China and the European Union (EU) appear to be moving towards China being granted market economy status, said visiting EU Trade Commissioner Peter Mandelson.

"In the respect of the criteria (of market economy status), I believe China is heading in the right direction. I believe it should be possible to recall some progress in the autumn when this matter is reviewed," Mandelson told a press conference yesterday in Beijing.

The EU criteria on full market economy status includes markers on the level of state intervention, bankruptcy legislation and accountancy law.

And the union insists that China has not yet met all the criteria.

The lack of market economy status has become the Achilles heel of Chinese exporters involved in anti-dumping investigations, because their production costs are not accepted.

Mandelson suggested that officials from the two sides meet as soon as possible, to move forward on the issue.

"China has been looking at relations with the EU in overall and strategic terms and it is in the interests of both sides to further promote economic relations," said Vice-Premier Wu Yi, who met Mandelson yesterday.

Mandelson said he considers China's resurgence "not as a threat, but as exciting and good for Europe," but he also called for China to further open its markets to European investors.

"The more the Chinese door swings open, the more European citizens will see our shared interests," he said.

During the commissioner's visit, Mandelson, Wu and other Chinese officials have also discussed a number of issues that have caused friction between the two economies.

As for the anti-dumping investigation over Chinese leather shoes, Mandelson said he would look at the evidence and re-consider whether to grant some Chinese companies market economy treatment.

He also said consultations between China and Europe over an auto tariff dispute had been concluded.

Together with the United States, the EU has filed World Trade Organization complaints against China, saying the nation's tariffs unfairly force carmakers to use Chinese-made parts in cars assembled in China.

Despite the frictions, China and the EU enjoy a healthy trading partnership, with trade totalling 210 billion euros (U$269 billion) last year.

(China Daily June 9, 2006)