Concerns about Chinese restrictions on foreign financial news providers escalated into a trade dispute yesterday when the European Union and the United States filed a joint formal complaint at the World Trade Organisation (WTO).

The row centres on Beijing's decision two years ago to require companies such as Reuters, Dow Jones and Bloomberg to distribute their information through a branch of Xinhua, the state news agency, rather than deal directly with their clients, such as banks.

It marks the latest sign of frustration in Brussels and Washington at China's reluctance to resolve disputes through informal talks and comes against a background of growing tension at the spiralling trade surplus and alleged barriers to market entry.

“Competitive and open financial services information markets are the lifeblood of a strong financial sector, but China's rules have tipped the balance against foreign companies,” Peter Mandelson, the European Trade Commissioner, said.

He has raised the issue in talks with senior members of the Chinese regime, including Wu Yi, the Vice- Premier, without success. Officials are understood to have argued that they reserve the right to monitor news transmitted to China, but the EU and US say that this case simply concerns market data such as stock prices.

The US is also pursuing cases over product piracy and alleged limits on imports of American-made books, CDs and DVDs. The WTO is understood to have ruled against Beijing for the first time in a joint EU/US/Canada case against China for improperly using tax policy to restrict imports of car parts. This judgment is due to be made public soon.

Susan Schwab, the US Trade Representative, added: “China's restrictive treatment of outside suppliers of financial information services places US and other foreign suppliers at a serious competitive disadvantage.

“We have raised this matter with China repeatedly, yet the problem has not been resolved. We hope the filing of our request for formal WTO consultations will lead to a swift resolution of this matter.”

China joined the WTO in 2001, a move that helped to trigger its huge growth in exports. However, it is being accused increasingly of failing to follow international trade rules. The final straw in the financial data case came when Xinhua set up Xinhua 08, its own financial data unit, to compete with Western providers.

Tian Congming, the Xinhua president, has expressed hope that Xinhua 08 will displace Reuters as a financial information service. Reuters and others fear that they could face restrictions in China.

The formal complaint will be followed by a 60-day consultation period. If the talks fail, the Europeans and Americans can ask the WTO to begin a formal investigation.

An official at the Chinese representation to the WTO said: “We take note that the European Union has brought up the issue in the dispute settlement system and we will respect any other members' rights under the mechanism. We shall study the request for consultations and deal with it according to WTO procedures.”

Information rights

— Xinhua 08, which began to operate in June, provides information on 20 Chinese and foreign exchanges, data on currency, gold and futures markets and reports on 55 industries, including metals and property.

— Xinhua is both competitor and regulator to its foreign rivals, requiring that data, videos and photographs be funnelled through Xinhua-approved distributors. The only approved distributor is a Xinhua subsidiary.

— The European Union's and the United States's requests will trigger a 60-day consultation period. If the talks fail, the two groupings can ask the World Trade Organisation to begin a formal investigation. WTO cases tend to take years before retaliatory sanctions can be authorised.

Times Recommends

• Toyota recalls 437,000 cars including Lexus
• Myners says bonuses are bleeding pension funds
• Japanese company faked safety reports on seats