Peter Mandelson will warn China today that its business relationship with the EU is one-sided and needs radical change.

The Trade Commissioner will tell his Chinese counterpart that the manufacturing powerhouse faces legal sanctions over a string of unfulfilled promises.

Mr Mandelson is coming under increasing pressure from member states to get a better deal for Europe, with Nicolas Sarkozy, the French President, attacking the “naivety” of the EU trade negotiating position and insisting that the opening of its markets must take place only in exchange for reciprocal access.

Mr Mandelson, who will meet Bo Xilai, the Chinese Trade Minister, today, hinted that the EU was on the point of adopting the tough tactics of the United States, which has already demanded World Trade Organisation proceedings to settle a number of disputes.

Under Mr Mandelson’s regime, the EU has adopted a softly, softly approach, for example, negotiating a complete opening of the textile market by 2008 after taking emergency interim measures to stop Europe being swamped by cheap Chinese imports.

But yesterday he said that, eight months after agreeing a framework for a fair trade balance in talks in Beijing, he had seen no movement from China on a series of issues:

— The EU estimates that €20 billion (£13.5 billion) in trade opportunities are lost every year because of market access barriers

— China has failed to enforce protection of European intellectual property rights and accounts for 80 per cent of the counterfeit goods intercepted at EU borders

— In service areas such as tele-coms, construction, insurance and finance, EU companies are still blocked by discriminatory licensing systems

— Despite the establishment of an EU/China Steel Working Group last year, the risk of dumping is increasing with imports to the EU rising from 200 million tonnes in 2005 to 600 million in 2006.

Mr Mandelson’s change of tactics comes as figures out yesterday showed that China’s glo-bal trade surplus ballooned to $22.45 billion (£11.4 billion) in May, a jump likely to intensify calls for Beijing to let the yuan appreciate more rapidly.

Mr Mandelson said Europe’s trade deficit with the booming export giant is growing at an “intolerable” €15 million an hour. He said: “The trade deficit is neither tolerable nor inevitable,” he said yesterday in Brussels ahead of the annual EU/China joint trade ministerial meeting.

“Of course we benefit from the lower cost of many competitively priced China exports but we also know that in goods and services Europe has much to offer China and our full export potential is being hampered in the Chinese market.

“The current trade balance is artificially inflated and is a product of politics as much as of economics.

“The Chinese Government has said it cannot control production at a provincial level but even over government procurement contracts there has been little movement. We are at a crossroads – the policy of dialogue and cooperation is only credible if it delivers.

“The EU is looking for improved access to China’s goods and services market, we are also looking for a sea change in protection of EU copyrights, especially by preventing movies or music being copied or downloaded.

“If the state authorities want to keep our trade relationship on an even keel, they are going to have to do more to recognise both the misgivings that exist within Europe and they will also have to recognise easy access to our markets is going to become increasingly questioned by business and government.

“I don’t think it is in our interests to sit back and watch spiralling trade deficits lead to mounting anger and threats of action on the European side.”

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