PETER MANDELSON will appeal directly to China’s business and political leaders this week to remove a series of “unfair” barriers to European companies, as he tries to bring about a change in trade relations between the European Union and the People’s Republic.

The growth in counterfeiting and technology theft, hidden state subsidies and China’s reluctance to open up government procurement are putting relations and investment at risk, the European Trade Commissioner will tell his Chinese counterparts.

He is expected to demand a crackdown on the trade in fake European goods in Beijing as a sign of China’s willingness to take seriously its responsibilities as a new, fully fledged member of the World Trade Organisation (WTO).

Mr Mandelson is scheduled to arrive in the Chinese capital today with a 30-strong delegation just as the EU, the United States and Canada have secured the first WTO probe into alleged restrictive practices over high tariffs on car parts. It is also only weeks since he imposed anti-dumping duties on Chinese shoes, and he has published a strongly worded paper declaring that “the absence of conditions of fair market competition and inadequate legal protection pose serious problems”.

The paper noted that China’s lack of regard for the environment, social standards, currency valuation and natural resources could distort trade. It concluded: “A range of obstacles to market access and skewed conditions of competition need urgent attention.”

Despite raising the heat on China before the visit, Mr Mandelson wants his message in a week of talks on a new EU-China trade pact to be that a damaging descent into protectionism and trade wars can be avoided. In return for continued EU market openness, Mr Mandelson will be seeking immediate action on a range of sticking points as a sign that China is prepared to forge a reciprocal trading partnership.

He is expected to call for a fresh crackdown on product piracy and intellectual property theft, with the introduction of criminal penalties, including imprisonment, to replace the civil system of fines that has been described as derisory by one commission official.

Fake goods, copies of items such as Dolce & Gabbana jeans and Rolex watches, are widely available in Beijing and Mr Mandelson will urge strong measures against the most visible outlets. Although this will do nothing to stop production, he believes that it will send a message that China is serious about ending its toleration of forged goods. In talks tomorrow with Bo Xilai, the Commerce Minister, Mr Mandelson will also call for an end to preferential state treatment of strategic industries.

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