China and Europe make up after averting trade war

Thu Oct 24, 2013 3:58pm EDT
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By Robin Emmott

BRUSSELS (Reuters) - China and the European Union sought to mend ties on Thursday after narrowly avoiding a trade war this year, but the EU's trade chief told Beijing to stop handing out state subsidies that Brussels says are illegal.

Europe is China's most important trading partner and for the EU, China is second only to the United States, but the bilateral relationship has been bedevilled by a series of damaging trade rows ranging from steel and wine to solar panels.

"China is ready to work with the European Union to set out a comprehensive plan for the future of EU-China relations," China's Vice-Premier Ma Kai told a news conference alongside the EU's two most senior economics and trade officials.

"China is ready to ensure that our cooperation can be elevated to a higher level," Ma said after talks with the EU's economics chief Olli Rehn and EU Trade Commissioner Karel De Gucht in Brussels.

Saying he had come to send a "clear and positive signal" Ma, a one-time state planner promoted in China's new government this year, welcomed the start of negotiations with the European Union on November 21 at a summit in Beijing that will seek to remove restrictions on EU investment in China.

The European Union wants greater access to China in industries including banking and is eager for Beijing to drop requirements that Europeans must work with a Chinese joint venture partner and hand over sensitive know-how.

EU officials say the so-called investment pact is a fundamental test of China's willingness to compromise and play by rules set down by the World Trade Organisation that ban subsidising of companies to undercut foreign competitors.

A successful EU-China investment agreement could pave the way for a wider free-trade accord in the future. But for now, there is friction as China seeks to produce the kind of sophisticated products that compete directly with Europe.   Continued...

China's State Councillor Ma Kai delivers a speech during the opening of the 68th International Air Transport Association (IATA) annual general meeting in Beijing June 11, 2012. REUTERS/Jason Lee