China breaking promises to EU firms, report says

In one example, EU companies seeking a wholesale licence to sell petrol in China must first own a refinery and get an import licence. But another law forbids foreign firms from owning a majority stake in Chinese refineries, while in practice, Chinese bureaucracy has never issued an import licence to a foreign company.

In another example, Chinese state purchases of IT gives nakedly preferential treatment to products developed by native researchers.

As a result EU firms invested just €5.3 billion in the vast country last year, amounting to less than 3 percent of EU foreign investments, the study noted.

The paper took China's leaders to task for failing to live up to commitments in the World Trade Organisation. The business lobby's chief, Jacques de Boisseson, also gently criticised the authoritarian country's top economic official, Premier Wen Jiabao, who in April said foreign firms can compete on a level playing field with Chinese ones.

"I do believe the words of Premier Wen when he says that foreign investment is welcome," Mr de Boisseson told Reuters. "[But China] would probably be satisfied with a lower level of foreign investment and a higher share for Chinese companies."

The plea for help - which, among other things, called for "a more coherent approach" to China diplomacy from EU member states, whose policies it dubbed "fragmented and uncoordinated to the detriment of European business" - comes during a high-level visit by EU foreign relations chief Catherine Ashton to China.

Ms Ashton is not responsible for trade but did on Wednesday discuss a wide-ranging EU-China strategic partnership with the country's most senior foreign affairs official, Dai Bingguo, and will on Thursday meet Mr Wen.

"China expects the EU to treat it as an equal," Mr Dai told Ms Ashton, according to the Xinhua state news agency.

Ms Ashton so far on her trip has also visited EU pavilions, such as the Bulgaria and Romania stands, at the Shanghai "Expo 2010" fair and toured an ethnic Miao village in the country's Guizhou province. "I have seen the beauty of Beijing and the splendor of Shanghai, and I have the great opportunity to see this part of China," she told Xinhua.

The EU foreign affairs chief declined to go to the re-launch of Middle East peace talks taking place in Washington on Thursday in order to complete her China itinerary, attracting criticism from some quarters.

"If the EU wants to play an international role compatible with its political and economic weight, it must clearly understand its priorities!" Portuguese centre-right MEP Mario David said in a statement on Wednesday.