After talks over the European Union's ballooning trade deficit with China, Trade Commissioner Peter Mandelson said Chinese Commerce Minister Bo Xilai had shown sensitivity to concerns about soaring Chinese exports such as steel products.
"I thought the discussion we had was for the first time as frank, concentrated and prolonged a discussion as was necessary for such a serious topic as the growing trade deficit between the EU and China," Mandelson told reporters.
"I felt I heard for first time at such a political level a clear recognition by China, in the words of Bo Xilai, that 'something must be done'."
No solutions were reached at the meeting but the two men agreed to work to present joint proposals on the issue to an EU-China summit in November, he said.
The EU racked up a trade deficit of 128 billion euros with China in 2006 and the shortfall could hit 170 billion euros this year, according to European Commission estimates.
Mandelson is under pressure from some EU capitals to take a tougher line with Beijing.
"As I said to Bo Xilai, if European public opinion is not satisfied that the Chinese authorities are making all the necessary changes ... then impatience and anger is going to rise and pressure is going to come on us here in the Commission to start to limit the access that Chinese producers have to our market," Mandelson said.
TROJAN HORSE
China is producing increasingly sophisticated goods that compete with EU manufacturers. Mandelson is under pressure to justify his softer approach to Beijing than the United States, which has launched more World Trade Organisation litigation.
French President Nicolas Sarkozy has said he will not allow the EU to be a "Trojan horse" for the threats of globalisation.
Mandelson reaffirmed his view that China is doing too little to tackle intellectual property theft and allow foreign investment in the giant Asian economy.
Intellectual property theft showed signs of growing out of control and unpunished piracy on a grand scale would also harm legitimate Chinese businesses as Beijing's economy develops, he said.
On steel, an area of concern for many European governments, China and the EU will meet in June or July to consider action beyond measures recently taken by China to slow exports, the EU trade chief said.
Bo was due to speak to reporters later on Tuesday.
Mandelson said China was making "significant progress" towards gaining the EU's coveted Market Economy Status which would make it easier for Chinese exporters to fend off anti-dumping charges in the bloc.
"We committed ourselves to continue to work constructively with China on this issue," the commissioner said.
In Beijing, Chinese Foreign Ministry spokesman Qin Gang said: "We hope the EU will able to objectively appreciate the massive achievements in developing a market economy China has made since reform and opening-up began." (Reuters)
