property rights while EU business leaders have increasingly complained about the obstacles they face to doing business in the country. Meanwhile, Beijing has taken a tough line on environmental issues arguing that countries that are catching up on the industry front should not have to pay for the environmental sins of fully industrialised countries.
"Part of China's success comes from the open global economy with common rules. If this system is going to continue it needs active efforts by all the important countries and of course China is now one of the most important ones. This is true in trade, but it is also true in the area of banking, security and the environment," Ms Ashton said.
With the EU-China summit on the agenda on 6 October, Ms Ashton will meet Prime Minister Wen Jiabao and foreign minister Yang Jiechi in Beijing during Thursday and Friday.
The Reuters news agency says that in an interim report to be published next month, the WTO panel will say that the EU discriminated against Chinese exporters of screws and bolts compared to exporters from other countries when it applied a single anti-dumping duty based on the national principle.
Instead of imposing a blanket duty for the whole country, the EU will in future have to set individual duties for companies on case-by-case basis in order to comply with the WTO position.
The EU already uses the individual duty model in cases of countries it considers not to be market economies, such as Cuba, Albania or Vietnam.
"The amount of money at stake here is not huge in this case, but it will have repercussions on other anti-dumping cases," a person acquainted with the report told the Financial Times.
"It's a big victory for China as it takes out one of the pillars of EU anti-dumping activity against China," a similar contact told Reuters.
The WTO report will not backed China's claim that Brussels made unfair comparisons between high-end EU fasteners used in the car and aviation industries and low-grade Chinese screws and bolts sold in hardware shops, however.
China raised the case against the EU, its first since joining the organisation in 2001, in July 2009. Chinese imports in the disputed case, worth around €575 million a year, were slapped with duties of up to 85 percent when entering the EU market.
In May 2010 the WTO set up an expert panel in another case brought by China against the EU on Chinese-made footwear. The Chinese authorities said when filling the complaint that the EU measures "violated various obligations under the WTO, and consequently caused damage to the legitimate rights and interests of Chinese exporters.
The EU in June has opened another anti-dumping case over below-cost Chinese imports of ceramic tiles, which saw the Chinese ministry of commerce threaten to punish EU-made iron and steel fasteners in return.
In 2009, EU customs officials took action in 43,500 different cases where they suspected counterfeited goods were being brought into the EU, a fall on 49,000 cases in 2008, according to Thursday's report (22 July).
Officials were quick to attribute the decline, the first in a decade, to the general fall in world trade last year however, rather than reduced product piracy levels, with 64 percent of the IPR infringing articles originating from China.
Of the main categories of detained products, cigarettes accounted for 19 percent, other tobacco products 16 percent, labelled goods 13 and medicines 10 percent.
Despite the dominance of fake goods from China, a majority of counterfeit foods and beverages originated from Turkey, while a majority of fake medicine entering the EU could be traced back to the United Arab Emirates.
The report comes as the EU commissioner responsible for customs, Algirdas Semeta, prepares to discuss the issue at an international conference in Shanghai this September.
Brussels also intends to come forward with a legislative proposal by the end of the year to clarify and simplify the bloc's customs procedures, with the current legislation on IPR enforcement dating back to 2003.
De Gucht
In a separate but related event on Thursday, EU trade commissioner Karel de Gucht told journalists that European firms were becoming increasingly worried about doing business in China due to a lack of intellectual property protection.
Mr De Gucht told reporters at an EU trade event at the Shanghai World Expo that many of the concerns originated from Beijing's policy of 'indigenous innovation'.
By forcing foreign companies to register as Chinese companies before being allowed to participate in the country's public procurement market, the policy brought overseas intellectual property "into the open", explained the Belgian politician.
The comments come just days after two leading German industrialists voiced similar concerns directly to Chinese Premier Wen Jiabao at a roundtable discussion also attended by German Chancellor Angela Merkel.
Jurgen Hambrecht, chairman of giant chemical company BASF, and Peter Loscher, chief executive of industrial conglomerate Siemens, added their voices to a growing clamour of criticism against Chinese rules that are seen as disadvantaging foreign firms.
Mr Hambrecht said foreign companies are frequently forced to transfer business and technological "know-how" to Chinese companies in exchange for market access.
"That does not exactly correspond to our views of a partnership," he told Mr Wen at the roundtable discussion in the northwestern Chinese city of Xian, according to German journalists who attended the meeting.
The strong statements are particularly noteworthy due to their public nature and delivery during a meeting also attended by German Chancellor Angela Merkel, in China as part of a four-day state visit.
Mr Loscher voiced widespread complaints about draft Chinese public procurement rules which are intended to support "indigenous innovation," a policy foreign companies fear could shut them out of lucrative government contracts.
The Siemens boss also called on China to remove investment restrictions in certain sectors, reported German daily Handelsblatt. At present, foreign companies can be required to form joint ventures with Chinese companies when setting up shop in China, as exemplified by the Shanghai Volkswagen Automotive company.
Mr Wen reportedly responded to the criticism by telling Mr Hambrecht to calm down, insisting that China remained committed to opening its economy. "Currently there is an allegation that China's investment environment is worsening. I think it is untrue," Mr Wen said.
But the comments from two of Europe's leading industrialists come on top of a recent survey by the EU's chamber of commerce in China which showed that foreign executives hold an increasingly gloomy outlook regarding China's regulatory setup.
The increasing fears of discrimination led the EU chamber's president Jacques de Boisseson to suggest firms may even consider pulling out of China altogether.
"Nobody should take for granted that European companies will continue investing whatever the business environment," said Mr De Boisseson.
The move, which marks a dramatic u-turn on previous positions, is vital to prevent Europe losing out in the race to develop low-carbon technologies, British energy minister Chris Huhne, German environment minister Norbert Roettgen and French ecology Minister Jean-Louis Borloo said in an opinion piece in the Financial Times on Thursday (15 July).
"If we stick to a 20 percent cut, Europe is likely to lose the race to compete in the low-carbon world to countries such as China, Japan or the US," wrote the three ministers.
While Europe currently enjoys a leading position in the low-carbon goods and services sector, recent research shows China has leapt ahead in green technology investment, attracting $40.3 billion of asset finance for clean energy in the past year, roughly $10 billion more than the EU.
The call for a unilateral jump to a 30 percent cut on 1990 levels is likely to anger European businesses however, with a European Commission paper in May on the subject attracting harsh criticism.
Brussels argued that the economic recession would make the greater cut significantly cheaper than previously thought, but fierce lobbying from businesses and certain EU states resulted in the document's language being watered down.
While making the case for the larger cut, EU climate commissioner Connie Hedegaard said present "conditions are not right" due to Europe's economic difficulties.
In their opinion piece on Thursday however, the three ministers say there is a compelling economic argument for the 30 percent cut, with failure to move now likely to lead to greater costs in the future.
"The current target of a 20 percent reduction now seems insufficient to drive the low-carbon transition," they said. "The recession by itself has cut emissions in the EU's traded sector by 11 per cent from pre-crisis levels."
The greater reduction "is a policy for jobs and growth, energy security and climate risk," they add.
Previously in UN climate talks, the EU has declared its willingness to make the jump to 30 percent only if other other countries around the world take similar steps, a development that did not materialise in Copenhagen last December.
Germany has been among the strongest opponents to a unilateral EU move, stressing that the jump should only be made in the context of a wider international agreement.
France has also shown resistance in the past, with the debate now likely to be thrown wide open again ahead of international talks on global warming in December in Cancun, Mexico.
With some analysts predicting that between 10-20 banks could require millions of euros in recapitalisations, EU economy commissioner Olli Rehn said on Monday evening (12 July) that national capitals must "prepare for any possible pockets of vulnerability" by getting their "backstops" in place.
Adding to tensions, a number of market participants have raised a series of doubts over the thoroughness of the tests that are designed to assess banks' abilities to withstand future financial shocks such as a national debt restructuring.
News, however, that China last week bought roughly €400 million in Spanish bonds will provide considerable cheer to EU finance ministers meeting in Brussels on Monday and Tuesday, with the return of Asian investors after a two-month pause seen as an important vote of confidence in the eurozone's economy.
Speaking to journalists on the sidelines of Monday's meetings, German finance minister Wolfgang Schaeuble denied the tests had been devised so that banks would easily sail through.
"First it was said that they were too tough, that they would lead all the banks towards bankruptcy. The next day it was said that they were too weak and that the exercises is useless," Mr Schaeuble told reporters.
"In general, the truth lies somewhere in the middle."
Germany's state-owned regional Landesbanken have been identified as some of Europe's weakest, with a study by PricewaterhouseCoopers also showing a number of British banks and Spain's regional lenders as being considerably exposed to non-performing loans.
Time for the €440 billion emergency mechanism?
One question is where European governments would find the necessary money, if called upon, to carry out further expensive bank recapitalisations, with some in Brussels suggesting the eurozone's €440 bail-out fund - known as the European Financial Stability Fund (EFSF) - could be used.
Originally intended to bolster the public finances of governments struggling to raise money on capital markets, supporters say the money could be indirectly channelled into banks.
But other EU sources say such a move would be impossible, with late-in-the-day Slovak reluctance to sign up to the bail-out mechanism also raising a further question mark. The country's new government has said it wants its contribution to the scheme, roughly €4.4 billion in loan guarantees, to be reduced.
With pressure growing on Bratislava to sign up, the stability fund's manager has said its failure to do so would not prevent the fund from raising money through debt issuances.
"The EFSF could begin financial operations if necessary, if required, almost immediately," said Klaus Regling.
Separately on Monday, EU finance ministers gathered with European Council President Herman Van Rompuy to discuss reform on the EU's economic governance.
In a statement after the third "taskforce" meeting, Mr Van Rompuy said ministers agreed that greater sanctions, including the potential suspension of EU farm and regional payments, were needed for states that repeatedly breached the bloc's budgetary rules.
"The scope of financial and non-financial sanctions will have to be widened, including in the community budget," said Mr Van Rompuy.
Ms Fu Ying made the comments in an interview with EUobserver in Strasbourg on Tuesday (6 July), ahead of a series of meetings with senior European Parliament officials.
"I think the misunderstanding is strong on the European side and is growing on the Chinese side as well," said Ms Fu, whose portfolio includes handling her country's relations with Europe and Taiwan.
"Since 2008, the perceived China-bashing sentiment of European countries has hurt China and Chinese people," explained Beijing's most senior female official, whose previous positions include three years as ambassador to the UK.
And while China hopes for an improvement under the Lisbon Treaty, the EU's new rulebook that creates a stronger foreign policy supremo in the shape of Catherine Ashton, so far there has been little tangible evidence of change.
"I'm not saying the new position is not working, it [simply] hasn't started very much yet," said Ms Fu of the seven-month old post, conceding that she has never spoken to Ms Ashton over the phone to discuss bilateral issues.
Despite strong trade ties, a number of recurring issues continue to create tension between the two sides.
Among them, Europe's perceived unwillingness to grant China market economy status, an escalating number of trade disputes and persistent criticism of the country's human rights record, especially from MEPs, continue to vex Chinese officials.
This comes despite the fact that some NGOs say Europe's criticism of conditions in the autonomous regions of Tibet and Xinjiang has been increasingly overtaken by commercial interests.
At the same time, European businesses say they receive unfair treatment when operating inside the Asian powerhouse economy, while the valuation of China's renminbi currency has attracted harsh criticism since an effective currency peg with the dollar was put in place in 2008.
Renminbi
US and EU pressure on the currency issue appeared to bear fruit last month, when China announced its intention to allow the renminbi greater flexibility to appreciate.
This decision however, insists Ms Fu, reflects the easing of the global economic recession rather than external influences.
"We don't like the pressure from outside because Chinese people are now asking why we changed our currency stance because somebody told us to," she said.
The conflicting nature of domestic and international demands is also evident in market access disputes.
In April, the EU Chamber of Commerce in China said growing nationalist sentiment expressed by Chinese internet users is driving the country's protectionist policies at the expense of foreign firms.
Taken together, the litany of potential flashpoints between the two sides seems likely to keep Ms Fu busy in the coming years, with Europe's tendency to hand out advice also grating against Beijing.
"Europe believes it has the best and that the whole world should copy it, although after a long period of time, many countries that did copy it are not so successful," said Ms Fu. "But Europe does not lose its confidence, you keep on lecturing."
The Frenchman made the comments at the European Business Summit in Brussels on Wednesday (30 June), flanked by the EU's trade commissioner Karel De Gucht, the US ambassador to the WTO Michael Punke and his Chinese counterpart, ambassador Sun Zhenyu.
"The truth is that we are stuck, because Mike, Karel and Zhenyu are trading words not concessions," Mr Lamy said bluntly during a jackets-off debate which saw all sides call for others to go further.
The behind-the-scenes glimpse of the nature and personalities involved in the drawn-out trade talks may not have instilled much optimism among the hundreds of business executives sitting in the audience, although some progress appears to have been made at the recent G20 leaders' meeting in Canada.
"I was pleasantly surprised by what happened in Toronto," Mr De Gucht said on the gathering, where leaders talked for an hour and a half on trade, indicating to each other what was politically possible. "I see an overall awareness ... that we need to conclude this."
Hopes will now focus on the next G20 leaders' meeting this November in South Korea, with a view to eventually wrapping up the agreement next year.
For the US, any deal must provide a badly needed stimulus to the country's struggling economy, which is slowly clawing its way out of recession, amid strong doubt over the package as it currently stands.
"For it to be a stimulus it has to create new opportunities for trade," said ambassador Punke, whose country is frequently blamed for the breakdown of talks in 2008. "The tariff cuts being offered by advanced developing countries are small and over a long period of time ...so that we don't even know what we will get."
The thinly veiled criticism of the Chinese position prompted ambassador Sun to question the political willingness of some countries to move forward, with US mid-term elections at the end of this year frequently cited as a barrier to immediate progress.
Many Democrats are traditionally wary of free trade agreements, and are unlikely to support much discussion on the subject until their seats are secured in November.
With roughly 80 percent of the deal supposedly negotiated, it is clear that securing agreement on the final 20 percent will prove difficult, with emerging nations such as China stressing the round's original aims of first and foremost improving conditions for less developed nations.
But nine years on from the start of the Doha talks, the global economic environment has changed dramatically, with Western countries saying that emerging giants such as Brazil, India and China can no longer be treated in the same way.
As the speakers sweated under the lights, Mr Lamy proffered some more advice to the warring sides, urging them to invest some political capital in a deal that he said would ultimately create a net benefit, even if some particular constituencies lost out.
"Spend half your time negotiating, and the other half explaining to your domestic constituencies what you are doing," he suggested to the panelists.
At the same time, other indications suggest EU member states are increasingly clamouring for a slice of the Asian behemoth's foreign direct investment, with a number of infrastructural projects in cash-strapped Greece recently benefiting from Chinese capital, for example.
The results of a poll of some 500 European companies, carried out by the European Chamber of Commerce in China and published on Tuesday (29 June), indicate that CEOs are worried the country's Communist leaders will become more discriminatory towards foreign firms.
Intellectual property rights issues and discretionary enforcement of local laws are cited among the list of frustrations.
The chamber warned that concerns over Beijing's policies, including those aimed at supporting 'indigenous innovation,' could result in foreign firms leaving the country, despite expectations for solid growth in China in the coming years.
"Nobody should take for granted that European companies will continue investing whatever the business environment," Jacques de Boisseson, president of the European business group in Beijing, told a news conference, according to various media reports.
"If things turn sour, China is not necessarily a must for them," he added.
Chinese capital in Europe
Moving in the other direction, there are signs that Chinese capital is being increasingly sought after in Europe, with firms and government officials flocking to the Chinese stand at the Expo 2010 in Shanghai this year.
China is set to pump billions of dollars into Greece's ports this year, with investors also reported eyeing the country's train network.
Recently-joined EU members Romania and Bulgaria have also successfully solicited funding from China, as European credit markets suffer from a shortage of liquidity.
But the head of research at the Brussels Institute of Contemporary China Studies, Jonathan Holslag, recently warned that the rising level of investment was not without its dangers.
"These growing commercial ties could have important political consequences," he wrote in an opinion piece in the Financial Times. "Especially if Beijing's closer links with eastern Europe undermine the formulation of a more coherent EU policy towards China.
At the same time, officials working in Brussels in preparation for the G20 leaders's meeting Toronto later this week (26-27 June) said China's recent decision to allow a gradual appreciation of the renminbi has helped to stave off a currency scrap at the gathering.
EU leaders meeting last week reached broad agreement on the need for a bank levy in order to reduce the costs of future bank bail-outs, but nations such as Canada, China, and Brazil, whose banks suffered less during the global crisis, have so far resisted the move.
"We are not not denying that there is a persuasive job to be done," said one senior EU official on condition of anonymity on Monday. "It depends how big the levy is. If it's a swingeing levy of 20 basis points" then it will be difficult to persuade others, said the official, suggesting that the EU would be looking for a much smaller tax.
"If we are just talking about a few basis points here and there we are not going to distort capital markets," they added.
The European Union, represented by European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy, together with leaders from larger European economies, will also have its work cut out in persuading states such as the US that budgetary consolidation should start sooner rather than later.
While most in Europe feel the region's debt crisis highlights the need for fiscal discipline, Washington is concerned that an over-zealous clampdown on spending could stifle global economic recovery.
"On fiscal consolidation Europe is ahead of the curve," said one official in reference to the multitude of austerity packages recently announced by European governments. "But the G20 [as a whole] has been behind the curve," added the official, an indication of the flavour of the debate to come this weekend.
However China's announcement on Saturday that it will gradually allow the renminbi to rise, a long-time European and American demand, could avert harsh words on at least one subject, although implementation will be key.
"Without this [Chinese announcement] the risk of acrimonious debate at the G20 was likely," said one EU official.
"The fact that the Chinese move comes just before the G20 leaders' meeting shows that it has become the primary forum for global economic co-ordination."
On Monday (21 June), China left the yuan's exchange rate with the dollar unchanged, despite pledging on Saturday to introduce a more flexible currency.
After months of building pressure in the US Congress, and just one week ahead of a G20 leaders' meeting in Canada, analysts have interpreted the pledge as heralding the end of the yuan's two-year old currency peg with the dollar.
A commission statement said the move would be beneficial to both the European and global economy as a whole.
"This implementation of the decision will help achieve more sustainable growth in the global economy, contribute to reduce external imbalances and strengthen the stability of the international monetary and financial system," the EU executive said.
"It will also entail positive effects for the euro area. By enhancing the flexibility of the RMB exchange rate, the Chinese authorities are providing an important contribution to the success of the G20 Toronto Summit."
But Beijing's apparent willingness to dampen expectations of rapid change, as witnessed by Monday's decision to hold exchange rates unchanged, is likely to result in continued external pressure.
US senator Charles Schumer said the apparent lack of implementation of China's new policy stance meant the Congress should push ahead with legislation to redress the balance.
"Just a day after there was much hoopla about the Chinese finally changing their policy, they are already backing off," said the American. "It vindicates our initial scepticism. We intend to move forward as quickly as possible with legislation."
Increased tensions over the currency issue have threatened to result in its discussion at this weekend's G20 leaders' meeting, prompting warnings from Beijing not to raise the subject.
US and European exporters have long complained that an artificially low yuan gave China's manufacturers an unfair advantage, although the eurozone's current debt crisis has seen the single currency fall dramatically this year, providing a badly needed boost to European exports.
Analysts say the eurozone's instability is one factor being studied closely by Beijing as it considers strengthening the value of Chinese currency.
Another is the need to avoid large inflows of speculative capital seeking to benefit off the yuan's rise, something officials feel could destabilise their economic policies.
Yuan appreciation between mid-2005 to mid-2008 saw considerable inflows of money.
Instead, debate should focus on how best to secure global growth while simultaneously improving the health of public finances in certain problematic regions such as Europe, they indicated.
"We believe it would be inappropriate to discuss the renminbi exchange rate issue in the context of the G20 meeting," foreign ministry spokesman Qin Gang said on Thursday (17 june).
The statement comes amid increasing pressure in the US Congress for China to allow the value of its currency to rise, with American lawmakers threatening to pass legislation if Beijing fails to act.
Western producers have long complained that China's currency peg with the dollar gives the nation's manufacturers an unfair advantage by undervaluing the yuan and artificially increasing the attractiveness of their product prices.
Indications at the start of the year that suggested Beijing was preparing to allow the yuan to gradually rise have been tempered by Europe's debt crisis and the plummeting value of the euro, say analysts.
The European single currency has lost roughly 17 percent versus the dollar this year, making the region's exports more competitive on the world stage.
Despite the creation of a major rescue plan for struggling eurozone governments, on Thursday Russian President Dmitry Medvedev expressed doubts about the future of the common currency that is currently shared by 16 countries.
Asked in an interview with the Wall Street Journal whether Europe's debt crisis could spell the end of the euro, Mr Medvedev said: "I don't exaggerate the threat, but it can't be underestimated."
The Russian leader will also attend next week's G20 meeting (June 26-27) in Toronto, where discussion on a global bank levy will feature prominently on the agenda.
EU leaders meeting for a summit on Thursday in Brussels reached a broad agreement to support bank levy plans, and said they would work hard to convince their G20 partners.
A number of countries such as Canada and China are likely to resist the proposals however, having largely avoided the expensive bank recapitalisations that contributed to Europe's poor public finances.
The single currency shared by 16 European states dipped in overnight trading, apparently on the back of a Financial Times report suggesting China was increasingly concerned about its bond holdings from peripheral eurozone states.
This led to market speculation that Beijing may be reconsidering its policy of diversifying part of its massive currency reserves out of the dollar.
But the euro then recovered during Thursday morning trading after China's State Administration of Foreign Exchange (Safe), which manages the $2,447 billion of foreign exchange reserves held by the country's central bank, issued a statement denying this was the case.
"China is a responsible and long-term investor in the investment of foreign exchange reserves and we will always follow the principle of diversification," it said in a statement. "Europe was, is and will remain one of the major investment markets for China's foreign exchange reserves."
The single currency was also buoyed by news that South Korea's central bank had also indicated it has no plans to cut its euro holdings. Korea is the sixth largest holder of foreign currency reserves.
Market concerns over the eurozone's fragility returned later in the day however, with news that Italy will now face a general strike at the end of June in protest against recently announced budget cuts causing the euro's rally to fade.
Rapidly changing fortunes
A European Commission report published last year to commemorate the 10th anniversary of the single currency was largely celebratory in tone, as central bankers around the world increasingly chose to include larger slices of the euro in their portfolios.
But after a decade of relatively calm waters, the currency has plunged roughly 14 percent versus the dollar this year on the back of market fears that Greece's debt crisis was in danger of spreading to the rest of the eurozone.
A perception that the region's politicians have been slow to react has exacerbated the problem, with squabbling between national capitals giving the impression of a European ship lost at sea and without a credible solution.
Investor sentiment subsequently rose on the back of a belated €110 billion Greek bail-out package and subsequent €750 billion equivalent for the wider eurozone, but the euphoria proved to be short-lived as markets questioned the ability of governments to implement the new packages.
Despite this however, analysts say there is very little evidence to suggest that China is moving reserves out of the euro, with Beijing still expected to push ahead with plans to gradually allow the renminbi to rise in value, a longtime European and US request.
"I wouldn't say the current behaviour is changing the Chinese position," said Sven Schubert, a currency analyst with Credit Suisse bank. "Chinese authorities are aware that the eurozone response was delayed for domestic political reasons. They are not disappointed."
"We still expect that there will be a re-evaluation of the renminbi, starting in the third quarter of this year, and rising by five percent over 12 months," he added.
Multi-lateral governance
China's increasingly important role in the global economy is one of the themes being addressed by European Parliament President Jerzy Buzek when he meets the country's leaders in Beijing this week.
On Thursday, Mr Buzek said Europe appreciated China's "steady commitment to macroeconomic stability and its recent development," but insisted that a multilateral approach to the global problems was needed.
"'One tree is not enough to build a temple': we need multilateral governance - we need China as a strong partner," said the Polish politician.
Speaking in Brussels on Friday (21 May) after a meeting with EU trade commissioner Karl De Gucht, Mr Chen also said however that the renminbi's appreciation would be "moderate" in the face of ongoing global economic uncertainty.
"The Chinese side is following very closely the sovereign debt crisis in the EU and hopes, as well as believes, that the efforts made by the EU and the IMF will end the crisis as soon as possible. China also looks forward to a stable and strong euro," Mr Chen told journalists.
"China is a member of the IMF and therefore will assume its responsibilities when it comes to the rescue package," he added.
European firms have long complained about China's currency peg with the dollar, arguing it keeps the currency artificially low and provides the country's exporters with an unfair trade advantage.
The euro's decline in recent months has led some analysts to speculate that renminbi appreciation may be delayed further, despite international pressure.
"The Chinese government will continue to implement the proactive fiscal policy, while moderately easing monetary policy as part of its macroeconomic policies," Mr Chen said.
"The world economy still has quite a lot of uncertainties and therefore we believe it is still too early for us to talk about an exit strategy from stimulus packages," said the Chinese minister, reiterating Beijing's stance that currency values should be a sovereign decision.
For his part, Mr De Gucht said trade was an important part of the EU's 2020 growth strategy and welcomed the lifting of certain restrictions to Chinese government contracts, related to patent requirements. But he added there were "still problems".
The Dutch politician is also reported to have raised the sensitive subject with Chinese vice-premier Zhang Dejiang during a recent five-day visit to China.
"It is one of those issues that needs to be tackled in the WTO and I'm aware it is at stake," Ms Kroes said in Shanghai on Monday (17 May), report newswires.
EU officials in Brussels sought to downplay the likelihood of any imminent WTO action, however. "The concrete base of launching a case isn't there at the moment," said one source who wished to remain anonymous.
But analysts suggest the Chinese practice of blocking online content, ranging from pornography to political dissent, is likely to become an issue of increasing concern for European firms.
Dubbed the "Great Firewall of China," they say Beijing uses the practice as a means of restricting foreign firms in favour of domestic companies.
Google became the highest profile example this year, with the company announcing it would no longer comply with Beijing's censorship requirements, subsequently rerouting its server to Hong Kong.
"At the moment, it's more a problem for American firms than EU firms as they are stronger in online services," says Fredrik Erixon, director of the European Centre for International Political Economy, a Brussels-based think-tank.
"But the censorship is increasingly moving into telecoms, an area where Europe is strong, for example using spyware on mobile phones," he adds.
Political sensitivities may well prevent the EU or the US from taking a case at the WTO however, despite a strong case.
"When China joined the WTO [in 2001] it didn't ask for an exemption for online services," says Mr Erixon. "If there is a country willing to take the case to the WTO, I think they could win."
Chinese Premier Wen Jiabao offered his support in a telephone call on Monday (10 May) to Spanish Prime Minister Jose Luis Rodriguez Zapatero, whose country currently holds the EU's rotating presidency.
"We have noted the rescue mechanism for Greece organised and launched by the eurozone and the International Monetary Fund," said Mr Wen according to reports in the Chinese state news agency Xinhua.
"China firmly supports the above actions and believes that each member of the eurozone can overcome the difficulties and realise stable economic growth," he added.
Euro area leaders signed off on a €110 billion bail-out for Greece over the weekend, and paved the way for EU finance ministers to agree a €750 billion support mechanism in the earlier hours of Monday morning, in case other states should also need to request aid. Both packages include money from the IMF.
With the knock-on effects of Greece's debt crisis spreading beyond Europe's borders, sending share prices into free-fall across the globe late last week, a number of analysts and politicians have criticised the speed of Europe's eventual reaction.
Europeans "waited too long" with the Greek bail-out and fueled speculation about the fragility of the entire eurozone, one US official told the New York Times on Monday. "Had they acted sooner ... they might have gotten away with less."
Chinese diplomats in Brussels were less confrontational, however. "We understand the necessary process of policy deliberation," Wang Xining, spokesman for the Chinese mission to the EU, told this website.
Beijing's support for the European package is likely to be a least partially motivated by concerns over falling exports, with the EU the number one destination for Chinese products.
Tuesday's edition of the state-run China Daily newspaper says the country's holdings of Greek government bonds are limited, meaning a Greek default would have a limited direct impact on government coffers.
But the spread of Greece's current woes to Spain and Portugal would leave China facing "bigger risks".
"Once the fragile EU economic recovery was again drawn into the plight of this debt crisis, China's export situation will become even more complicated," says the paper.
According to Chinese statistics, China's exports to Europe reached $236.28 billion in 2009, a drop on previous years due the global economic recession.
EU producers have long complained about China's artificially low currency, the yuan, and are currently enjoying the increased price competitiveness brought by the euro which has weakened considerably since the Greek crisis started.
Speaking at a conference in the European Economic and Social Committee in Brussels on Thursday (6 May), Mr De Gucht said China must match its newfound economic weight with greater participation in international governance fora such as the World Trade Organisation.
"With size comes responsibility," said the Belgian politician who has recently returned from a visit to China where he met the country's commerce minister, Chen Deming.
European businesses have increasingly expressed their frustration at a perceived slowdown in market-opening reforms in the Asian powerhouse economy, saying Beijing is succumbing to the protectionist calls of domestic producers.
Despite the tensions, trade between the two sides has grown over the past decade, with Europe now the primary destination of Chinese exports, while China is the second largest market for European exporters.
In 2009, the value of EU goods exported to China amounted to €81.6 billion, while Chinese imports hit €214.7 billion.
Europe has pointed to the need to address this imbalance however, with Mr De Gucht returning to the theme of market access. "China has greatly benefited from the openness of others," he said. "Therefore it is important for the EU to push China to champion openness and reform."
With little of substance to show for last week's visit, analysts suggest Mr De Gucht's hard stance in the presence of Chinese ambassador to the EU Song Zhe underlines a degree of frustration.
"His tough language suggests he is waiting for a sign from China that didn't come last week," Duncan Freeman, a research fellow with the Brussels Institute of Contemporary China Studies, told this website.
Reminding the audience of academics and policymakers that today marks the 35th anniversary of diplomatic relations between china and the EU, ambassador Song denied China had yet to assume its role on the global stage, and stressed that national sovereignty had to be respected.
"China is an active faciliator and participator to global governance," he said. "Countries have different roles in global governance ... we should fully respect the responsibilities of sovereign states."
"The EU-China strategic partnership is a partnership in name only. On many of the big issues that we have been observing in the last couple of years - climate change, financial regulation, nuclear proliferation, the Iran crisis - China has not treated the EU as a key strategic partner," Mathieu Duchatel, an analyst at the Asia Centre in France's Sciences Po university, told EUobserver.
"The EU has not been able to transform its economic relations with China into any political leverage," he added. "There are very few countries which can influence China. The only country that has succeeded in recent years is the US."
Mr Duchatel's pessimistic remarks come in a week designed to showcase EU-China diplomacy.
European Commission President Jose Manuel Barroso met with Chinese Prime Minister Wen Jibao on Thursday (29 April) in Beijing. The 50-strong EU delegation also included EU foreign affairs chief Catherine Ashton and several EU commissioners and will on Friday take part in the launch of Expo 2010 in Shanghai.
French President Nicolas Sarkozy is at the same time in China with his celebrity wife and will also attend the expo ceremony after visiting tourist attractions, such as the Terracotta Army.
Mr Wen said after the Barroso meeting that he will ensure a level-playing field for EU and Chinese companies on the Chinese market. Beijing also told Ms Ashton it is open to targeted UN sanctions against Iran and it set up a new "hotline" between EU climate commissioner Connie Hedegaard and her Chinese counterpart. It told EU trade commissioner Karel de Gucht that it will not bow to outside pressure on the value of the yuan, however.
For his part, Mr Barroso said: "The bilateral relationship is strong, and the EU-China strategic partnership is even more relevant in an increasingly globalised world."
He added that there are "no taboos in our discussions," referring to EU concerns about China's repression of political dissidents. An EU official in Brussels said Mr Barroso had planned to mention three cases by name to Mr Wen - Hu Jia, Liu Xiaobo and Gao Zhisheng - but it is unclear if he did or not, as the names did not come up in any of the press events in China.
The spokesman for the Chinese embassy to the EU, Wang Xining, said the EU is "quite well known" in Chinese society and media but that its post-Lisbon Treaty structure is unclear: "It's complicated. It's a learning process. We are still in the process of identifying the real functions of all the EU figures."
Turning the page
Mr Wang said it would be a good idea for the EU to expand personnel at its delegation in China and disagreed with the Asia Centre's suggestion that Beijing and Washington do not see Brussels as an equal partner.
"That's not true. The EU is a major player in the world and we want our relationship to grow. It's our number one trading partner. There's a strong relationship despite some differences in the past," he said.
The EU presence at Expo 2010 stands in contrast to the Beijing Olympics in 2008, which saw several EU leaders stay away from the opening ceremony due to human rights concerns. EU-Chinese relations also suffered when Mr Sarkozy met with Tibet's leader-in-exile the Dalai Lama the same year.
"We have turned that page," Mr Wang said.
The Asia Center's Mr Duchatel is not so sure. Pointing to China's execution of British citizen Akmal Shaikh on drugs charges in December 2009 despite high-level appeals from London and Brussels, he said the death was designed to send a message to the outside world.
"It was a strong symbolic statement of sovereignty in judicial matters. It was not just based on law. There was a political dimension, targeting international opinion," Mr Duchatel said.
"We will seize this opportunity to generate positive momentum in our 35-year relationship and develop a far-reaching agenda for the next five years," Mr Barroso said in a statement on Monday.
"The EU and China are important global players and it is essential that we work together in addressing common challenges," the Portuguese politician added ahead of his visit to Beijing and Shanghai, his first since the new commission was formed in February and since the EU's new rulebook, the Lisbon Treaty, finally came into force.
A number of other EU commissioners are scheduled to make the journey: EU high representative Catherine Ashton, digital agenda commissioner Neelie Kroes, culture commissioner Androulla Vassiliou, trade commissioner Karel De Gucht, energy commissioner Gunther Oettinger and climate action commissioner Connie Hedegaard.
The EU is China's largest trading partner, with the growing number of trade disputes set to feature prominently in talks between Mr De Gucht and his Chinese counterpart, as will questions of market access.
Earlier this month, Joerg Wuttke, president of the European Union Chamber of Commerce in China, said lobbying from local Chinese firms was leading Beijing to slow down market-opening reforms. "The pie is getting bigger and the door is getting narrower," Mr Wuttke told reporters.
Currency issues will also be on the agenda, with Europe once again joining the US in calling for an appreciation of the Chinese currency, the renminbi. However, while he EU will discuss the revaluation of yuan with China, "Our idea is not to put pressure because we think it doesn't work," EU Trade Commissioner Karel De Gucht said in a recent interview with Chinese state news agency Xinhua.
Connie Hedegaard will meet a number of Chinese officials involved in international climate negotiations ahead of the upcoming UN talks scheduled for the beginning of June.
On Friday, Mr Barroso will participate in the opening ceremony of the Shanghai World Expo 2010 and the inauguration of the EU Pavilion the following day.
"When we meet [Chinese] officials they are very worried about the netizens. They really feel they have to be responsive to these interest groups," said Mr Wuttke earlier this week (20 April).
Local firms are also becoming more adept at lobbying Beijing, said the chamber's president, leading to a slowdown of market-opening reforms.
As a result, foreign businesses operating in China are suffering. "The pie is getting bigger and the door is getting narrower," Mr Wuttke told reporters at a press briefing. "We are losing out on opportunities."
The comments are to be followed up by European Commission President Jose Manuel Barroso, who travels to China next week to meet the country's premier, Wen Jiabao, with questions of trade and market access high on the agenda.
The EU has frequently expressed concern over the apparently unequal treatment of European firms in China, while Beijing is dismayed by the growing number of anti-dumping measures taken against Chinese products.
Currency
Europe appeared to gain a number of important allies this week regarding another of its main economic gripes with the Asian behemoth, the question of currency manipulation.
Speaking ahead of a G20 meeting of finance ministers and central bankers in Washington on Thursday, both Indian and Brazilian central bank presidents expressed the need for a stronger Chinese yuan.
Europe and the US have repeatedly said they consider the currency to be artificially undervalued, to the detriment of their exporters, but Beijing has so far rebuffed the accusations.
A stronger Chinese currency is "absolutely critical for the equilibrium of the world economy," said Henrique Meirelles, head of the Brazilian central bank.
The increasing pressure from developing countries was also signaled by statement's from Duvvuri Subbarao, governor of the Reserve Bank of India. "If China revalues the yuan, it will have a positive impact on our external sector," Mr Subbarao said.
"The European Union's investigation sends a wrong message of protectionism to the world," ministry of commerce spokesman Yao Jian said on Saturday (17 April).
"China will closely follow this issue and reserves its right to take necessary measures in accordance with WTO rules," he added.
The reaction follows the publication in the EU's Official Journal of an inquiry into whether Chinese manufacturers of coated fine paper receive trade-distorting subsidies and, if that is the case, whether the subsidies are damaging to Europe's paper industry.
The glossy paper is used for a range of products including books and magazines, with the EU Journal citing Chinese government-backed loans for forestry programmes as one of the distorting measures.
The latest European move comes two months after the bloc launched a probe into below-cost sales of Chinese coated paper on the European market, and comes in response to a complaint from the sector.
On 4 March, Cepifine - the European association of fine paper manufacturers, representing over 25 percent of EU fine paper output, requested the investigation, said the Journal.
EU, Asia finance ministers
The exchange of words over paper subsides took place during the same weekend that EU and Asian finance ministers met in Madrid (18 April) to discuss economic issues.
Spanish finance minister Elena Salgado, whose country currently holds the EU's rotating presidency, said both sides need to fight against protectionism.
"We have to avoid forms of economic protectionism," she said, in order to "stabilise" imbalances within the global economy.
Ms Salgado also stressed the need to "co-ordinate better our monetary policies", although no concrete discussions on the Chinese yuan took place. The EU argues the Chinese currency is undervalued.
China was among a group of major Asian economies unable to make it to the Madrid meeting because of travel chaos triggered by the Icelandic volcano eruption.
The Asian giant accounted for 60 percent of the 1993 notification cases during the year, with toys, clothing, textiles and motor vehicles turning out to be the chief culprits.
Harm from dangerous chemicals, general injuries, choking, electric shocks and strangulation were among the main reasons cited by complainants.
The annual report stressed the high placing of Chinese goods was partially due to "the significant market penetration of Chinese-manufactured consumer products in European markets."
However John Dalli, the EU's consumer policy commissioner, said he would visit China in June to reinforce the idea that "dangerous products must be blocked at source."
"We can't order the closure of factories in China. We are going to continue to explain that we want them to intensify their vigilance," he said, adding that China had made considerable progress.
A category labelled "unknown" came in second place after the Chinese goods, followed by Germany and Italy with considerably less.
The European consumers' association Beuc said the report was proof that considerable improvements still needed to be made.
"We must aim for a situation where dangerous products are virtually non-existent in the market-place. This will only be done when national authorities are given more resources for market surveillance," said the group's director general, Monique Goyens.
Businesses welcome easing of restrictions
Meanwhile, European businesses have welcomed alterations to an "indigenous innovation" policy in China, designed to encourage homegrown technological development.
The country's Ministry of Science and Technology signaled the partial retreat in the government procurement procedures earlier this week.
Under draft 2010 rules, companies must show that the relevant patents and trademarks are registered in China, a moderation on last year's rules that indicated companies had to prove the relevant patent was developed solely in China or that the trademark was first lodged in China.
EU companies had complained that the old rules smacked of protectionism, with the European Union Chamber of Commerce welcoming the changes.
"This is an important sign that policymakers in China recognise the role that fair competition plays in developing and enhancing China's high-tech capabilities, and that foreign-invested companies can make a valuable contribution," it said in a statement.
Renewed in December 2009 for a further 15 months, the EU says the import charges are a justifiable means of protecting European shoe producers from Chinese imports sold at below cost price. The tariffs also apply to some Vietnamese shoes.
Beijing retorts that the practice is little more than old-fashioned protectionism, and has won the support of a number of European importers of Chinese-made shoes such as Timberland and Adidas.
The companies argue that the import tariffs significantly increase the cost of shoes for the European consumer, and simply give an advantage to other foreign imports rather than safeguarding European shoe-making jobs.
Shoe manufacturing within the EU accounts for roughly 260,000 jobs.
But Brussels argues that the tariffs merely equate to a price increase of less than €1.50 on a pair of shoes that sell for €50, because the product is being imported at a price of around €9.
The European duties add between 9.7 percent and 16.5 percent to the import price of Chinese shoes and 10 percent to Vietnamese shoes.
Having joined the WTO in 2001, China has so far filed very few official trade complaints against the EU.
The pending call for an official investigation comes as European Commission President Jose Manuel Barroso prepares to lead a delegation of commissioners to China in the coming weeks, with trade issues high on the agenda.
WTO rules allow the EU to delay the probe by up to one month, meaning a May start date at the latest.
"Greece is only one case, but it's only a tip of the iceberg," People's Bank of China Deputy Governor Zhu Min told an investment forum in Hong Kong.
Mr Zhu added that the "main concern today obviously is Spain and Italy," reports Dow Jones Newswires. The comments were made only hours before EU leaders were set to meet in Brussels to discuss economic issues, and a day after fresh turmoil swept through the 16-member eurozone.
On Wednesday, Fitch ratings agency downgraded Portugal's credit worthiness, sending the euro currency to a 10-month low against the dollar and highlighting the region's fragile economic situation.
In Brussels, Chinese diplomats insisted that Beijing was hoping for a quick resolution to Athens' woes, as the Greek administration struggles under a €300 billion debt pile and punishingly high borrowing costs.
"We hope that the fiscal situation in Greece will be properly resolved," a spokesman for the Chinese EU mission, Wang Xining, told this website.
"I don't think he [Mr Zhu] made the remarks to intentionally harm the European economy. I doubt he imagined his comments would be strong enough to do that," Mr Wang added.
Mr De Gucht will form part of an entourage of EU commissioners heading to China next month, with the currency issue and ongoing trade concerns likely to be raised during the talks.
"The yuan is under-priced," he told the Financial Times in an article printed on Thursday (18 March). "It certainly has an impact on their [US] export and trade patterns. The complaint is legitimate and there is awareness of that in Europe."
European businesses say Chinese exports gain an unfair advantage due to an artificially low yuan, although Beijing recently signaled it is considering a move to a more conventional monetary policy.
The governor of the People's Bank of China, Zhou Xiaochuan, said this month that the yuan's unofficial peg with the dollar, in place since mid-2008, was a "temporary" measure to fight the financial crisis, and that "sooner or later" it would come to an end.
US protectionism
The Belgian politician also took aim at US protectionism, blaming Washington for holding up the currently stalled Doha round of multilateral free-trade talks.
"One of the problems is that we don't know exactly what the United States wants. They don't want to go forward for now, that much is clear," he said of the decade-old negotiations, in an interview with Belgian business daily De Tijd.
US congressional elections in November were partly to blame, he added, but singled out a commitment from President Barack Obama to double US exports over five years.
"I don't see how anyone can double exports if there's no movement towards free trade," he said. "Protectionism will not lead to a doubling of exports."
Global trade negotiators are set to meet in Geneva next week for a technical meeting. However part of the problem is that leaders are not giving their representatives enough room to manoeuvre, said Mr De Gucht, despite calling for the deal to be completed by the end of 2010.
Officials hope to see the project completed over the next ten years, enabling passengers to travel the roughly 8,000 kilometre journey at speeds of up to 320 kilometres per hour.
Two lines to Europe are reportedly being considered under the proposals, one passing through India, Pakistan, and the Middle East, while a second would head to Germany via Russia. Exact routes are currently undecided however. A third line would extend south from China to connect Vietnam, Thailand, Burma and Malaysia.
Wang Mengshu, a member of the Chinese Academy of Engineering and a senior consultant on China's domestic high-speed railways said this month that work on the Southeast Asia line had already begun.
"We have also already carried out the prospecting and survey work for the European network, and central and eastern European countries are keen for us to start," Mr Wang said.
Chinese officials in Brussels were more cautious however. "I understand we want to improve our rail networks, potentially as far as Europe, but whether they will be high speed or not is yet to be determined," said one source.
Financing the project appears to be the main question, with China offering to bankroll the Burmese line in exchange for the country's rich reserves of lithium, a metal used in batteries.
"We will use government money and bank loans, but the railways may also raise financing from the private sector and also from the host countries," said Mr Wang, indicating the new lines would also be used to carry freight.
European experts say the current low maritime transport costs make it harder to justify an EU-China rail line on commercial grounds however. With global trade seemingly unstoppable in early 2007, ship builders were receiving record orders. But the subsequent financial crisis and global economic slump led to a 12 percent fall in world trade flows last year, according to WTO figures
"The availability of good infrastructure is pivotal to the growth of trade between nations," said Michael Clausecker, director-general of the Association of the European Rail Industry (UNIFE).
"However, whether this is the case for the EU and China is questionable as there is a huge amount of maritime capacity, with more expected in the coming years," he told EUobserver.
China is currently in the middle of a vast railway expansion project that aims to build nearly 30,500 kilometres of new railways in the next five years, connecting all its major cities with high-speed lines.
The world's fastest train, the Harmony Express, was unveiled in the country last year. Wholly Chinese-built, but using technology from Siemens and Kawasaki, the train is capable of a top speeds approaching 400 km/h.
EU officials confirmed the scheduled visit on Wednesday (10 March), with economy, trade, energy and climate issues among the topics up for discussion.
Mr Barroso is set to meet with Chinese Premier Wen Jiabao, while other commissioners will meet with their respective counterparts.
EU trade chief Karel De Gucht is among those almost certain to be part the European team, with the Belgian politician scheduled to chair the annual session of the High Level Economic and Trade Dialogue (HED) while in China.
Chinese and EU officials agreed to set up the dialogue at a November 2007 summit, providing the two sides with a regular forum for discussion of economic issues, including market access concerns and the imbalance in trade flows.
Climate commissioner Connie Hedegaard is also among the names expected to participate in the visit, the first of its kind since the formation of the new commission. The EU is keen to restart climate negotiations after last December's acrimonious UN negotiations in Copenhagen.
It is unclear whether the EU's high representative for foreign affairs Catherine Ashton will accompany the delegation.
The visit will follow a tradition set in 2008, when Mr Barroso visited Beijing with nine commissioners in a bid to strengthen bilateral ties.
The following year Mr Wen travelled to Brussels with a large number of Chinese officials.
European Central Bank officials declined to comment on the issue on Wednesday (10 March), a similar stance to that taken by the bank's president Jean-Claude Trichet earlier this week.
Mr Trichet said the Chinese currency issue was not discussed during a meeting of central bankers from industrialised and major emerging countries at the Bank for International Settlements in Basel on Monday.
"No, there was absolutely nothing on that. It was not discussed, but the position of a number of central banks and of a number of economies is very well known so there was not necessarily the need to discuss that," he told journalists after the meeting.
European finance chiefs including Mr Trichet and Luxembourg Prime Minister Jean-Claude Juncker, who chairs the monthly meetings of euro area finance ministers, have been vocal opponents of China's non-conventional monetary policy in the past, arguing that it undervalues the country's currency to the detriment of European exporters.
But various European initiatives, including a visit to China late last year by Mr Trichet and Mr Juncker ahead of an EU-China summit, have failed to produce the desired results, with Chinese officials restating the country's commitment to a stable currency policy.
The governor of the People's Bank of China, Zhou Xiaochuan, struck a more conciliatory tone on Saturday however, suggesting the renminbi's unofficial peg with the dollar was a "temporary" measure designed to combat the financial crisis.
"This is part of our package of policies for dealing with the global financial crisis," he said. "Sooner or later, we will exit the policies."
Mr Zhou was cautious about indicating when the bank could allow the renminbi to appreciate, however.
"If we say we withdraw from non-conventional policy and return to conventional economic policy, we must be very cautious and discreet in choosing the timing. This includes the renminbi exchange rate policy," he said.
The EU General Court, formerly known as the Court of First Instance, ruled against the producers on Thursday (4 March) after they requested an annulment of the 2006 tariff regulation.
The challenges were made on the grounds that European Commission analysis of the costs of Chinese and Vietnamese imports for EU manufacturers was inaccurate.
On 22 December, EU countries voted to extend the 2006 anti-dumping duties on the leather footwear imports for a further 15 months as of January 2010, evoking strong criticism from China.
Beijing filed a complaint with the World Trade Organisation last month, accusing the EU duties of being illegal, giving the two sides 60 days to reach an agreement before the WTO complaints body will rule on the case.
Speaking from Hanoi earlier this week, European Trade Commissioner Karel De Gucht said the commission had a "very solid case" in its imposition of anti-dumping measures. Mr De Gucht was in Vietnam to launch talks for a free trade agreement between the EU and the Asian country.
The companies that challenged the shoe duties were Brosmann Footwear, Zhejiang Aokang Shoes, Wenzhou Taima Shoes, Sun Sang Kong Yuen Shoes Factory and Foshan City Nanhai Golden Step Industrial.
Ruling against the companies, the court's statement said: "The anti-dumping measure ...thus remains in force."
The complainants were ordered to pay their own costs and those of the EU in defending the cases.
Completion of the stalled Doha round of multilateral trade talks is therefore more necessary than ever, said Mr Lamy at an event organised by the European Policy Centre in Brussels on Wednesday (24 February).
"If there was a geopolitical consensus in launching the Doha development round in 2001 ...it is today economically imperative to complete it," he said.
Originally designed to reduce barriers to trade for the world's poorer nations, the talks have become bogged down over the issue of US and EU farm subsidies and access to developing markets such as China and India.
The round's slow progress, coupled with a breakdown in UN climate talks in Copenhagen last December, have led some analysts and policy-makers to question the future of multilateral negotiations.
Questioned on his expectations for this year, Mr Lamy said he expected there would be "pick-up" in trade levels. "Whether is short-term due to restocking, or long-term due to sustained demand ...it is too soon to say," he cautioned.
Addressing EU concerns over a rise in non-tariff barriers in countries such as China, the former EU trade commissioner said this was an "inevitable" result of development in these countries, citing increased demand in product labeling by Chinese consumers as an example.
But he added that regional requirements must be justified and based on real science, and not an excuse to introduce protectionism by the backdoor.
Certain European businesses have increasingly complained that they are being shut out from the Chinese market by an ever growing list of certification requirements, with technology companies in particular feeling the squeeze.
Attention was drawn to the sector last month after Google said the cost of doing business in China may have become too high, leading the US giant to speculate on a possible pullout.
The probe, announced on Thursday (18 February) in the EU's Official Journal, is the latest in a string of trade disputes creating tension between the two sides.
Cepifine, an association of European fine paper manufacturers, contacted the European Commission in January with allegations that fine coated paper, used for glossy books and magazines, was being imported at artificially low prices from China.
As a result, European businesses have suffered "substantial adverse effects", said the association, which represents roughly 25 percent of EU manufacturers producing coated fine paper.
The commission now has 15 months to establish whether Chinese paper imports are being offered at artificially low prices, potentially leading to anti-dumping taxes if it decides in the affirmative.
"Prima facie evidence provided by the complainant shows that the volume and the prices of the imported product under investigation have, among other consequences, had a negative impact on the quantities sold and market share held by the Union industry," said the Official Journal.
The EU has already imposed anti-dumping taxes on a range of imports from China including leather shoes, steel products and candles.
The commission defended it tariffs on Chinese leather shoe imports earlier this month, saying it was "the right thing to do", after Beijing hauled the EU to the World Trade Organisation to dispute the punitive duties.
The US, which has also seen a deterioration in trade relations with China in recent months, decided three years ago to impose anti-dumping penalties on Chinese paper imports.
Data released by the German Federal Statistics Office showed the country's exports fell by 18.4 percent in 2009 when compared to the previous year, hitting a dollar equivalent of $1.121 trillion. China's exports for 2009 totaled $1.202 trillion.
Despite the drop, which represents the greatest year-on-year decline for Germany since 1950, the news of China's takeover was not greeted with great alarm by German economists.
"This is something that was expected. Everyone agrees that China's currency is undervalued, but still it was only a matter of time," Gernot Nerb, head of the industry department with the Ifo Institute for Economic Research, Munich, told this website.
The official figures also showed a strong export recovery in the fourth quarter of the year, helping to pull Germany out of its recession and providing a silver lining to the more gloomy annual data.
With more than 60 percent of Germany's exports going to other EU countries, concerns have been raised that the bloc's forecast low rates of growth in the coming years could prose a problem for Germany's export model.
"There is some concern but we are mainly exporting investment goods, and you can not postpone investment for ever," said Mr Nerb, conceding that investment levels will probably not pick up before 2011-12 however.
A breakdown of the German figures shows exports to the EU were down 19.1 percent year-on-year, with sales to faster-growing regions of Asia and South America faring little better and falling 17.1 percent.
German imports also declined rapidly in 2009 as result of the financial crisis, dropping fell by 17.2 percent.
The revelation comes just a day after China hauled the EU to the World Trade Organisation over a long-running shoe tariff dispute.
Reports on Friday (5 February) said Taiwan's military is set to buy three helicopters from German manufacturer Eurocopter, a subsidiary of EADS, with an option to buy up to 17 more.
Taiwan's defence ministry spokesman Martin Yu said the contract for the EC-225 search-and-rescue helicopters was valued at $111 million.
The European deal comes hot on the heels of last week's news that Taiwan will buy roughly $6.4 billion-worth of arms from US companies, prompting Chinese condemnation and threats of sanctions.
Whether Europe will now come in for the same response is yet to be seen.
Some analysts suggest Beijing's response may be more muted due to an unwillingness to fight on two diplomatic fronts as the same time.
Recent murmurings within the EU over a possible lifting of the bloc's arms embargo with China could also result in a softer response from the Asian powerhouse.
The Chinese government said European tariffs "violated various obligations under the WTO and consequently caused damage to the legitimate rights and interests of Chinese exporters."
Brussels immediately hit back, saying the tariffs had been imposed in response to the "unfair trade practices" pursued by the Asian powerhouse.
"Anti-dumping measures are not about protectionism; they are about fighting unfair trade," said the European Commission's acting trade spokesperson, John Clancy.
"The decision to impose measures was taken on the basis of clear evidence that dumping of Chinese products has taken place and that this is harming the otherwise competitive EU industry," he added.
The quarrel comes on the same day that US President Barack Obama vowed to take a "much tougher" stance on China, in a bid to make sure it opens its markets to US exporters.
Sino-American relations are already frayed following last Friday's announcement that US companies are set to sell $6.4 billion worth of arms to Taiwan.
China joined the WTO in 2001, but waited until July of last year to file its one and only unfair trade case against the EU. Thursday's decision to haul the EU to the international trade body is been seen as a sign of greater trade assertiveness by some analysts.
Controversial tariffs
Europe itself has been divided over the shoe tariff issue, with producer nations such as Italy strongly in favour, while several net exporting states have expressed their opposition to the duties.
On 22 December, EU countries voted to extend anti-dumping duties on Chinese and Vietnamese leather footwear imports for a further 15 months as of January 2010.
In total, 13 member states voted against the commission's proposal to extend the duties, nine voted in favour and five abstained. Under EU anti-dumping rules, abstentions count in favour of a commission proposal.
In an eight-page legal complaint, the Chinese government requested consultations on both the original 2006 decision to impose the shoe duties and last year's move to extend them.
The European Footwear Alliance (EFA), which represents several big manufacturers such as Adidas and Timberland, welcomed China's move.
"The EFA shares China's view that the EU's decision to extend the duties for a further 15 months in December 2009 was based on a very questionable investigation and a flawed analysis of the economic facts," said the group in a statement.
"Ironically, the measure hurts European business and consumers the most," it added.
Following a meeting of EU foreign ministers in Brussels on Tuesday (26 January), Spanish foreign minister Miguel Angel Moratinos said his country was "weighing the pros and cons" of lifting the ban.
"We are all aware of the new role which China is assuming in the world," he added.
China considers an end to the ban to be long overdue. "The embargo is outdated, it does not go along with the partnership between China and the EU," Wang Xining, spokesman for the Chinese mission to the EU, told EUobserver.
"Its a political principle on the definition of the relationship," he added, indicating that China was not necessarily going to place a large military order should the embargo be lifted.
France has been a vocal supporter of ending the ban, a line Moratinos said Spain would now follow, but other member states have traditionally indicated China's human rights record did not merit an end to the EU restriction.
Last October saw the EU lift an arms embargo against Uzbekistan however, despite continuing concerns about human rights in the central Asian nation, suggesting a reluctance to allow full Chinese access to EU military capabilities is also a factor.
European diplomats also queried whether the Spanish decision to visit the perennial issue would win the backing of all 27 member states this time round, with any decision requiring unanimity for a change of position.
The United States, which also maintains an arms embargo on China, is a further complicating factor, with the country likely to be reticent towards a unilateral European move.
The European Parliament has shown its support for the ban, voting in 2008 to maintain it as long as Beijing supports armed forces and groups involved in African conflicts in general.
News that Spain would revisit the thorny issue first hit the headlines last week following a China Daily interview with Spain's ambassador in Beijing.
The issue has subsequently attracted considerable media attention in the Asian powerhouse.
In Strasbourg the day before, European Commission president Jose Manuel Barroso told the European Parliament that Europe's economy is "at a delicate moment."
The euro has fallen steadily this week as investors keep a close eye on Greece's ongoing budgetary difficulties.
A change of government last autumn resulted in a dramatic upward revision of the country's deficit forecasts, prompting credit rating cuts and raising the possibility of a possible Greek default and spillover effects to other euro area economies.
"This Greece news is a huge piece of news," Gregory Salvaggio, vice president of capital markets at the currency- trading firm Tempus Consulting Inc. in Washington, told Bloomberg.
"If we see sovereign debt default, it could lead to a fracturing of the euro zone, and the euro's shine as a reserve currency is certainly going to diminish," he added.
Sentiment that Europe's economy will perform less strongly than the US this year also contributed to Thursday's slide in Asian markets, with the euro hitting $1.4067, the lowest point since 18 August last year.
"The euro is now being targeted ...as one of the assets likely to underperform in 2010 based on headwinds," Omer Esiner, senior market analyst at Travelex Global Business Payments in Washington, told Dow Jones.
Chinese data
Fresh data pointing to strong economic growth in China also contributed to the euro's slump, as speculation mounted that Beijing may take further steps to cool its economy. On Wednesday China's banking regulator said it would rein in new lending this year.
Figures showed China's gross domestic product expanded 8.7 percent in 2009, beating market expectations for 8.5 percent growth.
"The China data were strong, so people are now even more anxious over when the authorities might again try to apply the brakes on the economy," said Yasuo Nakayama, manager at Shinkin Central Bank, reports Dow Jones.
With many economies around the world, including Europe, still struggling as a result of the financial crisis, speculation about Chinese tightening has raised worries about the potential impact on the world economy as a whole.
The Belgian politician candidly told euro deputies that he is not in favour of an EU border carbon tax, adding that he saw an undervalued Chinese currency as a "major problem" for the European Union.
France has led European calls for an EU border tax on products manufactured in external countries with weaker environmental standards, but Mr De Gucht said the measure risked triggering an international trade war.
"In terms of border adjustments, I'm against it," said the Liberal politician in response to a question.
"I don't see that as the right approach, it's one that will lead to lots of practical problems," continued the former foreign minister and current European commissioner for development and humanitarian aid.
"We've seen it in the past. The big risk is that it will also lead to an escalating trade war on a global level," he said.
While the blunt statements may disappoint some who favour the proposed border tax, pro-environment MEPs are likely to be buoyed by Mr De Gucht's strong support for an abolishment of tariffs on environmental goods such as wind turbines and solar panels.
Yuan threat
Turning his attention to China, Mr De Gucht reiterated the European line that the Asian powerhouse should revalue its currency to ease global trade imbalances.
Fresh export data for 2009 released by Chinese customs authorities on Sunday suggest the country is set to strip Germany of its leading exporter title in terms of gross volume.
With the yuan essentially pegged to the dollar for more than a year, despite the US currency's protracted slide, European manufacturers have increasingly pointed to their diminishing price competitiveness.
But China has shrugged off repeated calls by European policy makers to allow the yuan to rise, saying the currency's stability is in everybody's best interest.
The Chinese administration "must show its responsibility by being able to address thorny questions such as currency misalignment," Mr De Gucht told the hearing, adding that European antidumping duties against Chinese firms were only "a very partial solution" to ongoing problem.
Semeta
In a nearby room to the trade discussion, Lithuanian commissioner-desiginate Algirdas Semeta also fielded questions from MEPs on Tuesday morning.
Currently serving as the commission's budgetary chief, the centre-right politician is hoping to take over in a beefed up portfolio responsible for taxation and customs union, audit and anti-fraud.
"It will be an essentially new economic portfolio of especially high responsibility," Mr Semeta said before the hearing. He stressed to MEPs the importance of pushing through new rules on energy taxation within the EU, amongst other issues.
"The energy taxation directive will be one of my first priorities in my future job," Semeta said. "I think in the future if we would move forward with green taxation it would allow us to decrease taxation on labour."
However, analysts have been quick to point out that the figures only reveal half the story, with China still behind Germany and other net exporting countries in the value-added stakes.
The figures, released on Sunday (11 January) by China's General Administration of Customs (GAC), mark a 16 percent fall on 2008, but are still tipped to exceed total German exports for last year.
Forecasts by the Federation of German Wholesale and Foreign Trade predict exports in Europe's largest economy area are likely to fall by 18 percent this year to 816 billion euros ($1.18 trillion), with official figures expected in February.
Commenting on the likely switch in positions between Germany and China on the global export ladder, analyst Duncan Freeman of the Brussels Institute of Contemporary China Studies said the figures on crude volumes of trade were "something of note," but added: "it doesn't necessarily mean China is a dominant trading force."
"The Chinese are right to say that many of their exports have relatively low added value," he told EUobserver, adding that profits on products assembled in China frequently leave the country.
The Chinese 2009 annual total was given an important boost by strong exports in December worth $130.7 billion, up 17.7 percent from a year earlier and marking the first rise since November 2008.
Compared to the country's exports, Chinese imports slid a more modest 11.2 percent to $1.006 trillion in 2009, something Chinese officials are likely to point to if foreign criticism over the country's trade surplus resurfaces.
In a letter to European Commission president Jose Manuel Barroso, Poland's constructors' lobby group, the OIGD, urged the EU executive to take action against the Chinese group on the grounds it received competition-distorting state aid from Beijing.
"We note that the bid by the Chinese consortium is based on a price far below the value of the tender, which constitutes unfair competition," reads the letter, obtained by AFP.
The Polish lobby group says the commission, EU watchdog on competition matters, should initiate anti-dumping measures against the China Overseas Engineering Group Company (COVEC).
The value of COVEC's successful bid to build the stretch of road was 1.3 billion zloty (319 million euros).
"That was 48 percent less than the estimated cost of the tender. It was also 23 percent less than the second-lowest bid," says the Polish lobby group, claiming that the Chinese government will simply cover the cost of COVEC's losses.
After decades of underdevelopment, Poland is pushing hard to upgrade its infrastructure in time to co-host the 2012 European football championships
In September, COVEC's bid beat several European competitors who were also vying to upgrade the 49 kilometres of motorway linking the Polish and German capitals, Warsaw and Berlin.
Chinese leader Hu Jintao switched on the gas at a ceremony on the Turkmen-Uzbek border with Turkmen president Gurbanguly Berdymukhammedov and the leaders of Uzbekistan and Kazakhstan.
The 1,833 km pipeline passes through Uzbekistan and Kazakhstan before reaching Xinjiang in China. It will pump 40 billion cubic metres of gas a year - about half the consumption of Germany - when it is in full swing in 2012.
The development highlights the difficulties surrounding EU efforts to get direct access to Turkmenistan's gas, breaking Russia's monopoly on EU-bound exports from the region.
"Everybody thinks we are in competition with Russia in Central Asia. But we are also in competition with China, and to a lesser extent, with Iran," an EU official said.
The Chinese pipeline was built in lightning speed.
China and Turkmenistan signed a preliminary agreement on the project in April 2006. Construction began in August 2007 and was completed 27 months later by an army of 8,000 workers.
In contrast, EU firms signed the first agreement on the Nabucco pipeline, designed to bring in gas from Turkmenistan and other countries in the region via Turkey, in 2002. It launched a wide-sweeping Central Asia strategy in 2007 and ratified a basic trade agreement with Turkmenistan in late 2009.
As of the end of this year no EU company has a gas contract with Turkmenistan and not one kilometre of the 3,300 km project has been built.
Early drafts of the Central Asia strategy said that EU concerns with human rights abuses in the region could hold back the union's interests. Unwillingness by EU companies to pay a huge bribe to Mr Berdymukhammedov's predecessor also stymied progress.
The Chinese pipeline does not directly threaten Russia's monopoly on gas exports to the EU but it challenges Russia's influence in the three post-Soviet states.
"I hope that, thanks to this investment we will be not just good neighbours, but also faithful partners," Mr Hu said at the ceremony.
These were among the sentiments expressed by speakers and delegates at a high-level EU-China business conference organised by Friends of Europe, a Brussels-based think-tank, on Wednesday (9 December).
The meeting was organised as part of the Understanding China programme, a three-year project to increase European business awareness of Chinese market issues, and co-funded by the European Commission.
As European firms increasingly turn to China's rapidly growing economy, with its 1.3 billion potential consumers, questions over currency valuation, market access and intellectual property rights are foremost in the minds of many European CEOs.
But Europe also needs to put its own house in order, and should not simply compile a list of requests for Chinese policy makers, said Arnaldo Abruzzini, secretary general of the European business organisation, Eurochambres.
With citizens around the globe increasingly calling for job protection, a large number of recent protectionist measures have been implemented in Europe, he said, adding however that Chinese non-tariff barriers are considerably more extensive than the headlines suggest.
"We need to make order ourselves first," said Mr Abruzzini, referring to the EU's fragmented economic and trade policies as a frequent stumbling block in this regard.
Fragmented Europe?
As part of the EU's new rulebook the Lisbon Treaty which came into force on 1 December, two new top-level posts were created in a bid to increase the bloc's visibility on the world stage.
However some doubt whether the new high representative for foreign affairs, Catherine Ashton, and the permanent president of the European Council, Herman Van Rompuy, have the political stature to successfully achieve this aim.
Jean-Claude Knebeler, director of foreign trade in Luxembourg's economy ministry, said European discussions with China are likely to remain at the bilateral level.
"As long as the big players such as Nicolas Sarkozy, Gordon Brown, Angela Merkel take prominence on the stage in discussions with China, we will probably remain on a more nation state-focused approach," he said.
He pointed out that while the EU complains about the trade deficit with China, a figure that reached €169 billion in 2008, Luxembourg enjoyed a trade surplus with China in the same year.
Cheap labour
Chinese officials and academics are also quick to point out that many of the exports leaving the Asian giant's shores, destined for Europe, have in fact been produced by European companies with factories in China in order to take advantage of the cheap labour force.
One recent estimate suggests that only 15 cents in every dollar of the added value created in China actually stays in the country.
Despite this fact, deficit and currency tensions look set to continue in the short and medium term say observers.
"The nature of the EU-China dialogue over the next 10 years is still going to be very challenging," says Patrick Horgan, a member of the European Chamber of Commerce in China.
The move was overseen by the commission's current stand-in trade chief Benita Ferrero-Waldner, who has temporarily taken over the commerce reigns until a new EU executive is up and running early next year.
Former trade commissioner Catherine Ashton took up her new post as high representative for foreign affairs on 1 December.
Last month an advisory committee of national experts voted against an informal commission proposal to extend the tariffs, but three member states subsequently appear to have changed their minds.
In is unclear why the three Germany, Austria and Malta now look set to abstain from the extension vote later this month, but the move would result in a majority of EU countries in favour of the commission proposal.
Shoe producing countries such as Italy, Spain and Poland strongly support the measure.
If approved, the extension will prolong the current shoe tariffs of 16.5 percent and a 10 percent on Chinese and Vietnamese imports respectively by a further 15 months.
The measures which only apply to leather shoes - had been due to expire at the end of this year.
The commission says Chinese and Vietnamese firms continue to dump their products on the European market at below production cost, justifying the anti-dumping duties.
The European Footwear Alliance, representing a number of large importing companies such as Adidas, attacked the apparent change of position by the three member states.
"This sudden U-turn is a catastrophe for all those who care about European business, European consumers and, more broadly, about Europe's place in the world," said Manfred Junkert, director of the Federation of the German Footwear Industry.
"It raises serious questions about the application of EU trade law and policy in these times of economic crisis," he added.
China has openly criticized the EU plans to extend the tariffs, with further trade discord provided this week at the World Trade Organisation ministerial meeting in Geneva.
The meeting appeared to make little headway towards completing the Doha development round of multilateral trade talks that have now been dragging on for eight years.
Rising protectionism and sluggish EU and US growth mean world trade looks set to fall by nine percent this year.
"We cannot solve the climate challenge to mankind without China taking on leadership and responsibility," Swedish Prime Minister Fredrik Reinfeldt, the current EU president, told reporters after the meeting in the eastern city of Nanjing.
China's administration last week pledged to cut the amount of carbon dioxide emitted per unit of economic output by 40 to 45 percent by 2020 compared with levels in 2005.
The promise will allow CO2 emissions in China to increase in the coming years in absolute terms, but will significantly reduce them from business as normal' levels.
But without specifically criticising the Chinese offer, Mr Reinfeldt implied the EU would like to see a greater commitment.
"So far, our belief is the global effort put on the table for mitigation is not enough ... more needs to be done," he said at the post-summit press conference attended by Chinese Premier Wen Jiabao and European Commission President Jose Manuel Barroso.
However, Mr Wen defended China's offer, saying it represented "a major contribution to global efforts" to tackle climate change.
The UN's Intergovernmental Panel on Climate Change has requested that developing countries, such as China, cut emissions by 15-30 percent on 'business as usual' levels, while developed countries must reduce CO2 emissions by 25-40 percent on 1990 levels.
Ecofys, a Dutch consultancy tracking the various climate proposals of different countries ahead of global talks in Copenhagen in December, told EUobserver that China's offer was within the range demanded by scientists.
The EU for its part has offered to cut its emissions by 20 percent by 2020 based on 1990 levels, rising to a higher 30 percent cut if other developed nations do the same.
A meeting between officials from China, India, Brazil, South Africa and Sudan over the weekend restated their position that developed countries must lead the way at climate talks due to start in Copenhagen next week.
Currency rebuff
China also stood firm behind its currency policy in a meeting on Sunday between finance officials, also in Nanjing.
Luxembourg Prime Minister Jean-Claude Juncker, who chairs the monthly finance meetings of the 16 EU countries that use the euro, suggested the EU delegation had failed to persuade the Chinese administration to allow its currency, the renminbi, to rise.
"I can't say I am more optimistic than I was before I came here," he told journalists after the meeting with Mr Jiabao and Zhou Xiaochuan, China's central bank governor.
Jean-Claude Trichet, European Central Bank president, said Chinese officials had restated their commitment to implement currency reforms started in 2005, but stressed Europe should not "over-interpret" the importance of this statement.
China allowed its currency to slowly appreciate in 2005, but since July of last year has effectively pegged the renminbi to the weaker dollar in a bid to help the country's producers.
As a result the euro has gained 15 percent on the Chinese currency over the past year, making European exports less competitively priced compared to products produced in China.
The European team, which also included the EU's economy commissioner Joaquin Almunia, argued a gradual appreciation of the renminbi was needed to achieve a better global balance, and was therefore also in the interests of China.
But Beijing insists it needs a stable currency relative to the dollar to assist its economic recovery, something it argues is important for the global economy as whole.
Top of the agenda when leaders from the two sides sit down together in the eastern city of Nanjing will be climate change, leaving the EU just days to digest a Chinese pledge announced on Thursday (26 November) to cut emissions by 40-45 percent "per unit of GDP" on 2020 levels.
The pledge comes hot on the heals of a US announcement on CO2 emissions, as more and more countries show their hand before a crucial UN meeting in Copenhagen next month, designed to secure a global deal to fight climate change.
However Swedish Prime Minister Fredrik Reinfeldt, whose country currently holds the EU's rotating presidency, and European Commission President Jose Manuel Barroso, are likely to press for more details when they discuss the issue with Chinese premier Wen Jiabao.
They will also stress the need to secure at least a political framework agreement on climate change at Copenhagen that will set out a clear roadmap for a legally binding deal some time in 2010. China has told the West that it is not responsible for the legacy of climate change, adding that it has made considerable efforts to be part of the solution.
The leaders also expected to push a joint "near-zero" emissions energy project on to the next stage. The pilot project, largely funded by the EU, aims to develop a coal-burning plant in China using controversial carbon capture and storage technology, which some environmentalists question as a viable solution to the problem.
The Asian behemoth is also expected to press its case for an easing of property rights and cuts in prices on European green technologies in the interest of tackling climate change.
"I think they have been very clever in asking for that. But I think this will not be in the interest of the European businesses. We have heavily invested in the development of those technologies," Arnaldo Abruzzini, secretary-general of Eurochambres, told EUobserver on Thursday. The organisation represents EU chambers of commerce in Brussels.
Bilateral relations, financial crisis
Discussion will also focus on the current state of EU-China relations and the financial crisis, with ongoing negotiations for a partnership and co-operation agreement between the two sides expected to receive an extra push.
Following a cancelled summit in December 2008 and a fence-mending replacement in May of this year, one senior European Commission official this week said the EU was now "very much back to business with China."
But ongoing tensions over the EU's embargo on selling arms to China and delays in granting it economy market status, together with a spate of recent anti-dumping measures and questions over market access will prevent leaders from getting too chummy.
One area causing particular concern in the EU at the moment is China's policy of maintaining a weak currency, undercutting European exporters.
But how successful the meeting on 28-29 November between Chinese officials and European Central Bank president Jean-Claude Trichet, EU economy commissioner Joaquin Almunia and Eurogroup chairman Jean-Claude Juncker, remains to be seen.
And while the EU has received some clarifications regarding a Buy China clause in the country's 4 trillion yuan (€400 billion) stimulus package, the situation has not improved in recent months, said Mr Abruzzini.
"Everything is becoming more and more difficult in China for European businesses," he said of market access in general, citing a recent list of 130 products that now need to receive "china certification" before they can be sold in the country.
A summit of EU and Chinese business leaders on the 30 November will contribute a political message to the main event.
Human Rights, security
On the 29 November, Swedish foreign minister Carl Bildt will sit down with his Chinese counterpart to discuss foreign policy issues.
The EU is keen that China plays a greater role in improving the human rights situation in Burma and dealing with the security threat posed by North Korea. The US recently adopted a new strategy of greater engagement with the Burmese generals and the country is due to hold elections next year.
The EU and US would also like China to join international pressure on Iran, while the Chinese stress their policy of non-interference in the internal matters of other countries.
"We must be very cautious to conclude that peaceful nuclear technology will be used for military ends," China's ambassador to the EU, Song Zhe, told journalists last week.
Whether these and other issues, such as China's recent use of the death penalty against a number of citizens accused of causing unrest in the autonomous regions of Tibet and Xinjiang, make it on to the summit agenda is uncertain.
Already a problem before the crisis, the country's 4 trillion yuan (€400 bn) stimulus package is worsening Chinese overcapacity says the document, with important ramifications for Europe.
The steel, aluminum, cement, chemical, refining and wind-power equipment industries were singled out as amongst the worst offenders.
Domestic consequences include falling profits and failures to meet loan obligations. But overcapacity also generates trade tensions as producers offload their surplus production overseas at marked-down prices, warns the report.
The EU has already initiated a string of anti-dumping cases against China this year alone, greatly adding to frictions between the two sides.
"The Chinese stimulus package has poured credit into increasingly questionable projects," say the report's authors. "The global impact already can be felt in the form of growing trade tensions."
To correct the imbalance, the Chamber argues China must shift from investment and export lead growth to greater domestic consumption and development of services.
Weak yuan
Another issue of concern to European businesses is China's weak currency, with EU finance chiefs set to discuss the issue in China this weekend.
EU economy commissioner Joaquin Almunia, European Central Bank president Jean-Claude Trichet and Eurogroup chairman Jean-Claude Juncker will meet with Chinese officials in Nanjing on 28-29 November.
On Wednesday, European businesses called on the European trio to push for a stronger yuan, arguing that its current weakness against the euro is hurting European exports and dampening the region's economy.
The Brussels-based business umbrella group, Business Europe, called on the finance officials to hold an "open and frank" debate on the subject.
The imminent switchover, divulged by a number of EU officials on Monday (23 November), will facilitate Ms Ashton's move to her new foreign policy job as the EU's high representative.
Ms Ashton's departure had raised a question mark over who would take over in the important trade post until a new commission is set up, with a World Trade Organisation (WTO) ministerial conference set to take place in Geneva between 30 November and 2 December.
While the meeting will not be a formal negotiating session, a number of important issues are set to be discussed, including the Doha round of multilateral trade talks that countries hope to complete next year.
Ms Ferrero-Waldner, a conservative politician from the Austrian Peoples' Party, served as the country's foreign minister from 2000-2004, and prior to that also served as the influential chef de protocole for former United Nations secretary general Boutros Boutros-Ghali.
One of the important tasks in Ms Ferrero-Waldner's new brief will be the maintenance of strong commercial ties with China in the face of an upsurge in trade disagreements between the two sides, in part the result of the economic downturn.
Already this year, the WTO has ruled against Chinese restrictions on the distribution of Western music and movies, and against the EU over subsidies for commercial aircraft sector.
Added to this, the commission recently asked the WTO to rule on a dispute with the Asian giant over raw materials and may go ahead with a formal proposal later this month to extend import tariffs on Chinese and Vietnamese shoes.
Ashton's baggage
Ms Ashton will take the record of this increased bickering into her new job as high representative, a role that includes the creation of stronger foreign policy ties with China.
Although considered to be a rising superpower, the country's administration has so far been reluctant to apply extensive pressure in areas of EU concern such as human rights in Myanmar or the military threat posed by North Korea.
The double-hatted high representative post, created under the Lisbon Treaty, merges the foreign policy, job currently carried out by Javier Solana, and that of the commission's external relations chief.
The quick take-up of this latter position has been greatly facilitated by the fact that Ms Ashton is already a commissioner, say EU officials, with commission president Jose Manuel Barroso allowed to switch commissioner portfolios under EU rules.
Set to become a vice-president of the commission under her new role, Ms Ashton will face a hearing by MEPs along with all other commissioners.
But as she is already a member of the EU executive, the fact that Ms Ashton starts the new job next week before the hearings is seen as less problematic for MEPs, who jealously guard their powers of scrutiny over new commissioners.
However, the UK politician is expected to participate in an exchange of views with the European Parliament's foreign affairs committee on 2 December before the full hearings for all commissioners take place in January.
But despite the decision by EU member state experts, the commission will press ahead with a formal proposal later this month that must then be either approved or rejected by national governments before the end of December when the current tariffs are due to expire.
"The commission will take today's committee decision into consideration when preparing the formal proposal," trade spokesman Lutz Gullner told EUobserver.
Plans to extend the 16.5 percent and a 10 percent import tariffs on shoes from China and Vietnam respectively for another 15 months have produced deep divisions among EU member states, with one commission official saying the trade issue had become "political and nearly emotional."
If approved, the tariff extension would only effect leather shoes, with producer countries Italy, Portugal, Romania, Spain and Poland in favour of the measure.
Other member states including Denmark, the UK, Germany and the Swedish EU presidency are strongly opposed to the extension as a matter of principle.
"This kind of unjustified taxation of European importers and consumers will not get my support," said the Danish economy minister, Lene Espersen, on Wednesday.
"Once again we are seeing the EU's trade policy determined by a few southern European producers who have failed to see globalisation as an opportunity," said UK conservative MEP Robert Sturdy.
But despite the strong opposition by a number of states, a council vote next month could go in favour of the extension if ministers from producing countries can win over their more sceptical colleagues.
The key to this, say trade officials close to Thursday's committee debate, is convincing countries such as Germany that the extension will be limited to 15 months and will not come up for a further review.
Cost to the consumer
The EU executive argues the tariff extension is necessary to counter the actions of Chinese and Vietnamese firms that are dumping their products on the European market at below production costs.
While the extension could last up to five years, the commission is proposing 15 months as sufficient time to allow the EU industry to restructure sufficiently in order to deal with the "unfair" dumping practices.
The institution says only €125 million of the current €1.8 billion worth of shoes imported annually from China would be subject to the tariff extension, and adds that the cost to the consumer is no more than €1.5 on a pair of shoes.
But an alliance of European companies that oppose the tariff extension say this figure is likely to be higher, with the 15-month extension expected to cost European consumers and businesses in excess of €1 billion.
The current tariffs have benefited no one, says European Footwear Alliance, with imports from China and Vietnam merely being replaced by imports from other third countries.
The visit comes amid mounting international tensions caused by China's weak currency policy, with the yuan essentially pegged to the dollar over the last year, even as the value of the dollar has fallen considerably against other major currencies.
The result means European export price-tags are less attractive than their Chinese counterparts, with eurozone companies already suffering from a strong euro, according to an analysis by Dutch bank ING.
The visiting delegation will consist of EU economy commissioner Joaquin Almunia, European Central Bank president Jean-Claude Trichet and the 16-member eurozone chairman, Jean-Claude Juncker.
The meeting will take place in Nanjing, east of Shanghai, with both the date and location confirmed by Guy Schuller, spokesman for Mr Juncker, reports Bloomberg.
However, it is still unclear whom the European trio will meet from the Chinese side and what benefits can be won from their visit.
A similar plea for a stronger yuan when the group visited China two years was rejected by the country's premier Wen Jiabao.
Since 2005, China has allowed its currency to appreciate 21 percent, but halted the rise in July of last year in a bid to help its exporters during the crisis. The Asian giant maintains its artificially low currency by buying up US dollars, resulting in a greater supply of weaker yuan on the market.
EU and Chinese leaders will meet one day later on the 30 November in the same city for their second political summit this year.
A EU-China business summit will also take place on the 30 November in Nanjing, bringing together business leaders from the two sides.
Speaking at an event in Vienna, Mr Almunia told journalists that it would be "the best system for all of us" if China's currency and those of other developing countries were decided by the market and with less public intervention.
And amid mounting concern that a stubbornly strong euro the currency shared by 16 EU member states could be dampening Europe's nascent economic recovery, Mr Almunia also re-iterated his support for a strong dollar.
European policymakers fear the region's exports are in danger of being undercut by more attractively priced foreign products from China and the US amongst others.
Since 2005, Chinese policymakers have allowed the yuan to gradually appreciate. But over the last year this rise has been halted due to the economic downturn, something Mr Almunia is confident China will now reassess as the crisis comes to an end.
"US treasury secretary Timothy Geithner clearly said that he wants a strong dollar, and from China there are signals that indicate a loosening of the yuan from the dollar," the EU commissioner told German business daily Handelsblatt in an interview published on Monday.
"The Chinese leadership knows and accepts that it has to rebalance its economy, and a certain appreciation of its currency is necessary for that," Mr Almunia explained.
ECB
Europe sees the currency debate as part of a global rebalancing act following the worst economic crisis since World War II, with other components including the need to address US over-borrowing and China's trade surplus.
Mr Almunia intends to travel to China later this month to discuss the issue, together with European Central Bank President Jean-Claude Trichet and eurozone chairman Jean-Claude Juncker.
And with Germany the largest exporting nation within the EU and eurozone, there are increasing signs that the country will try to fill the ECB post with its own candidate once Mr Trichet retires in two years' time.
Debate is currently raging within the EU as to who should take up the new posts created under the Lisbon Treaty. Leaders will meet for an extraordinary summit on the 19 November to decide the issue.
However, the apparent absence of German candidates for either the post of president of the European Council or the high representative for foreign affairs is adding to speculation that Germany will seek the ECB job.
"When this [current debate] has been settled, there will be a number of other positions to fill and Germany attaches a great deal of weight to playing a corresponding role," German deputy foreign minister, Werner Hoyer, said before a meeting of EU foreign ministers on Monday.
Bundesbank chief Axel Weber is a likely German candidate.
The announcement on Wednesday (4 November) is set to further increase the trade tensions between the two sides ahead of an important EU-China summit scheduled to take place later this month.
The dispute surrounds Beijing's use of export subsidies and quotas to limit certain raw materials such as phosphorous, coke, and magnesium from leaving the country.
"China's restrictions on raw materials continue to distort competition and increase global prices, making conditions for our companies even more difficult in this economic climate," said the EU's trade chief, Catherine Ashton.
The EU decision to take formal action follows the same path as the US and Mexico, and comes after two years of urging China to lift the restrictions. In June, the bloc sought formal WTO consultations with China over the issue.
"I regret that the formal consultation process and significant EU engagement on this issue has not led to an amicable solution which would have been our preferred course of action," said Ms Ashton.
Brussels argues that the Chinese restrictions not only contravene current WTO rules but also break specific accession agreements signed by Beijing when it joined the multilateral trading organisation in 2001.
By limiting the outflow of raw materials some of which cannot be found outside of China Chinese companies enjoy an unfair cost advantage when competing against foreign firms, say EU officials.
The materials in question are widely used in the chemical, steel and non-ferrous metal industries and by their downstream clients.
Global race for minerals
China imposed the contentious restrictions two years ago at the height of the commodity boom, in a frantic bid to stop essential raw materials used by the nation's growing list of manufacturers from leaving the country.
But despite the condemnation they have attracted from other countries, the levies and quotas on the strategic materials have not had a great effect on limiting their export, say analysts.
As well as the scramble for materials at home, recent years have increasingly seen China compete with Europe and the US for key minerals in other continents around the world, especially in Latin America and Africa.
But despite the frictions, trade between the EU and China has increased dramatically in recent years and now totals over €300 billion.
China is now the EU's second largest trading partner behind the US and the biggest source of EU imports. The EU argues that Chinese non-tariff trade barriers deny EU companies business opportunities worth at least €20 billion a year.
The sixth EU-China Civil Society Roundtable (27-28 October) will see members from the European Economic and Social Committee (EESC) descend on the Swedish capital, along with their counterparts from the Chinese Council.
The EESC is a consultative body representing over 300 economic and social interest groups in Europe, whose opinions are forwarded to the the European Commission and the European Parliament.
Debate at the two-day meeting will focus on Economic and social rights in China and in the EU' and Sustainable Development and Water,' according to the programme.
A second topic of discussion will be the importance of social dialogue, with the EESC keen to stress the need for freedom and independence if the process is to successfully avoid and resolve conflicts.
The role of employers and employees in this process will also be debated.
Swedish state secretary for the environment Ms Elisabet Falemo is to open the proceedings, which will also feature a number of side events covering topics such as sustainable urban development.
The previous roundtable between the two sides was held in May in the Chinese city of Tianjin, the sixth largest in the country with a population of over 11 million inhabitants.
The meeting saw the start of discussions on economic and social rights in China and Europe, with both sides recognizing the importance of freedom of association and collective bargaining.
These two principles are laid down in the International Labour Organisation's core labour standards, with debate this time round set to focus on social dialogue.
Both Europe and China have been hit by the financial crisis and economic downturn that followed, although recent growth figures suggest the Chinese economy has returned to a strong rate of growth.
Last week, Chinese officials announced 2009 third quarter growth figures of 8.9 percent, while the economies of many EU member states remain in recession for the same three months.
Providing enough jobs for new graduates in the large Asian country is a key concern for its administration, with fears that a return to rural areas could cause social conflict.
The new Europe-China Standards Information Platform (CESIP), which can be found at http://eu-china-standards.eu , allows users to search for information in the areas of electrical appliances, machinery, medical devices and environmental protection.
Information on standards in other areas will be added in the coming years.
The initiative was designed by the Sustainable Development Association (SDA), with the support of the European Commission and the European Free Trade Association (EFTA).
"The aim is to help European businesses to get the relevant information about market access," Mr Tore Nyvold Thomassen, an EFTA official involved in the launch, told EUobserver.
The platform will also provide data for Chinese firms looking to do business in Europe.
Mr Thomassen says small and medium sized businesses (SMEs) stand to gain the most from the added clarity provided by the new platform, as bigger companies frequently have their own ways of accessing the information.
Compliance with Chinese standards is a vital step for European businesses looking to trade with the Asian giant, with the new platform's provision of data on industry standards differentiating it from already existing platforms.
The move is just the latest in a string of European initiatives designed to help the region's businesses access China's billion-plus consumers, as the country's administration continues to push measures designed to boost domestic demand.
Recently released data show China's economy grew by a blistering 8.9 percent in the third quarter of this year, helped by the country's €400 billion stimulus plan.
However statements made by Chinese premier Wen Jiabao this week on the need to manage inflation, point to the administration's growing concern in this area, and could signal its intentions to ease off on stimulus spending.
Chinese diplomats in Brussels confirmed the meeting would take place at the end of November but declined to comment on the exact date.
As at the May summit held in Prague, tackling the economic crisis looks set to dominate the agenda of the upcoming meeting, with climate change also taking a prominent position.
"As the summit will focus on the new China-European Union strategic partnership, climate change and the global financial crisis will certainly be on the agenda," said William Fingleton, a diplomat in the European Commission's representation in Beijing, reports AFP.
Concern over the euro's steady rise against the dollar and the yuan may also see the issue creep onto the agenda.
"We want a strong dollar, we need a strong dollar," French finance minister Christine Lagarde said on Tuesday.
Last November China stunned EU officials when it announced that premier Wen Jiabao would not be traveling to France then holders of the EU presidency for the scheduled summit meeting in December.
The move to cancel the summit was a protest against French President Nicolas Sarkozy's decision to meet with Tibetan spiritual leader, the Dalai Lama.
The commission is expected to come forward with proposals in the coming weeks to extend tariffs on shoe imports from the two countries first imposed in 2006 for a further 15 months.
A leaked draft of the proposal which circulated in Brussels earlier this week says the decision is based on the need to protect European shoe manufacturers from imports sold at below their real production cost.
But the alliance made up of the European Branded Footwear Coalition, the European Outdoor Group and the Federation of the European Sporting Goods Industry says the selection of Brazil as a comparison country when checking the Chinese and Vietnamese prices essentially predetermined the result.
"The commission's ability to choose an "analogous country" for the purpose of price comparison means that it ends up comparing apples and pears," said the alliance in a statement.
"Using Brazil, one of the world's most protected footwear markets, with its 35 percent import tariff of footwear ... and higher cost of labour ... exacerbates this effect," said the group.
Under current international trade rules, governments looking to start anti-dumping procedures against countries that do not have market economy status' may look to a comparison country.
The EU's refusal to grant the status to China has long been a bone of contention between the two sides. Vietnam does not have the status either.
Commission defense
Commission sources familiar with the investigation defended the decision to use Brazil as the comparison country, saying it was based on objective criteria.
They also said that comparisons were made using Indonesia as the comparison country which again showed Chinese and Vietnamese shoe imports were priced unfairly.
But Iana Dreyer, a trade expert with the Brussels-based European Centre for International Political Economy, says the decision to extend tariffs is clearly a political one at a time when greater opening up of markets is unpopular.
"The case itself highlights the rather shaky legal and economic foundations of European anti-dumping measures," she told EUobserver.
"Brazil is not a low-cost economy like China or Vietnam. If you really wanted to carry out a good comparison it would be with India or Bangladesh," she said.
The tariff proposal is set to be adopted by the full commission in the coming weeks, and will then go to national governments for approval. If agreed it will be implemented on 3 January 2010.
A draft document leaked on Monday (12 October) suggests the EU executive will call for a 15-month extension to current duties of 16.5 percent and 10 percent on shoe imports from the two respective countries.
The decision is based on the need to protect EU shoe producers once the current two-year period of duties ends later this year.
"The investigation showed that there is a likelihood of continuation of injury for the short/medium term, until the process of adjustment of the Community (EU) industry has been completed," says the document, several newswires report.
Antidumping measures import tariffs on products deemed to be priced at below their production cost are a favourite EU tool in its many ongoing trade disputes with countries such as China.
But businesses and representatives from several EU member states have voiced their opposition to the proposed move in recent days, with the approval of a majority of governments needed if the extension is to go ahead.
Shoe-producing countries Italy, Spain, France and Poland are in favour of the duty extension reports Reuters, while the majority of other EU members are not.
Bigger manufacturers that make their shoes in Asia, such as Diesel, Adidas or Puma, are also fighting against the renewal of the shoe tariffs, as is EU consumer group BEUC.
But the commission argues the duties are necessary and that they only have a very modest effect on EU shoe prices.
As rumours of the proposed extension circulated last Friday, China's Vice-President Xi Jinping told business leaders in Brussels of the need for greater co-operation between the two sides due to the financial crisis.
"We should take concrete action to fight against all forms of protectionism in trade and investment," he said.
Despite the opposition, the Commission hopes that the limited 15-month extension will win over enough member states to see it implemented from 3 January of next year.
Companies have been given until 3 November to voice their opinion on the new proposal, before member states ministers vote on the extension this December.
Centre-right Italian MEP Crescenzio Rivellini signaled his intention on Tuesday (29 September) to use ongoing negotiations for an upgrade in EU-China relations to step up pressure in this area.
"We will try to use the Partnership and Co-operation Agreement to improve investment access in China for EU companies," he told EUobserver following his election to the post.
Ties between China and the EU are currently set out under a 1985 Trade and Co-operation Agreement but discussions have been ongoing since 2007 to broaden the formal relationship.
While China complains about EU anti-dumping measures that are periodically imposed upon the country's exports, European companies say they are not granted fair access to Chinese markets.
Foreign companies looking to invest in China are frequently forced into joint-venture obligations with local firms, or can run into other restrictions in sectors considered strategic by the Chinese government
However Mr Rivellini also suggested that further duties might be needed at the European end to restrict the level of shoe and textile imports coming into the bloc from China.
"In the profound crisis that we are going through right now, we should be able to introduce policies that protect European industries," he said.
End the arms embargo
On Thursday (1 October), many of the 1.3 billion inhabitants in Asia's largest nation will turn out to celebrate 60 years since the country's civil war ended and Mao Zedong proclaimed the People's Republic of China.
The government will use the occasion to parade all its latest weaponry through the streets of Beijing, with foreign military strategists keen to assess China's progress in this field over the last ten years.
Following the events of Tiananmen Square in 1989 however, under which the army opened fire on students and other protesters, the EU has held an embargo on selling arms to the China.
Mr Rivellini says he is in favour of an end to the embargo, which sees European defence manufacturers denied access to the lucrative Chinese market.
"I think we should remember that things have changed somewhat in the last few years. The climate in the relations between China and the rest of the world has changed," he said.
Mr Rivellini also feels the EU needs to compete harder for influence in Africa and other developing regions, frequently an important source of raw materials.
"The old continent of Europe cannot just stand by and simply look on at an expansionistic policy by China," he said.
METP was launched in July 2006 as a four-year intergovernmental programme comprising four intakes of participants, but this latest decision provides an opportunity for more to avail of the scheme.
So far, roughly 400 managers from China and the European Union have been provided with training and internship opportunities, with the aim to provide a better understanding of each others' economy.
"I welcome this programme because it highlights a very important aspect of the EU-China relationship confidence in one another," said EU trade commissioner Catherine Ashton earlier this month in Beijing.
"Building that confidence will be key if we are to continue to develop a deep and lasting EU-China trade relationship," she added.
Previous rounds have shown the Chinese side to be more interested in the scheme however, with European managers slower to take up the opportunity.
But the successes so far and rising interest on the European side were reasons enough to extend the programme, said Stefan Hell, METP team leader in Beijing.
China has evolved into one of the world's most dynamic and constantly growing markets but small and medium-sized companies often lack the resources to establish business relations with China.
The expenses-paid training programme therefore aims to help SMEs, Non-governmental organisations and self-employed entrepreneurs gain a foothold.
"I don't think the dollar reserve will change in the near-term but we don't want to put all our eggs in the same basket," China's ministry of foreign affairs spokesman Qin Gang told EUobserver.
The country's political elite has watched with growing alarm over the past year as the US federal reserve has injected billions of dollars into the US economy in its fight to stave off financial collapse.
However, the long-term inflationary risks associated with this threaten to greatly devalue the $1 trillion in dollar reserves, roughly half its total, currently held by China.
The strength of the US currency is already suffering from the downward pressure created by the country's large budget and trade deficits, but a switch to the euro is not a foregone conclusion, said Mr Qin.
"If conditions are right we want to hold more euros, but it must be in our interest,' he said. "We must get good value. We want our reserves to appreciate, or at least not devalue."
The current strength of the euro means the Chinese government may not be buying any time soon.
The currency did well against the dollar on Monday (14 September), breaching $1.46 on news that both the 27-member EU and 16-member eurozone look set to record positive growth in the third quarter of this year.
A strong Europe
Speaking more generally about Sino-EU relations, Mr Qin said China wanted to see a strong EU help play an important role in constructing global multilateralism.
"A three-pillar table is more stable than a two-pillar table," he said, referring to the current dominance in global affairs of the US and China that has lead some commentators to refer to a G2. "Four is even better," he added.
"I think the EU is now having some problems internally," Mr Qin said of the ongoing difficulties surrounding ratification of the Lisbon Treaty, the proposed set of new rules for the bloc which deals largely with institutional reform.
Asked whether China was ever frustrated by the fragmented nature of the EU and its difficulties in achieving greater integration he said: "You have 27 member states and 500 million people so it takes time. Maybe it [enlargement] was too quick."
Mr Qin Gang denied his government favoured Chinese companies when awarding lucrative contracts under the country's stimulus plan, contrary to opposite claims by a number of European business groups.
"Foreign investors must come to China in a more aggressive and competitive form [if they are to win the contacts]," said Mr Qin. "Nobody wants to buy white elephants."
China's four trillion yuan (€400 billion) stimulus plan announced last November has received praise from many in the international community as an important measure to help boost the Asian economy, with positive knock-on effects for the rest of the world.
However Europe's main business lobby group, BusinessEurope, recently sent a letter to EU trade commissioner Catherine Ashton, complaining that new rules appeared to limit purchases by the Chinese government to companies that are at least 50 percent Chinese-owned.
"We are deeply concerned that these new provisions could have a domino effect on protectionism globally," wrote the group's chief executive Philippe de Buck.
The European Union Chamber of Commerce in China recently expressed a similar view, saying China fails to treat local and foreign companies equally in the public procurement process.
Wind energy is proving to be a particularly hard sector for foreign companies to crack, says the chamber, with developers required to make 70 percent of their parts in China.
But Mr Qin denied the Chinese government was using protectionist measures to give an unfair advantage to domestic turbine producers and related manufacturers.
"We also have Chinese companies making windmills," he said. "At the end of the day, it's [a question of] value for money."
Warning to France
Separately, Mr Qin warned France to pull back on proposals for a carbon tax on imports entering into the European Union, aimed at complementing a newly unveiled carbon tax on fossil fuels products in France.
"We need to impose a carbon tax at [Europe's] borders. I will lead that battle," French President Nicolas Sarkozy said last week while visiting a factory in the east of the country.
Mr Qin indicated that China strongly opposed such measures, saying: "we would regard that as another form of protectionism."
The US decision on Friday night to raise tariffs on imports of car and light truck tyres from China has also come under fire.
Under pressure from the powerful United Steelworkers union, US President Barack Obama slapped a 35 percent tariff on the tyre imports for the coming year, falling to 30 percent in the second year, and 25 percent in the third.
"We are against it firmly and it is not in the interest of the US," said Mr Qin. "It sends out a very bad signal and sets a very bad precedent."
But as more and more Chinese citizens are lifted into the middle class, and with car sales showing few signs of abating, Beijing's municipal government is pushing ahead with an ambitious metro expansion plan in a bid to ease the growing pressure on the city's roads.
"We cannot forbid people to own cars and destroy their dream," says Minghui Zhan, director of the Beijing Metro Network Control Centre. "What we can do is attract them to the metro."
Part of the expansion includes the opening of a new line later this month, in time for the 1 October celebrations to mark the 60th anniversary of the founding of the People's Republic of China.
As troops trundle along the main east-west artery leading to Tiananmen Square to mark the occasion, the opening of the new metro line will bring the city's total to nine, helping to push metro use above the current daily volume of four million passenger journeys.
And with the number of cars in the city of 17 million inhabitants also around the four million mark and rising rapidly, the municipal government hopes to have a total of 19 lines up and running by 2015.
European investment
"We have learnt a lot from European countries," says Li Xiaosong, spokeswoman for the Beijing transport committee, who together with Mr Minghui has paid numerous visits to European cities over the last few years to study the metro systems there.
In a bid to provide market efficiency but also a widely affordable service, the local government opted to allow two private companies to run the metro system, in conjunction with substantial government subsidies to keep ticket prices down.
"The price of a Beijing subway is the lowest in the world," says Mr Minghui confidently of the two yuan (€0.20) ticket price.
As well as providing several metro templates, a number of European governments have invested in Chinese metro systems, with the UK government providing a loan to finance the Beijing metro signalling system.
Germany at the same time has invested extensively in the Shanghai metro system, on condition that much of the technology needed to run the network is bought from the large European economy currently showing some signs of economic recovery.
Despite this, European trade commissioner Catherine Ashton warned on a visit to China this week that investment levels between the two sides had been decreasing in recent years.
EU investment in China in 2007 was €7 billion, falling to €4.5 billion in 2008.
"Brazil and India are becoming increasingly attractive destinations for EU investment," said Ms Ashton. "Governments should not think that national investment is in some way better."
Ms Ashton is currently in China as a follow-up to the High-Level Economic and Trade Dialogue (HED) discussions held in Brussels in May, a regular forum for EU-China trade meetings that was set up in 2007 and is co-chaired by Ms Ashton and Chinese Vice-Premier Wang Qishan.
The students clapped politely throughout Ms Ashton's speech - peppered with the careful diplomatic language characteristic of dealings between the two sides - but got straight to the point in a questions and answers session afterwards.
"Why has the EU given market economy status to Russia but not China, yet the Chinese economy is clearly more open?" asked one post-graduate student in international relations to loud applause.
Market economy status is a technical label that, once awarded, would limit the EU's ability to use anti-dumping measures against China in trade disputes.
"You have made a very good representation of the feeling in the room," acknowledged the commissioner, adding: "We are not trying to hold this [status] up but we can't do it until we are ready."
Independently on Wednesday, Ms Ashton's predecessor in the commission's trade portfolio, current UK business secretary Peter Mandelson who is also in Beijing, called on the commission to speed up the process and warned member states not to hold it up for political reasons.
The commission says that so far China meets one of the five technical criteria to qualify as a market economy.
Building confidence EU anti-dumping measures imposed on imports from China have been a growing cause of tension between the two sides since the economic crisis broke out last year. Ms Ashton said such disputes were "an accepted part of advanced trade relations, used to combat unfair trade," but that they highlighted the need to continue to build stronger relationships. "We need to communicate to speak frankly to exchange ideas and to recognise there have been and will be some difficult moments as our relationship matures," she said, adding that the anti-dumping duties currently affect less than 1 percent of China's exports to the EU. "Confidence is vital because I firmly believe that the future of international trade lies in relationships rather than in the mathematical formulae used to crunch tariffs in the past," she continued. IPR While Chinese officials complain about the anti-dumping measures, a primary EU concern is the lack of protection for intellectual property rights in China, especially patents, which can harm European companies doing business there. As part of her visit, Ms Ashton also spoke at the EU-funded China IPR / SME Helpdesk, which was set up a year ago to aid European companies doing business in China. "In a global economy, small and medium-sized enterprises [SMEs] are among the most likely victims of property theft. The European Commission is committed to address the needs of SMEs with regard to the infringement of their intellectual property rights," said Ms Ashton. She pointed out that concern over IPR was a common deterrent for EU businesses looking to invest in China, and therefore also in China's interest to rectify. As part of the strategy to improve IPR, the commission is currently working with Chinese custom officials in an attempt to clampdown on illegally produced goods.
EU anti-dumping measures imposed on imports from China have been a growing cause of tension between the two sides since the economic crisis broke out last year.
Ms Ashton said such disputes were "an accepted part of advanced trade relations, used to combat unfair trade," but that they highlighted the need to continue to build stronger relationships.
"We need to communicate to speak frankly to exchange ideas and to recognise there have been and will be some difficult moments as our relationship matures," she said, adding that the anti-dumping duties currently affect less than 1 percent of China's exports to the EU.
"Confidence is vital because I firmly believe that the future of international trade lies in relationships rather than in the mathematical formulae used to crunch tariffs in the past," she continued.
IPR
While Chinese officials complain about the anti-dumping measures, a primary EU concern is the lack of protection for intellectual property rights in China, especially patents, which can harm European companies doing business there.
As part of her visit, Ms Ashton also spoke at the EU-funded China IPR / SME Helpdesk, which was set up a year ago to aid European companies doing business in China.
"In a global economy, small and medium-sized enterprises [SMEs] are among the most likely victims of property theft. The European Commission is committed to address the needs of SMEs with regard to the infringement of their intellectual property rights," said Ms Ashton.
She pointed out that concern over IPR was a common deterrent for EU businesses looking to invest in China, and therefore also in China's interest to rectify.
As part of the strategy to improve IPR, the commission is currently working with Chinese custom officials in an attempt to clampdown on illegally produced goods.
Following an invitation from the Chinese Economic and Social Council, Mr Sepi will set out on a fact-finding mission to assess the real economic and social conditions on the ground, with particular emphasis on the areas of employment, education and healthcare.
Mr Sepi who travels with the backing of European Commission president Jose Manuel Barroso says he sees a "slow but steady" improvement in the area of human rights in the country, despite tensions in the neighbouring region of Xinjiang in recent months.
Questioned by journalists as to how free the three-man delegation will be to move around the Tibetan region, the EESC president says so far no requests for meetings have been declined.
"As soon as I accepted the invitation I insisted on being able to meet whoever I liked," says Mr Sepi, whose visit includes meetings with local leaders and NGOs such as the World Wildlife Fund and Save the Children.
Officials in the Brussels institution which represents organised strands of civil society such as trade unions and the business sector, but is frequently criticised for lacking influence, say the less political nature of the body can work to their advantage.
They point to a marked increase in candid dialogue between the two sides during their two meetings of 2008, adding that trade interests between the EU and China have held back higher level political and diplomatic discussion.
Indhira Santos, author of the chapter on development policy, says the EU is now facing much stiffer competition from emerging powers such as China and India for political influence and natural resources on the continents of Africa and South America.
"For the recipient countries, it is far from clear whether these changes are good or bad in net terms," she told this website.
China's role as a development donor to poorer regions around the world has grown in recent years, in line with its desire to secure trading routes and access to raw materials.
To tackle this, the EU the world's largest aid donor should "fight for intellectual leadership" in the area of development policy, argues Ms Santos in the report which is intended as advice for the next European Commission.
In addition, China must be brought further into the international development fold.
"This implies including them in the discussions of standards and objectives of the development community in the poorest countries," says Ms Santos.
The challenge posed by changes in the global economic order is not the only issue that will need to be dealt with by the new commission however.
The report warns that the EU's highly fragmented development policy and weak performance assessments are further difficulties that must be rectified.
At present, EU development policy is shared between the 27 EU member states and the commission.
Sun Yongfu head of the European affairs section in China's ministry of commerce predicts differences in net trading levels between the EU and China will fall in 2009 when compared to 2008.
"There has already been a sharp fall in China's trade surplus with the EU so far, and the figure for the whole year will not be as large as that of last year," he said, reports Xinhua news agency. "Trade between the two sides will become more balanced."
The European Commission confirmed the general trend of a reduction in the trade deficit.
Mr Sun's comments follow recent Chinese customs figures which show China's surplus with the EU was roughly $55.7 billion (€38.9bn) for the first seven months of this year, less than half of last year's total figure of $160 billion (€111.7bn).
Almost a year on from the fall of Lehman Brothers bank in the US, continued caution on the part of European consumers and retailers has resulted in Chinese exports to the EU falling further than trade in the other direction.
According to the Chinese customs figures, EU imports from China were valued at $103.5 billion (€72.3bn) in the first two quarters of this year, a fall of 24.5 percent on the same period in 2008.
Chinese imports from the EU during the first two quarters of this year were valued at $56.5 billion (€39.4bn), a smaller fall of 15.1 percent from a year ago, with some signs of recovery.
Helping to partially explain the difference is the greater emphasis the Chinese government has placed on boosting domestic demand since the economic downturn started.
As traditional western markets for Chinese goods struggled to keep up import levels over the past year, the government stepped in with a $585 billion (€408bn) stimulus plan in the spring.
The resulting series of new infrastructure projects and subsidies on a range of goods including flat-screen TVs have provided a valuable boost to the region as a whole, but have also had a positive impact on sales in the US and Europe.
The import duties for the chemical - used in a range of products including medicines and paints had been due to expire on Wednesday (26 August).
Reacting to the news, the European Commission said in a statement that it "regrets" the decision, "given that EU exports [of the chemical] now hardly reach 30 percent of their level before the measures were introduced."
China originally introduced the imports duties on catechol in August 2003 at a rate of 27 percent, revising the figure up to 41 percent in 2005.
As a result, EU exports to China of the essential chemical fell from 4,200 tons per year in 2002 to the current annual level of 1,200 tons with a value of €3 million.
The Chinese Ministry of Commerce said the decision to maintain the duties for another five years was based on the need to protect domestic catechol producers.
Anti-dumping measures - allowed under international rules laid out by the World Trade Organisation - are an ongoing source of tension between the Asian giant and the EU.
Dumping is generally defined as the practice of selling a product abroad for less than on the domestic market, or the practice of selling a product abroad for lower than its production cost.
As of January next year, all fish products entering the EU must come with catch certificates validated by the country whose flag the fishing boat which caught the fish is flying, a move the EU hopes will aid the fight against what is called illegal, unregulated and unreported (IUU) fishing.
But China, which in recent years has soared to the top of the list of the world's leading fish product exporting nations, has a long way to go to successfully track a product along its chain of transactions, according a report published on Monday (17 August) by Traffic, a UK-based conservation group that monitors trade in wild plants and animals.
In 1993, the Chinese fish re-processing sector, primarily based in the Shandong and Liaoning provinces, was placing 2.8 million tonnes of fish products on the market. But by 2006, production had rocketed to 9.3 million tonnes, outranking other leading fish product producers Peru, Norway, the Russian Federation, the US, Thailand and Chile.
Because of China's importance within the trade, Traffic also says that the country must improve its existing traceability systems in order for the new rules to be meaningful.
To meet the EU rules, China will have to issue certificates for all catches by China-flagged vessels and obtain certificates from other countries when fish is imported into China for processing.
The report estimates that more than half the raw material that enters the fish reprocessing industry originates in the Russian Federation, particularly cod and salmon and large quantities of "unspecified" fish.
The Traffic document says that customs systems both in China and in some importing countries lack sufficient detail and usually do not check whether fish imports are classified under the appropriate code.
Additionally, says the report, fish may legally change hands several times while in China, further complicating product traceability.
The conservation group is principally recommends that China streamline the different monitoring systems its authorities currently use into "a single, integrated and effective traceability system."
Traffic would also like to see the development of formal requirements for catch certification and documentation in China.
The report, which was funded by the UK's Department for Environment, Food and Rural Affairs, does not shoulder Beijing with all responsibility for making the changes, however.
The group also says that the EU must deliver additional assistance to help China comply with its legislation, as well as providing Chinese fisheries enforcement authorities with intelligence on countries that may be the source of IUU fish arriving in the country.
At the same time, the quicker economic recovery expected in Asia is likely to see China overtake Germany as the world's largest exporter.
Discussing the new report in Singapore, the organisation's chief economist, Patrick Low, told journalists the two countries were likely to switch their positions at the top of the global trade league table as early as this year.
China has been gaining ground on Germany, with the Asian giant's merchandise exports valued at €1,004 billion in 2008, just behind those of Germany on €1032 billion.
Selen Guerin, head of trade policy with Brussels-based think-tank the Centre for European Policy Studies, told EUobserver that German exporters had been badly hit by a shortage of trade finance while demand for Chinese exports had largely held up.
"The origin of the economic downturn is a financial crisis, so it hit developed countries more than developing countries. Banks stopped all forms of credit, including trade finance," she said.
European and Asian growth figures have also shown signs of divergence.
The EU's economy as a whole is set to contract by 4 percent of GDP this year according to data from the EU's statistics office, with Germany set to suffer a larger 5.4 percent contraction.
China, on the other hand, turned in positive year-on year growth of 8 percent in the second quarter of this year and appears well placed to benefit from a global upturn.
WTO trade report
Presenting the new trade report in Singapore, the WTO's director-general Pascal Lamy said Asia was likely to lead the world's trade recovery out of its current decline.
The 10 percent fall predicted for this year is the worst since World War II.
The report focuses on trade measures used by different countries around the globe to protect vital economic sectors, warning that although these can be politically useful in the short-term, they need to be rolled back to avoid long-term harm.
"Protecting trade can be tempting until everybody understands that protectionism does not protect," said Mr Lamy.
Faced with economic difficulty, WTO agreements allow governments to implement a range of measures such as antidumping and tariff increases up to permitted levels.
"We should hasten the implementation of our going out' strategy and combine the utilisation of foreign exchange reserves with the going out' of our enterprises," Mr Wen told Chinese diplomats in comments published on Tuesday (21 July).
Although China had been investing in foreign firms before the economic crisis, the statement is the first time a senior government official has openly articulated the policy say analysts.
The move will likely see large Chinese state-owned firms such as China Telecom, Bank of China, Chinalco and PetroChina receive greater financial support to extend overseas.
However it is unclear how much of the Asian giant's foreign currency reserves estimated to be over $2000 billion (€1408bn) will now be channeled towards the large companies.
Strategic assets
Since the onset of the credit crunch and economic downturn, western companies have sought to buoy their badly hit balance sheets with injections of fresh capital, with sovereign welfare funds (SWFs) from net exporter countries frequently stepping up to the mark.
China's own SWF - China Investment Corp has been heavily criticized at home due to the extensive loses made on investments in financial firms such as Blackstone in 2007, just before the onset of the crisis.
However the fall in prices over the last year and signs that the global economy may be bottoming out are tempting management at the $200bn sovereign wealth fund back into the market, with a recent acquisition of a 1.1 percent stake in British distiller Diageo.
But the improved investment climate and Mr Wen's announcement could restart the debate over strategic' investments, with a number of European politicians in the past expressing concerns that national champions' could slip into foreign hands.
Anglo-Australian mining giant Rio Tinto walked away from a proposed $19.5 billion (€13.7bn) deal with Chinalco last month, partly a result of political concerns over handing an 18 percent stake in the world's third largest miner to a state-owned Chinese company.
In a further escalation of tensions, on 5 July four Rio Tinto executives were detained by Chinese authorities, allegedly for spying and broader accusations of bribery.
Dollar dependency
However China's renewed attempts to step-up overseas investments are not solely driven by a desire to improve access to natural resources, but also lingering concerns over the dollar's long-term value.
The US federal reserve's policy of printing new money in response to the economic crisis have sparked fears that inflation could rise rapidly in years to come, bringing with it a corresponding decrease in the value of US treasury notes held by China and other investors.
A move to private sector investments rather than dollar denominated bonds could help the Chinese government secure greater long-term value.
In recent months, several senior Chinese officials have also publicly voiced their wish to move away from the dollar as the world's reserve currency due to concerns over its stability.
The free-of-charge China IP Law Search' was launched by the EU-China IPR2 project last week at an event attended by senior officials from the Chinese ministry of commerce and the European commission's delegation to China.
Project officials say the new search tool enables users to search legal texts in the areas of IP including patent law, trademark law, copyright law, customs protection, dissemination of information on the internet, new plant varieties and unfair competition.
The legal texts are part of the current legislative framework of intellectual property protection and enforcement in China.
"China IP Law Search' aims to provide for the first time a comprehensive, bilingual collection of legal references immediately relevant to intellectual property in China," said Mr Rudie Filon from the European Commission delegation to China.
"It will be a valuable support to anyone working, studying or simply interested in the Chinese IP environment," he added.
The new tool is part of a major drive by both sides to allay the piracy fears many foreign investors still habour over investment in China and to shed light on the complicated web of legislation in the area.
"As most IP laws are readily provided on official sites in Chinese, at this stage of development it is potentially of more of interest to non-Chinese users given that English translations are not always freely nor timely available," IPR2 team leader Carlo Pandolfi told EUobserver.
IPR2 project
The EU-China IPR2 project, a partnership initiative launched in 2007 between the European Union and China, was set up to tackle the problem of breaching IP legislation, such as copyrights, and the subsequent loss of revenue by companies in China.
It has €16 million in joint funding over 4 years until 2011, aiming to providing technical support to the different levels of the Chinese legislative, judicial, administrative and enforcement authorities.
It builds on the IPR1 project (1999-2004) which provided support to China's legislative, judicial and administrative reform.
On 1 October China is set to carry out the first major amendment to Chinese patent laws since 2000.
The changes will involve a broadening of protection for design patent owners, an increase in financial damages for certain types of infringement and the adoption of some IP protections from international treaties.
According to statistics published by the European Commission on Thursday (9 July), national customs officers are increasingly recognizing and detaining counterfeit products, in co-operation with industry.
In 2008, some 178 million items were seized compared to 79 million in 2007, up 125 percent. There was a 13 percent increase in products registered as breaking intellectual property rights - over 49,000 cases compared to 43,000 in 2007.
European producers themselves filed some 13,000 applications to request customs interventions, this way enforcing 80 percent of all investigations.
The pirate list has been for years dominated by the same kinds of products and last year's figures confirmed the existing trends : DVDs and CDs were the most prevalent fake goods, with 79 million disks detained, 44 percent of all items, followed by cigarettes (23%) and clothing (10%).
Meanwhile, the highest increases in terms of actual cases of IPR infringement were registered with toys (up 136%), electrical equipment (58%), medicines (57%) and personal care products (42%).
Geographically, over half of the fake goods confiscated at EU borders came from China.
The European Commission said that a significant part of the confiscated products was potentially dangerous for European consumers.
While most fake medicines came from India, Indonesia was the biggest source of forged food and drink products and the United Arab Emirates was the key point of origin for counterfeit cigarettes.
"I have to say very clearly that some of our companies have suffered not to have been chosen," said Mr Abou on Wednesday (8 July), reports the Associated Press.
The sentiments are shared by the European Union chamber of commerce in China (EUCCC), which says the bidding process used to allocate stimulus projects is designed to exclude foreign-owned suppliers.
As an example, the chamber says European companies that produce wind turbines have been prevented from bidding for a €3.6 billion wind project financed by the stimulus programme.
Mr Abou did not rule out some form of European retaliation. "This principle of non-discrimination has to be respected," he said.
"If not, there is this clear fear that some European investment will be diverted from China and go elsewhere where the climate is more favourable for European investment."
EU options
Despite the prospect of the wind farm example being replicated in other areas, the EU is partially constricted by the fact that China is not a signatory to the World Trade Organisation's agreement on public procurement.
However, Europe does have a number of options open to it, says Fredrik Erixon, director of the European Centre for International Political Economy, a Brussels-based think-tank.
European products frequently offer better value for money he told EUobserver, adding that China might be persuaded to sign up to the WTO's agreement on public procurement in exchange for something in return.
"The problem in Europe [is that] they believe that they can demand things from China and that China is going to deliver without having the right to ask for something in return," he said.
China is not the only country seeking to keep stimulus funds within its borders.
Earlier this year, both China and the EU were critical of United States initial intentions to attach a Buy American clause to projects funded under the country's $787 billion (€565bn) stimulus programme.
The US eventually adjusted the clause - that would have negatively affected foreign steel producers - to comply with its WTO obligations.
The annual report by the European Union Chamber of Commerce in China draws on the responses of more than 300 European companies active in China.
"Our members welcome the stimulus package and the Chinese government's efforts to sustain growth. But they clearly feel that not enough has been done to unleash the potential of China's economy," said Joerg Wuttke, president of the European Chamber.
"They identify the promotion of more free competition and the breaking down of existing monopolies as the key actions needed to drive growth, and continue to caution against protectionist reactions that would hamper China's development," he added.
The findings of the survey show that very few European businesses with investments in China have escaped the current downturn unscathed.
However loses for European businesses in China have generally been considerably smaller than loses in domestic markets.
The economies of most EU member states look set to record an average contraction this year while China is headed for positive growth of roughly seven percent according to the latest World Bank forecast.
As a result, less than one-third of the survey's respondents said they plan to scale back or postpone their investments in China.
"This year's survey re-confirms that China is an important market for European businesses today and will continue to be in a world that is increasingly intertwined," said Charles-Edouard Bouée of Roland Berger Strategy Consultants, co-producers of the survey.
"So it is critical to understand this market's development and get prepared to maximise the opportunities ahead," he added.
Key findings
Of the companies questioned, 71 percent said the Chinese economy has proven more resilient than Europe or other traditionally strong markets where members of the European Chamber are based.
Added to this, roughly 37 percent of the respondents reported that China has become a more important market for them, while only three percent said China has become less important to their overall strategy.
However 78 percent of the respondents do not believe that China can drive the world to recovery in the short term, feeling instead that the Asian giant will be an important driver of global growth in the long term.
An important finding of the survey is that 50 percent of respondents feel the promotion of more free competition and the breaking down of existing monopolies will be vital to drive growth in the future.
Chinese officials say the mass installment of the internet filter is necessary to stop children gaining access to pornographic websites, while critics counter that it would enable the country's Communist Party to spy on internet users and block access to politically sensitive websites.
"The aim of this internet filter, contrary to what Chinese authorities contend, is clearly to censor the internet and limit freedom of expression," the commission's spokesman for information society and media, Martin Selmayr, told EUobserver.
Last month, China's ministry of industry and information technology announced that all personal computers sold in China from 1 July onwards must be installed with the Green Dam internet-filtering software.
"China's insistence that the Green Dam filter be installed in new computers proves once again that censorship takes place in this country," said Mr Selmayr.
"China cannot compete with other powers of the world only at the economic level without paying attention to freedom of expression," he added.
The announcement will add to pressure on the Chinese government to reverse its decision, with US trade representative Ron Kirk and commerce secretary Gary Locke lodging a formal complaint with their Chinese counterparts on Wednesday.
Mr Kirk said US companies had been given very little time to comply with the request for all computers sold to China to be pre-installed with the Green Dam software and suggested the US might file a complaint with the World Trade Organisation.
US companies have also expressed their unwillingness to be complicit in any form of political censorship.
Iranian tensions intensify debate
The issue of internet censorship has been propelled further into the foreground this week following the extensive use of the internet by Iranian citizens as a means to protest against last Sunday's presidential elections that many claim were fraudulent.
Opposition groups have used the micro-blogging site Twitter and social networking sites such as Facebook to organise protests and share information.
Such homegrown protest would be more difficult to organise in countries such as China where the internet comes in for greater censorship.
As Iranian authorities step up efforts to stifle use of certain websites however, the country's citizens are increasingly turning to counter-censorship software designed by Chinese computer engineers living in America to access the restricted sites.
Access to the world's leading search engine, Google, was temporarily blocked in China on Wednesday evening, a further indication of the Chinese government's growing crackdown.
The country's official news agency, Xinhua, published an article accusing Google of displaying links to "pornographic" websites among its search results.
Speaking about the Green Dam software on Thursday, Mr Selmayr said: "We urge China to postpone the implementation of this mandate and request that a meeting is organised at technical level to better understand what is at stake."
Environment commissioner Stavros Dimas said the joint project to have a CCS-using coal plant up and running in China by 2020 could act as a template for future agreements between developed and developing countries.
"This important co-operation between the EU and China on CCS can act as a model for co-operation under the post-2012 global climate change regime the world must agree in Copenhagen in December," he said.
In 2005 the EU and China signed a partnership agreement to co-operate on a range of climate change issues, with the two sides also signing a cooperation agreement on clean energy at the EU-China summit in Prague this May.
However the commission's new proposals, now headed to the European parliament and EU member states for approval, warn that the general role-out of CCS technology in China could be "significantly delayed" without assistance from developed countries.
One explanation for this is the greater cost of electricity production when using CCS, a process that involves capturing CO2 emissions after the coal combustion, transportation and the eventual burial of the gas underground or under the seabed.
To finance the demonstration coal plant, the commission proposes the use of a public-private partnership (PPP) - possibly in the form of an easy to set up investment fund known as a 'special purpose vehicle'.
"The initiative has to be designed to inform and garner support from China, EU and European Economic Area member states, international financial institutions and private companies to contribute to this activity," says the communication.
The commission itself has pledged several million euros for the initial stages of the plant's development, with the possibility of a further €50 million for the construction and operation phase of the project "provided there is continued political support from China".
The EU executive estimates the additional cost of constructing and operating the plant over a period of 25 years to be between €300 million and €550 million, assuming China introduces some form of carbon pricing instrument to help with the financing.
Carbon capture and geological storage
While the commission attempts to garner political and financial support for the demonstration plant, a majority of environmental NGOs consider CCS projects to be a dangerous waste of valuable funding.
Groups such as Greenpeace and Friends of the Earth argue the money should be channeled towards the development of renewable energy sources, rather than invested in a technology that will prolong fossil fuel use and may not be ready for a commercial roll out before 2030.
This, they argue, is too late if world temperatures are to rise by no more than two degrees above pre-industrial levels, a crucial cutoff point say scientists.
However supporters of CCS say it is a vital bridging technology that can help to keep emission levels down while the world is slowed weaned off fossils fuels.
In particular, the continued high growth levels forecast for China over the coming decade are expected to drive the construction of hundreds of new coal-fired electricity plants that provide 70 percent of the country's energy.
Already in 2007, the equivalent of one new 500MW coal-fired plant was being built at a rate of one every two and a half days estimates the International Energy Agency, with the country unlikely to make a rapid switch over to renewable energy.
"The Chinese restrictions on raw materials distort competition and increase global prices, making things even more difficult for our companies in this economic downturn," said European trade commissioner Catherine Ashton.
"I hope that we can find an amicable solution to this issue through the consultation process," she added.
The EU argues that China's export restrictions, which include the use of quotas, export duties and minimum export prices, result in Chinese companies gaining access to key raw materials below market prices.
The materials concerned include yellow phosphorous, bauxite, coke, fluorspar, magnesium, manganese, silicon metal, silicon carbide and zinc, some of which are only readily available in China.
Chinese companies producing and using certain chemicals and metals are the main beneficiaries of the export restrictions, says the EU, breaching both general WTO rules and also specific commitments in China's WTO accession protocol.
Other governments around the world including Argentina, India and Russia have also used exports tariffs as a way of keeping raw materials for domestic use.
Buy China provision
The EU is also currently investigating the provision of a Buy China' policy linked to the country's €420 billion stimulus programme.
Under the provision, stimulus funded projects must seek permission from Beijing before purchasing foreign goods or services.
"Only Chinese products and services may be used for government procurement, except when certain products or services are not available within the country or could not bought on reasonable commercial terms," reads the Chinese policy.
The EU successfully forced a limited backdown by the US earlier this year over a Buy America' clause related to its stimulus package that would have restricted foreign steel imports.
However, an EU official working on the China investigation said the commission was hesitant about putting the Chinese provision into "the same pot" as the Buy America' clause.
China has not signed up to the WTO's government procurement agreement, something that limits the EU's list of possible responses.
Mr Song said the policy was "an absurd political discrimination against a strategic partner," adding that many Chinese diplomats and ordinary citizens also found the embargo and the EU's failure to recognise China as a market economy "bewildering".
The issues continue to produce tension between the two sides, despite the fact that senior officials have stressed the need to focus on the bigger picture rather than getting bogged down on specific issues.
Mr Song himself said: "A logical and accurate definition of our relationship must be based on a macro, global and strategic point of view," during the discussion hosted by the European Policy Centre think-tank.
The EU's refusal to sell arms to China dates back to the suppression of protesters in Tiananmen Square in 1989, but some member states, in particular France, have suggested that the policy is outdated. A majority of states do not agree however.
Likewise, the EU is reluctant to give China market economy status before it automatically qualifies in 2014, as doing so would limit the amount of anti-dumping cases it can take against the large Asian country, one of its principle weapons in the various trade disputes that regularly arise.
Partnership and Co-operation Agreement
Mr Song's comments come three weeks after a EU-China summit in Prague and at a time when policy makers on both sides are discussing the future direction of bilateral relations.
Franz Jessen, head of the China unit in the European Commission directorate for external affairs, said relations between the EU and China had evolved considerably since the two sides signed a Trade and Co-operation Agreement (TCA) in 1985.
Greatly increased contact, from the top political level in EU-China summits, down to more technical discussions between commission head's of unit and its Chinese counterparts, meant there were far fewer "surprises" than before, said Mr Jessen.
"Ambassador Song Zhe has taken public diplomacy to new levels in the last couple of years," he said, with other commission officials confirming that China's mission to the EU in Brussels has been highly effective in getting its message across.
However, he also stressed the need for a new document formally outlining bilateral relations between the two sides, citing China's greatly expanded economic and political influence as the main reasons.
Discussions on a further reaching Partnership and Coo-peration Agreement (PCA) were opened in 2007, with Mr Jessen predicting the political component of this agreement to be completed "in the year to come".
Officials say the high tariffs prevent minerals such as zinc, tin, tungsten and silicon from leaving China, enabling manufacturers within the country to purchase the raw materials at bellow market prices, reports the Financial Times.
The European Commission is set to discuss the issue with member states on Friday (12 June) before taking up the matter with China later this month in a bid to avoid the need for a WTO action.
China's handling of its mineral resources has been a long-standing source of trade tension with the West.
Particular irritation stems from a 95 percent duty on yellow phosphorous an important component in numerous industrial chemicals that the EU says greatly exceeds levels agreed by China when it joined the WTO in 2001.
Likewise, the use of quotas to limit the amount of various minerals leaving China contravenes WTO rules say European diplomats, reports the Wall Street Journal.
They argue that the use of both export tariffs and quotas artificially lowers the input costs of raw materials for Chinese producers, placing European and US manufacturers at a distinct disadvantage.
The EU has already taken action in this area in April, placing temporary duties on Chinese aluminium foil and seamless steel pipes that they say benefited from artificially cheap raw materials.
In previous boom years, other governments around the world including Argentina, India and Russia have also used exports tariffs as a way of keeping raw materials for domestic use.
Ongoing trade tensions
This latest dispute adds to ongoing trade tensions between the EU and China, despite extensive political and diplomatic efforts in recent months to smooth over problems.
China and the EU held a summit in Prague last month and are likely to hold another in December. Likewise, various high-level trade talks have been held between the two sides this year.
Despite the overtures however, the EU has used an increasing array of anti-dumping measures against Chinese products and has failed to recognise China as a market economy a status that would limit the EU's capacity to use antidumping measures.
China complains that such measures amount to a form of protectionism.
"The meeting has great significance, but no substantial progress has been made so far," Li Gao told the Xinhua news agency.
"Developed countries have neither enough active responses to proposals from developing countries about emission-cutting targets for 2020, nor interest in providing funds and technologies to help developing countries adapt to climate change," Mr Li said.
China recently called on developed countries to cut emissions by at least 40 percent from 1990 levels by 2020, but received little positive response from the West.
Environmental NGOs tend to agree with Mr Li over the slow pace of the talks, with one Greenpeace poster outside the Bonn conference hall stating: "If the world was a bank, you would have already saved it."
The 27-member EU is leading the fight against climate change having agreed to cut greenhouse gas emissions by at least 20 per cent by 2020.
It has also agreed to go further if other developed countries sign up to ambitious targets as part of a global agreement to be negotiated in Copenhagen this December. However, it is reluctant to talk figures when it comes to getting poorer countries on board.
A bill currently working its way through US parliament appears less ambitious than the EU's, aiming to cut emission levels by 17 percent on 2005 levels. But there is guarantee that this moderate cut will be approved.
The current round of the UN climate talks in Bonn that run between the 1-12 June aims to prepare key negotiating texts for the Copenhagen meeting in December where leaders hope to secure a successor to the current Kyoto Protocol that expires in 2012.
Any agreement there however, is likely to hinge on a deal between the US and China, with high-level talks between the two sides taking place in Beijing this week in parallel to the Bonn discussions.
The bilateral meeting - due to end on Wednesday (10 June) - does not appear to have produced a major breakthrough with the World's top two emitters instead agreeing to strengthen scientific cooperation.
"In conducting strategic cooperation between China and the EU, the most important thing is to stick to the principles of mutual respect and not interfere in each other's internal affairs," Wen said.
The warning comes just weeks before Tibet's spiritual leader, the Dalai Lama, is due to visit several countries in Europe. The EU has long pushed for greater freedom of expression in the autonomous region of Tibet and has shown concern over human rights abuses carried out there in the past.
At the same time, Wen assured the EU that China does not harbour ambitions of becoming the dominant world power but instead supports greater multilateralism in global decision-making.
"China will never seek hegemony," he said, adding that multi-polarity and multilateralism constituted the will of the Chinese people.
The two sides exchanged views on a number of the world's trouble spots including Burma and Sri Lanka.
The EU was represented at the summit by Czech president Vaclav Klaus whose country holds the EU's rotating presidency, commission president Jose Manuel Barroso and EU foreign policy chief Javier Solana.
While many politicians in recent weeks have heralded the G20 as the correct forum for multilateral discussions to take place in, some analysts say a G2 of just China and the United States is where future important decisions are likely to be made.
Last year British historian Niall Ferguson coined the term 'Chimerica', a reference to the unique interdependence between the economies of the two states.
Speaking after the Prague summit however, Chinese premier Wen poured cold water on the idea that China and the United States would monopolise global decision-making in the future.
"I think that idea is baseless and wrong," he said.
Developing relationship
Following tense EU-Sino relations in 2008 including the cancellation of a summit scheduled to take place last December, this year has seen a flurry of dialogue and meetings between the two sides.
Their usefulness has been called into question however, with the European commissioner for external relations, Benita Ferrero-Waldner, saying in Brussels on Tuesday that there needed to be more concrete results. It now appears that China agrees.
"We must work to raise the efficiency and quality of the [EU-China] summit and also the high level dialogue on trade," Wen said on Wednesday, adding that the relationship had evolved successfully in the face of the economic crisis and must continue to do so.
As a sign that China takes the threat of protectionism seriously, Wen announced that he would shortly be sending a second procurement mission to Europe to increase his country's imports of EU goods.
In return China would like to see the EU relax its exports of high tech products, end an arms embargo and recognise the large Asian country as a "market economy", a status that would restrict EU anti-dumping measures against it.
Cooperation agreements on SMEs and science and technology were signed between the two sides at the summit.
Climate change
A third cooperation agreement was signed on clean energy.
Despite the rapid economic growth experienced in recent years, Wen said China was still a developing rather than a developed nation, referring to the "common but differentiated responsibilities" of the two sides regarding a future agreement on climate change.
Developing countries argue that the world's richer countries have brought about climate change and as a result should contribute financially to poorer nations to help them meet future CO2 emission targets.
So far the world's major economies have held their cards close to their chests in the lead up to a pivotal climate change meeting in Copenhagen in December but on Wednesday commission president Barroso said it was now time for all sides, including China, to move the process forward.
"Now what is needed is a clear engagement of all major economies to make a deal possible in Copenhagen. For that to happen, each of us must put his positions on the table," he said.
"China is one of our most important partners in meeting the challenges of today and tomorrow," Ms Ferrero-Waldner told policymakers and diplomats gathered in Brussels for a conference on EU-China relations organised by Friends of Europe and the Security and Defence Agenda, a pair of Brussels think-tanks.
While Wednesday's (20 May) summit is to touch on a number of topics, including climate change and human rights, it is clear that the huge volumes of trade between the two sides form the backbone of their relationship.
On Monday, the EU's statistics office, Eurostat, released new figures showing the marked increase in trade volumes between the two sides over the last nine years.
Exports from the EU's 27 member states to China rose to €78 billion in 2008 compared to €26 billion in 2000, while its imports from China rose from €75 billion to €248 over the same period.
Yet despite the substantially increased trade deficit, the economic crisis is causing some EU policy makers to see China as part of the solution to the current economic downturn.
"The increasing Chinese middle-class is an attractive market for EU goods," said Ms Ferrero-Waldner, citing figures contained in a recent report published by the European Ideas Network that predicts China and India will account for 50 percent of the world economy by 2060.
The commission's director-general for trade, David O'Sullivan, also re-iterated this idea, saying that while competition with China in the coming years would be great, it would not result in a "zero-sum game," where one side's gain implicitly meant the other side's loss.
At the summit on Wednesday, Chinese premier Wen Jiabao is likely to renew calls for the EU to relax constrictions on high-tech exports and also reduce anti-dumping measures, while the EU will repeat its concerns over market access.
"This has the potential to create future friction if it is not dealt with in the correct way," said Mr O'Sullivan on the issue of market access.
China's stimulus package
While the EU looks for greater access to China's growing domestic market, Chinese policy makers are beginning to question the very basis of their current economic model, based primary on the export of low-added-value goods.
Song Zhe, Chinese ambassador to the EU, said his country's exports were in great trouble, adding: "We all fear the economic recession might cause social strife."
However, he also said his country's economic fundamentals remained in good health and that the massive economic stimulus plan was starting to take effect.
At over €400 billion, China's stimulus plan as a percentage of its GDP dwarfs all others currently deployed around the world, amounting to 14 percent of 2008 GDP.
However, some analysts question whether this massive stimulus spending will bring about the necessary reforms to secure long-term growth levels once the current spending package comes to an end.
For European companies, the real question is to what extent they will be allowed to bid for projects under the Chinese stimulus plan.
Director for Asia in the commission's external affairs department, James Moran, says this is one area where the EU will be seeking greater assurances at Wednesday's summit.
China as a political actor
The interdependence between the EU and China means Europeans should not be perturbed by China's future economic growth, says Mr Moran.
More of a question is China's willingness to take on a greater role as a political actor around the world, considering the country's previous reluctance to get involved in global disputes.
Two areas where China holds particular sway have come to increasing public attention in recent weeks.
"We would like to say how sad we are over the ongoing casualties in Sri Lanka and the recent arrest of [human rights activist] Aung San Suu Kyi in Burma," said commissioner Ferrero-Waldner on Tuesday, in an apparent bid to prepare the ground for Wednesday's discussions.
On Thursday, Burma's Nobel Peace Prize winner and leader of the opposition, Aung San Suu Kyi, was charged with breaking the terms of her house arrest and now faces the prospect of five years in prison.
The country's military junta allege an American swam across the lake that borders Ms Kyi's bungalow and spent two nights inside.
This week Ms Kyi considered by many in Europe to be a political hero - will go on trial, with the surrounding publicity likely to push the issue of Burma and human rights in general further up the EU-China summit agenda.
While much of the meeting's discussion will focus on the standard issues of trade and investment and the global response to the economic crisis, the EU is likely to press Chinese premier Wen Jiabao to increase pressure on its neighbour with which it has extensive trade ties.
"As long as China holds its protective hand over Myanmar (Burma) nothing will be done," a European commission official for external relations told EUobserver.
The West has not forgotten the junta's 2007 crackdown on the widespread protests in the country that were led by Buddhist monks and is well aware that the region's powerhouse, China, remains the key to bringing pressure to bear on the military regime.
Representing the EU at Wednesday's summit will be Czech president Vaclav Klaus, commission president Jose Manuel Barroso and EU foreign policy chief Javier Solana.
The Czech Republic currently holds the rotating six-month presidency of the council of ministers that represents EU member state governments.
Adding to pressure for discussion on human rights, Czech MPs from the Greens party petitioned Mr Klaus last week to raise the issue of Ms Kyi's release at the summit, as well as the ongoing human rights abuses in Tibet.
"None of the current global challenges that the world faces can be dealt without cooperation between the EU and China. But at the same time the EU cannot keep silent to the violation of human rights in China," Greens MP Katerina Jacques told Czech media.
On Tibet however, both sides are likely to trot out their previous positions and then move on to other topics say commission officials.
As well as Burma, EU foreign ministers meeting on Monday will discuss a number of other countries where China holds significant influence, aware that Chinese support can make or break international sanctions and greatly shape global opinion.
China for instance has been instrumental in mollifying international criticism of civilian causalities in Sri Lanka say analysts, also supplying the Sri Lankan government with much of its firepower in its 25-year struggle against the Tamil Tigers in the north of the country that appears to be drawing to a close.
In return China has gained access to an important Sri Lankan port, perched on the edge of a major international shipping route.
Klaus complicates climate discussions
The EU-China summit also provides an opportunity for the two sides to discuss climate change in the lead up to the Copenhagen summit this December where environment ministers from across the globe will attempt to thrash out a successor to the current Kyoto protocol.
One of the more prickly issues is what contribution developing countries such as China will make towards limiting world CO2 emissions in the future and how much financial support they should receive from developed nations in exchange.
While Wednesday is too early to discuss potential EU financial contributions, the commission is keen to push the idea of increased clean energy use in China, a country where economic growth and energy consumption are set to increase in the coming years.
Indeed, an agreement on clean energy is one of the potential documents that may come out of Wednesday's summit but complicating discussions is the fact that Mr Klaus, who will chair the meeting, denies that global warming is a man-made phenomenon.
While commission spokeswoman Christiane Hohmann says there is little worry of Mr Klaus hijacking discussions, others are less sure.
"I don't agree with him on the issue [of climate change] but I think its fair to say that he has a much more informed view than most politicians at that level in the sense that he can talk about the details," says Fredrik Erixon, director of the European centre for international political economy, a Brussels-based think-tank.
"It will be an interesting situation when the issue of climate change comes up and probably some of the Chinese delegation will be very happy to see Vaclav Klaus chairing the discussion," he says.
Market economy status
A number of issues of keen interest to one side or the other are unlikely to get more than a passing reference on Wednesday.
These include the Chinese desire to achieve "market economy" status from the EU before 2014, after which they will automatically qualify.
The EU however is reluctant to give in, as recognizing China as a market economy would constrain the amount of anti-dumping cases it can take against the large Asian country.
"China is extremely annoyed at that, and they look at it as a real snub," says Mr Erixon.
Likewise any serious discussion on lifting a EU arms embargo on China or China's call for a new international reserve currency is unlikely.
From a European perspective, the meeting allowed policy makers and a number of business leaders to voice their chief concerns to a higher-than-usual level of Chinese political seniority.
The unprecedented Chinese delegation of 12 ministers was lead by vice-premier Wang Quishan, with EU trade commissioner Catherine Ashton heading up the Brussels side that contained a further eight commissioners and five directors general.
Fighting protectionism and the need for a quick completion of the Doha round of multi-lateral trade talks emerged as two central themes of the talks with Ms Ashton, saying trade and investment would lead the two countries out of the current crisis.
"The message that we are sending to our businesses and our citizens is that we are working together in these difficult times," she said.
Before talks got underway on Thursday, Mr Wang said both sides should oppose protectionism in "unequivocal terms," highlighting Chinese concern that the EU its largest trading partner could succumb to domestic pressures to restrict imports.
As a sign that China intended to keep its side of the bargain, Wang announced he would send a second delegation of Chinese companies to Europe in the coming months on a multi-billion-euro shopping spree.
In February, a team of Chinese companies toured European capitals, spending over €10 billion on European products.
Despite the calls from the two sides for a completion of the Doha round of trade talks, current differences between countries such as India and the United States remain a substantial barrier.
However, Mauro Petriccione, director for bilateral trade relations for the European commission says China is acting to build bridges between the warring sides in the hope of securing a deal.
Mr Petriccione described the EU-China trade talks as "much more substantive" than the first of their kind last year.
Market access
Of particular interest to European companies is the possibility of bidding for upcoming tenders under China's €435 billion stimulus package announced last year.
"We received assurances that the Chinese will keep their stimulus package fair, open and transparent. Will they be totally open? That's a different story," said Mr Petriccione.
But he added that so far the EU was not seeing the "backsliding" that had characterised the US stimulus package with its buy-American provisions.
"The recent US legislation on procurement that includes additional buy-American provisions is something we are not happy about," he said.
"We are equally not happy about the basic framework of public procurement in China, but we haven't seen that getting worse as a result of the crisis."
Both sides also announced their commitment to helping small and medium-sized enterprises, with the EU planning to open a centre to help European SMEs in China this September.
Intellectual property rights
The Chinese made no new arrangements in the area of intellectual property rights, instead re-iterating their commitment to step-up enforcement of rules introduced in recent years that forbid Chinese companies from copying patented European goods.
The current scale of the problem is considered large in a country where making a good copy has traditionally been considered an art in its own right.
Part of the problem is the complexity of the Chinese intellectual property rights legal framework and prosecution procedures, greatly slowing the pace and number of infringement proceedings being completed.
"Their expectation, in my view, is that we should get our act together, not just economically but also politically," he told a gathering at the Brussels Institute of Contemporary China Studies on Thursday (30 April).
"The feeling I have is that the Chinese think we don't have enough of an identity."
Partially fuelling this desire for greater unity is a wish for the EU to act as a counterweight to the United States.
China also shares the frustrations of many third countries when it comes to dealing with the myriad of diverging voices within the EU and its institutions.
Of these, the European parliament plays the most paradoxical role says Mr Sterckx - on the one hand frequently criticising China on issues such as human rights, while on the other providing an essential channel for the development of good contacts with the country.
"The European parliament is considered to be the least friendly institution on China," he says.
Yet the delegation is always well received in China and over the years has achieved a frankness of discussion with Chinese deputies and officials that is the envy of European diplomats and European commission officials.
"Our discussions both ways are a kind of thermometer to know what is going on. I see that the commission for instance are always very interested to be there when we meet to see how the atmosphere is, what they tell, how they react to our questions."
Exploiting the EU's differences?
While China at times may find the diversity of opinions within the EU difficult to deal with, it is also happy to exploit those differences say certain analysts.
A report produced by the European Council on Foreign Relation, a pan-European think-tank, last month argues that China is using these differences to secure better outcomes a the negotiating table.
In particular, the report points to the EU's failure to put united demands to China at the recent G20 meeting in London and the willingness of EU leaders to exploit the sometimes tense relations between their counterparts and Beijing.
"China treats its relationship with the EU as a game of chess, with 27 opponents crowding the other side of the board and squabbling about which piece to move," say the report's authors.
But Mr Sterckx feels that there is nothing unique about this to China.
Many countries such as the US, India and Congo also use the different positions within the EU to achieve their desired outcomes he says, that is the European weakness.
"The Chinese know very well how to play this but they are good diplomats, they are very skilful at doing this but that's the job of a diplomat."
"This is an issue that we have been discussing with the Chinese for quite some time," commission spokesman Lutz Gullner told EUobserver.
"We have received the law. We are now analysing it and we are looking at all aspects, including its World Trade Organisation compatibility," he added.
The law, which was passed last Friday, would see the China Post, a state monopoly operator, as the only company delivering letters within China when its comes into operation on 1 October, cutting out international companies such as TNT or FedEx.
The EU Chamber of Commerce in Beijing has described the measure as protectionist.
The law's broad definition of "letters" to include most printed documents and also material on CDs and DVDs means that international companies will be restricted to delivering "packages" and international letters in China.
High-level trade talks
The fact that the EU wishes to tread carefully on the issue could be linked to high-level trade talks that are scheduled to take place in Brussels next week from 7-8 May.
Chinese vice-premier Wang Qishan will bring a group of ministers to Brussels to meet with trade commissioner Catherine Ashton and ten other commissioners, highlighting the importance both sides place on a successful outcome of the talks.
On the agenda are trade and investment issues as well as ways to promote sustainable development and a low-carbon economy.
Likewise, support measures for small and medium-sized enterprises and the need to boost consumer protection and innovation are also up for discussion.
The EU is currently China's largest export market, while China is the EU's second most important export market after the United States.
However, significant trade imbalances exist between the two regions, something the Europeans will be keen to address in next week's talks.
In 2007 the EU exported €71.6 billion worth of goods to China while in the same year it imported goods valued at €230.8 billion from China.
Also next month, an EU-China summit is to take place as the two sides continue to mend fences following the cancellation of a previous summit scheduled for December of last year.
China decided to cancel the summit just days before it was scheduled to take place, following announcements by French President Nicholas Sarkozy that he intended to meet the Dalai Lama, Tibet's spiritual leader, in Poland.
France held the EU's rotating six-month presidency at the time.
China's vice-minister for finance, Li Yong, and the EIB's vice-president, Carlos Costa, signed the agreement on 14 April.
The funds will predominantly be used for the re-establishment of over 100,000 hectares of forest that were destroyed by landslides that were triggered by the earthquake, measuring 7.9 on the Richter scale.
The EuropeanCommission will also take part in the plans, as will other multilateral institutions including the World Bank and the Asian Development Bank.
The recently pledged funds will also be used to conduct essential building work on over 500 reservoir dams that help to provide irrigation and drinking water to the area.
The earthquake killed over 69,000 people and damaged vital infrastructure less than three months before China was scheduled to host the 2008 Olympic games.
"This operation is a good example of international co-operation and co-ordination in the implementation of a major reconstruction programme," the EIB said in a statement.
The EIB, the EU's long-term financing institution promoting European objectives, also operates in 130 countries outside the EU as part of its co-operation policy with third countries.
"The support for the reforestation component of the investment programme is in line with EU's policy to mitigate climate change, while the reservoir repair component will contribute to promote natural resources management," said the EIB.
As well as damaging many man-made dams and reservoirs, the earthquake and its aftershocks caused over 30 new lakes to form in the region as a result of mudslides blocking rivers.
These in turn have exacerbated problems, causing secondary flooding and forcing many towns to be evacuated.
Last year Chinese authorities pledged to spend 1,000 billion Yuan (€113bn) over the next three years to rebuild areas affected by the earthquake and were praised for allowing international relief efforts to enter the country.
China became the largest car producer in 2008, with a world market share of 17.2 percent, outranking Germany with its 14.7 percent and the US (14.6%), the German association of car manufacturers VDMA revealed on Monday.
A look at the profit shares also highlights the troubles in Western car industries compared to the Asian one: German companies had an eight percent increase, the US a loss of 10 percent, while Chinese car makers managed a 30 percent increase.
The sales slump in the US and Europe is still a distant prospect on the Chinese market, where in March, new cars sales reached a record of 1.11 million, according to statistics released by the China association of automobile manufacturers.
Luxury cars, which pile up in ports and in European car parks, are increasingly attractive for Chinese customers with big pockets.
Recent car sales in China have also been boosted by various incentives introduced as part of government stimulus plans, especially in the low-consuming segment, where taxes have been scrapped for cars with engines of 1.6 litres or less. The government is also subsidising the purchase of alternative energy vehicles.
The lack of a level playing field between European and Chinese car manufacturers will lead to even smaller profits for the EU's struggling industry, says John Fox from the European Council on Foreign Relations, a London-based think tank.
"European companies all had very big shares of the Chinese market previously, when they had the technological advantage, but the terms of the joint ventures forces the companies to hand over the technologies. Now the Chinese can produce the same technology without needing the European partners," Mr Fox told EUobserver.
The only lesson to be drawn, according to the British expert, author of a recent study on EU-China relations, would be for Europe not to make the same mistake with other technologies where their companies still have the competitive advantage.
"The problem is that Europe doesn't see China as a competitor, it still sees it very much as a developing country," he said.
Japanese car companies, for instance, have all been signing up to a government-negotiated code of practice and were producing in China only car body parts, but not the high-tech engines such as for the Toyota Prius, Japan's cutting-edge eco-car.
European companies, however, were still very much competing with each other for a market share in China at any price although the profit outlook was increasingly shrinking, Mr Fox explained.
The EU's rapid alert system,"RAPEX" designed to share information between member states and the commission on dangerous products shows that 59 percent of notifications in 2008 were for products of Chinese origin, up from 52 percent in 2007.
EU consumer affairs commissioner Meglena Kuneva said on Monday (20 April) that the Chinese authorities were taking a more active approach to tackle the concerns, having managed to investigate roughly half of the non-food products identified as dangerous, but said that this was not enough.
"It is not satisfactory but it is better than before," she said, pointing out that in 2007 the percentage of dangerous products inspected by Chinese authorities was close to zero.
"No, I am not satisfied and I am working with the Chinese authorities and also with the toys industry," she added. "They [China] are doing their best to have well-staffed market authorities."
The total number of non-food products notified as being dangerous through RAPEX which is also used by Iceland, Liechtenstein and Norway - in 2008 reached 1,866, a 16 percent increase on 2007.
Toys make up the single largest component of this figure, with 32 percent of the total, followed by electrical appliances on 11 percent, motor vehicles on 10 percent and "clothing, textile and fashion" items on 9 percent.
The countries making the most notifications were Germany with 13 percent, Spain with 11 percent and Slovakia with 9 percent. Romania and Luxembourg on the other hand made no notifications in 2008.
EU products also at fault
An array of melted kettles, dangerous teddy-bears and children's bicycles were on display for journalists at the launch of the annual RAPEX report on Monday as examples of the apparently innocuous items that injure EU citizens every year.
Despite the high level of attention placed on products of Chinese origin, 20 percent of the non-food products identified as dangerous through RAPEX in 2008 actually originated from within the EU itself.
Ms Kuneva used the example of the Dutch electrical producer Philips who in 2008 recalled 7.2 million coffee machines from the market due to company concerns they could burn users.
"We should praise Philips because they took very responsible behaviour in recalling from the market these dangerous products," said Ms Kuneva, adding that self-assessment and rapid action by companies was the ideal solution.
The duties were imposed in November last year on a temporary basis following complaints from European candle producers. They say they are suffering from unfair competition and that the Chinese are making headway in European markets by selling candles below the cost of their raw materials.
Following a 13-month investigation, a committee of experts from the 27 EU countries has now agreed to make the tax permanent for five years.
One in three candles (34%) sold in Europe are produced in China and will be subject to the extra tax from 15 May when the anti-dumping scheme enters into force. Member state ministers are to formally endorse the scheme at a meeting later this month.
Brussels' decision to tax Chinese candles follows a series of recent anti-dumping decisions against China and risks fuelling trade tensions, business organisations warned on Tuesday.
"I only hope that, in light of the G20 commitment last week to avoid protectionist measures, this example is an aberration and that further calls to impose unwarranted anti-dumping measures go unanswered," said Jan Eggert, Secretary General of the Europe's Foreign Trade Association, (FTA) representing European commerce.
The British Retail Consortium (BRC) warned that the European Union already risks reneging on its free trade commitments.
"A vote for imposing duties on candles is a vote for protectionism. It will benefit a handful of European producers, at the expense of hard-pressed retailers and retailers," said BRC's Brussels Director Alisdair Gray.
"The EU has previously imposed import duties on other products including low energy light bulbs, shoes and screws. This has pushed up the shop prices of these goods and so penalised the shoppers that the EU should be protecting," the BRC said and called for all these duties to be removed immediately and for EU Trade Commissioner Catherine Ashton to take a firmer stand.
When asked in Prague whether the rumoured date was accurate, Czech foreign minister Karel Schwarzenberg said: "Yes, there hasn't been any change," reports the French Press Agency.
The date for the EU-China summit was one of the topics discussed by EU foreign ministers who met in the Czech Republic last Friday (27 March).
China's mission to the EU told EUobserver that they were busily making preparations for the summit but were unable to confirm the date at present.
However, they did confirm that Chinese vice-premier Wang Qishan will visit Brussels in late April or early May as part of high-level bilateral trade co-operation and investment talks.
EU commissioner for external relations Benita Ferrero-Waldner is currently in China to discuss the preparations for the G20 meeting in London on 2 April, climate change and also the upcoming EU-China Summit.
The commission says discussions will also look at the current state of play of negotiations on a Partnership and Co-operation Agreement. The negotiations started in 2007.
A previous EU-China summit scheduled to take place in Brussels last December was cancelled by the Chinese side following French President Nicholas Sarkozy's announcement of his intention to meet the Tibetan spiritual leader, the Dalai Lama, in Poland.
The French government held the EU's rotating six-month presidency at the time and Mr Sarkozy's move was seen as antagonistic by a Chinese administration that is sensitive over the Tibetan question.
Since then, relations have improved following a fence-mending tour by Chinese premier Wen Jiabao in January and a trade delegation of about 200 Chinese entrepreneurs led by commerce minister Chen Deming in February.
However, the Chinese administration was incensed earlier this month when the European Parliament adopted a declaration marking the fiftieth anniversary of an uprising in Tibet against Chinese rule that saw the Dalai Lama flee to India, where he continues to reside.
The Dalai Lama was recently refused a travel visa to visit South Africa where he was due to attend a conference on football's role in promoting world peace.
Despite the South African government's statement that the move was intended to prevent the Tibetan leader from distracting the country's 2010 football world cup preparations, in reality the decision reflects the increasing unwillingness around the globe to upset China.
China has become a major investor in Africa as it seeks to secure improved access to raw materials.
Mr Almunia said he didn't envisage: "major structural changes in the role the dollar plays today as a major reserve currency," following Monday's call by China's central bank governor, Zhou Xiaochuan, to create a new reserve currency "that is disconnected from individual currencies."
"Everybody agrees also that the [main] present world reserve currency, the dollar, is there and will continue to be there for a long period of time," said Mr Almunia after a meeting of commissioners in Strasbourg reports the Associated Press.
China's call for a new reserve currency reflects fears that its huge stockpile of dollar denominated US treasury notes, amounting to roughly half of its $2 trillion (€1.49trn) in foreign reserves, is in danger of being devalued.
Last week the US Federal Reserve announced the surprise decision to expand its balance sheet and buy up to $300 billion (€223bn) worth of longer-term US treasury securities.
Mr Zhou made the appeal for a reserve currency that "is able to remain stable in the long run" in an essay published on the People's Bank of China's website and included an English translation to ensure an international readership.
In the essay, Mr Zhou proposes that an accounting unit used by the International Monetary Fund known as special drawing rights (SDRs) and which is currently based on a basket of four currencies - the US dollar, the yen, sterling and the euro - should become the new reserve currency.
The proposal suggests expanding this basket of currencies to include all those from the world's major economies and a system whereby governments could store their reserve SDRs with the IMF. In time SDRs would replace the dollar as the world's reserve currency says Mr Zhou.
The British economist John Maynard Keynes, whose theory of counter cyclical spending to lift economies out of recession is currently in vogue, proposed a similar scheme in the 1940s.
The move highlights China's increased willingness to voice its economic opinions on the world stage and comes just ahead of a G20 meeting of the leaders of industrialised and developing nations on 2 April in London where reforming the IMF is firmly on the agenda.
Russia has also mooted the idea of a new reserve currency based on SDRs and has suggested the upcoming G20 meeting is the place to get the ball rolling.
On Tuesday Mr Almunia said that "everybody agrees" over the need to reform the IMF and give developing nations such as China a greater say in how it is run.
The bank's China Quarterly Update is upbeat about the Chinese stimulus programme's capacity to boost domestic demand but the fall in trade levels has nevertheless caused the international financial institution to downgrade the country's growth forecast.
The reviewed growth figure for 2009 is now 6.5 percent, down from the previous estimate of 7.5 percent. Last week the Chinese administration said it was still targeting 8 percent growth in 2009 in a bid to maintain solid job creation and prevent social unrest by the unemployed.
"The continued global crisis is bound to contain China's growth in 2009 and 2010, especially via weaker exports and market-based investment," says the report.
China has been hit by falling demand in the European Union, the world region that purchases more Chinese exports than any other. As a result production has plummeted in many Chinese factories, forcing millions of workers to return to rural areas in search of farm work.
However, the World Bank's report says the country's economic fundamentals are still strong, enabling policy makers to take a longer-term approach to market reform.
"Looking ahead, less focus on targeting short term GDP growth would allow for more emphasis on the rebalancing and reform agenda," it says.
Stimulus spending
Last November, the Chinese administration announced a substantial stimulus programme worth $586 billion (€450 billion) to the delight of Asian markets. The money will primarily be targeted towards housing, infrastructure and post-earthquake development over two years, but with some spending on technological development and environmental areas.
The EU's €200 billion stimulus programme has been criticised recently as being insufficient to lift Europe out of recession, while the commission and member state governments argue that they wish to see the results of the first wave of spending before announcing more.
Speaking last week at the annual parliamentary session, Chinese premier Wen Jiabao showed no such constraint, saying his government was ready to introduce new stimulus measures "at any time." He stopped short however of announcing a second stimulus package that some analysts had predicted.
"We have prepared contingency plans to handle greater difficulties," he said. "We have prepared enough ammunition and we can launch new economic stimulus policies at any time."
Interdependence
It was also during this parliamentary session that Mr Jiabao called on the United States to guarantee the safety of Chinese investments, in particular US treasury bills and other official notes in which China has invested almost half of its $2 trillion (€1.53tn) in foreign currency reserves.
"We have made a huge amount of loans to the United States. Of course, we are concerned about the safety of our assets. To be honest, I'm a little bit worried," Mr Jiabao said.
While the US continues to look to China to buy its debt and help fund its $787 billion (€600 billion) stimulus programme, the EU is also acutely aware that China will play a vital role in ending the current economic downturn.
"They are a large part of world consumption as well as production, so a growing economy in China is of very high importance," the head of the European parliament's delegation to China, MEP Dirk Sterckx, told EUobserver in a recent interview.
However Mr Sterckx said some of the structural issues facing the Chinese administration are significantly different to those that need to be tackled in the EU and US.
The Chinese government is keen to encourage its citizens to save less and spend more in order to boost the economy whereas Europe must tackle issues of flexibility and competitiveness he says.
"We each have our problems. The Chinese have their part to do and we have our part to do, and I wouldn't be surprised if they did their part before us," he added.