Europe should recognise China?s increasing competitive edge in low-end manufacturing and stop hitting Chinese firms with anti-dumping duties, a senior Commerce Ministry official said yesterday. The European Union has taken 12 anti-dumping actions against China in the past 12 months, in industries from preserved mandarins to energy-saving light bulbs, after concluding that firms were selling goods for less than the cost of making them.

Cheng Yongru, director of the ministry?s Bureau of Fair Trade for Imports and Exports, said Brussels should acknowledge China?s prowess was a function of the international division of labour. «EU companies should adjust their mindsets to adapt to the globalisation trend. At the current stage of globalisation, China?s advantages are in processing, low-end manufacturing and labour-intensive sectors,» he said. «The EU should realise this and work to improve their competitiveness in high-tech, the high end and in service sectors, where they enjoy more advantages,» Cheng said on the sidelines of an investment conference in southern Xiamen.

EU Trade Commissioner Peter Mandelson is due to visit China September 24-27. He has long urged China to open up its markets and economy to foreign goods and investments to ease pressure on him from many European capitals to take a tougher line against China and its soaring trade surplus with Europe.

Cheng was speaking a day after sources familiar with the matter said the 27-member EU was likely to keep in place anti-dumping duties on shoes imported from China and Vietnam while Brussels considers calls to renew them formally. The levies, which had been due to lapse in October, were set to extend into 2009, the sources said.

Cheng said the EU was also backsliding on according individual Chinese companies market economy treatment, a designation that helps shield them from anti-dumping actions. «China has made many improvements in market reform, but fewer and fewer Chinese firms are getting market economy treatment from the EU, which implies that the EU is moving backward in this regard,» he said. The EU has not granted China market economy status on a national level, arguing that the state still plays too big a role in the economy.

Cheng took aim at some big European firms, including steel maker ArcelorMittal, for abusing anti-dumping procedures «in pursuit of their own selfish interests». The European Commission is investigating Chinese steel exports to see whether they are being dumped in the bloc after complaints by European producers.

Brussels is unlikely to impose provisional duties on imports of hot-dip galvanised steel, a category under investigation, trade publication Steel Business Briefing reported in late July.

In a separate investigation into steel fasteners from China, Brussels found evidence of dumping but did not impose duties while the probe continues, European producers said in August. China was the most frequent target of new anti-dumping investigations in the second half of 2007, according to the World Trade Organisation, with 40 probes by the EU and others directed against its exports.

«China is very concerned about it as the EU is China?s biggest export destination and Beijing hopes to see stable export growth to the bloc,» Cheng said.

Protectionism is just one of many headaches facing Chinese exporters. Soaring labour and environmental compliance costs, rising raw material prices, a steadily strengthening currency, tight bank credit and government policies aimed at curbing low-end exports are all depressing manufacturers? margins.