EU and Chinese leaders meet to discuss trade

Chinese and European Union leaders launched a high-level dialogue today on tensions over China’s swelling trade surplus with Europe and amid disagreements over how to tackle climate change.

“Our meeting today marks a significant step towards the strengthening of the strategic partnership between China and Europe,” European Commission president Jose Manuel Barroso told Premier Wen Jiabao as they met in the Great Hall of the People, the seat of China’s legislature.

The EU is stepping up pressure on Beijing for action over its trade surplus, market barriers and currency controls – areas where Washington long took the lead.

China’s trade surplus with the EU surged 23% to £17bn (€21bn) in the first quarter of the year, surpassing the gap with the United States, according to government data.

Barroso gave no details but said the sides agreed to work on narrowing that gap.

“But there are major imbalances and we both agree on the necessity to rebalance our bilateral trade,” he said.

European businesses say China keeps its currency undervalued, giving their Chinese competitors an unfair price advantage. Europe also echoes US complaints about Chinese product piracy, saying 80% of counterfeit goods seized at its ports originated in China.

The EU-China meeting mirrors similar dialogue being carried on by Beijing and Washington.

Barroso’s delegation includes nine EU commissioners – one-third of the EU executive – including trade chief Peter Mandelson.

Barroso said that Chinese and EU officials had discussed co-operation on fighting climate change and other environmental issues.

“As far as climate change is concerned, we had a very deep exchange of views, particularly on the vital international negotiations,” he said.

Barroso said China had repeated its long-established position that it was willing to discuss emission reductions as part of a global agreement on climate change.

“We welcome indications of Chinese readiness to include its domestic emission reduction policies in an international agreement, provided that developed countries commit to midterm reduction targets for 2020.”

He said Beijing also repeated calls that “an effective financial mechanism is put in place to promote technology transfer”.