China and the European Union signed an agreement on the creation of a Sino-European Union (EU) competition policy dialogue, showing the commitment of both sides to promote co-ordination in resolving international trade disputes.

"It (the agreement) is very promising, and it set up a framework for the following systematic co-operation between the two sides," European Commissioner Mario Monti said.

Competition policy is widely regarded as aiming to ensure wider consumer choice, technological innovation and effective price competition, contributing to both consumer welfare and the competitiveness of industries.

The primary objective of the dialogue is to establish a permanent mechanism of consultation and transparency between China and the EU in the area, and to enhance the EU's technical and capacity-building assistance to China in the area of competition policy, according to the competition policy dialogue agreement - China's first.

"The establishment of such a dialogue mechanism will benefit both sides and improve the transparency of markets," said Xue Rongjiu, president of Beijing-based World Trade Organization Research Association.

"Competition policy will be a crucial element of China's efforts to restructure its industries and make them more competitive given the size of the Chinese economy and the level of investment in China."

Zhou Shijian, a China-EU Research Centre adviser, said the dialogue will help the establishment of smooth and sustainable trade relations between China and the EU.
If China and the European bloc work well together, they can greatly contribute to global economic stability and prosperity, he said.

"The dialogue is of great significance for both to resolve their trade disputes through co-ordination rather than retaliatory means," said Zhou.

According to statistics, in each year of the 1990s, there were 232 anti-dumping cases on average. Last year, the number of cases climbed to 348.

As statistics show, the EU only trails the US in terms of utilizing anti-dumping measures. Analysts say the anti-dumping measures being adopted by the EU against China are not fair in terms of either policy or practice.

For example, some Western countries and the EU have granted Russia a market economy status, to which China has no objection. But it is not the same status that China enjoys, despite it being a logical and fair step, said Zhou.

After more than 20 years of reform and opening-up, a price market mechanism has more or less taken shape in China. And its World Trade Organization entry demonstrates that the country is determined to join the rest of the world and take an active part in the global economy.

The EU has granted nearly 20 Chinese enterprises with "market economy treatment" since 1999, according to Zhou, saying it is an "encouraging" step in Sino-EU trade and economic co-operation.

Franz Jessen, minister counsellor at the European Commission Delegation in China, said: "The process of consolidation of a competition policy in China is a very significant development for the international dimension of competition policy.

"As China advances in the process of economic reform, it is essential that authorities create a level playing field in order to allow all companies, public and private, Chinese and foreign, to enjoy the same opportunities in the market. This will be primarily in the interests of Chinese consumers and SMEs (small and middle-sized enterprises)."

China has adopted regulations on mergers and acquisitions and on price control including the prohibition of abusive behaviour by dominant companies.

The Price Law, aiming to create a fair and competitive environment for businesses to operate, took effect at the start of November.

Experts familiar with China's top legislative body's legislation plan said the 10th National People's Congress will scrutinize about 60 draft bills in the following five years.

Among them there may be new laws covering areas such as bankruptcy, dumping, monopolies, subsidies, telecommunications, State-asset management and taxation.
China and the EU have become each other's third-largest trading partners. The bloc is also the fourth-largest foreign direct investment source and the largest technology import source for China.

Both sides have expressed their goal "to become each other's largest trade and investment partner."

European Commission President Romano Prodi said during his visit to China in October that there are no "major differences" between the two sides on whether to grant China "complete market economy status," adding that he is very "confident" about the future prospects.

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