BEIJING Oct 31: The European Union’s top trade official urged Beijing on Friday to meet its commitments to open markets, cautioning against letting Europe’s surging trade deficit with China grow into a political conflict that threatens a flourishing relationship.

The comments by Pascal Lamy came just days after US Commerce Secretary Don Evans visited Beijing and said China could face action under US trade laws if it didn’t move faster in opening its markets.

Lamy, the European Commission member for trade, echoed US complaints when he cited China’s failure to meet deadlines for opening its telecoms and other industries as promised in 2001 when Beijing joined the World Trade Organization, the global rule-making body for trade.

“We don’t have the same political and economic problems that the United States has, but we should be careful that it doesn’t develop into the same abrasiveness,” Lamy said in a speech to members of the European Chamber of Commerce in China.

On Thursday, EU and Chinese leaders promised to build closer trade and technology ties, a relationship implicitly aimed at counterbalancing each side’s relations with Washington.

European Commission President Romano Prodi said Thursday after meeting with Chinese President Hu Jintao that the two sides should “intensify our relations” and become major partners.

Lamy stressed that EU leaders regard their ties with Beijing as friendly and strong.

He cited such joint efforts as a deal signed Thursday for Beijing to join Europe’s $4.2 billion Galileo project to create a network of navigation satellites that would rival the US-run Global Positioning System, or GPS.

Lamy welcomed what he called progress by China in opening its insurance and construction industries.

Total annual trade is worth 115 billion euros ($127 billion), the commissioner said. The EU and China say they are each other’s third-largest trading partners.

But Lamy said some people in Europe are growing “more sensitive” about its 47 billion euros ($52 billion) annual trade deficit with China, which is growing by 15 per cent a year.

“We will continue to insist on full compliance with WTO commitments,” Lamy said. He added later, “We still have very serious concerns in some areas.”

Those range from limits on fertilizer imports and foreign involvement in China’s telecoms industry to Beijing’s failure to stop piracy of copyrights and other intellectual property, he said.

Later Friday, the EU announced an agreement to launch a series of high-level talks with China aimed at improving cooperation in fighting such piracy.

Lamy also echoed American criticism of China’s policy tying its currency, the yuan, to the US dollar. Critics say the official exchange rate undervalues the yuan —also known as the renminbi, or “people’s money” — by up to 40 per cent, making Chinese exports unfairly cheap and hurting foreign competitors.

“We do not believe there is much of a rationale for the renminbi to remain pegged to the dollar,” he said.

But Lamy stopped short of endorsing the American demand for China to let the currency float freely. Instead, he said, it could be linked to a “currency basket” that would include the dollar, the EU euro and the Japanese yen.—APP