EU officials to talk tough on trade in China

By William Schomberg

BRUSSELS (Reuters) - Top European Union officials will talk tough in Beijing next week about China's snowballing trade surplus and its reluctance to open its booming economy further to European business.

The EU has long taken a softer approach to China than the United States. Washington has sued Beijing more often at the World Trade Organization and protested more loudly about China's currency, which is widely seen as undervalued to help exporters.

But EU officials, alarmed at the surge in the value of the euro, now cite the yuan as their main currency concern and say that while China's trade surplus with the 27-nation bloc is billowing, EU exporters face barriers to the Chinese market.

In an unprecedented move, EU monetary officials, including the head of the European Central Bank, will urge China on Tuesday in Beijing to speed up strengthening the yuan's value, echoing French President Nicolas Sarkozy's call on Saturday.

On Wednesday, at an EU-China summit, European trade chief Peter Mandelson will warn Beijing it must make a "major change" on investment restrictions, red-tape barriers for EU companies, and counterfeiting, or risk tougher action by Brussels.

"We do not intend to turn away from dialogue and cooperation. What we will do is treat China as a normal trading partner in the future, especially by enforcing rules where necessary," Mandelson said in a statement on Friday.

From almost no trade 20 years ago, the EU recently overtook the United States as the biggest export market for China.

China joined the WTO in 2001 and was given time to adapt to its rules. But with its EU trade surplus heading for 170 billion euros ($252 billion) this year, according to EU estimates, a near 30 percent rise on 2006, European patience is wearing thin.