China accuses EU of political games on trade

"If you go through the technical criteria, you will realise that some of the EU members are [themselves] not meeting the criteria, and China is not applying for EU membership," she quipped. "And that's why we say it's not technical, it's political."

"Looking back at the history of our relationship, the EU places a lot of criteria on China and many of them are resolved and new concerns are placed and we work on it and it's resolved. That's why I joke that EU concerns are like a moving film that changes all the time, and the Chinese concern is like a still painting that is hanging on the wall."

China asked the EU in 2003 to formally classify it as an open market economy, but there is little prospect of recognition before 2016, when the Union will be forced to make the move under a World Trade Organisation agreement.

The status quo makes it easier for EU companies to restrict Chinese imports by invoking anti-dumping laws, measures which impose tariffs on goods on grounds that the Chinese state is giving its producers unfair support.

Fu also said the EU should remove its arms embargo on China, a set of sanctions imposed in the wake of the 1989 Tiananmen square massacre.

"China is going to grow into one of the largest consumer markets in the world," she said. "If the EU countries could remove the restrictions on exports of high technologies that would very much help boost EU exports to China."

Her remarks on market economy status flatly contradicted David O'Sullivan, a top official in the European External Action Service (EEAS).

"It is somehow considered as a sort of judgment on the nature of the country, it is in fact a rather specific and almost technical issue about how you calculate margins in anti-dumping cases," he said, sitting alongside Fu in Budapest.

"We have criteria by which we measure to which extent there are distortions in the economy which mean you cannot consider it as a normal market system for the purposes of anti-dumping."

He noted there is no chance that all 27 EU countries will agree to lift the arms ban in the foreseeable future. But he pointed to security issues rather than human rights abuses as the main reason.

"We have concerns about certain of the situations which can arise in the region," he said, alluding to China's long-standing tensions with Taiwan.

O'Sullivan's boss, EEAS chief Catherine Ashton, in a strategy paper in December suggested the EU should lift the arms ban, but her idea went down like a lead balloon with member states.

"The current arms embargo is a major impediment for developing stronger EU-China co-operation on foreign policy and security matters. The EU should assess its practical implication and design a way forward," the Ashton paper said.