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In recent years, trade and economic relations have developed a positive momentum. The EU has become China's largest trading partner and the largest source of technology imports. China has also become the secondlargest trading partner and the fourth-biggest export destination for the EU.

In 2007, bilateral trade was worth Dollars 356.2bn, up by 27 per cent year-on-year. In the first quarter of this year, trade between China and the EU has reached Dollars 93.9bn, up 24.7 per cent on the same period last year.

China has sourced 27,000 items of technology from the EU, representing a contractual value of Dollars 112.3bn. Companies from the EU have invested almost Dollars 54bn in China, with almost 27,000 EU companies firmly settled and robustly growing on Chinese soil, extending their reach and development, while contributing to China's boom.

In 2006, EU companies recorded Dollars 134bn of sales in, and exports from, China . Meanwhile, Chinese companies are starting to invest in the EU, stimulating local economic growth and employment there. As the two major markets in the world today, China and the EU have provided tremendous impetus to each other's economic development.

China-EU trade and economic co-operation is one of complementarities and mutual benefit. The EU is strongly competitive in technology, high-end manufacturing and modern services, while China enjoys a competitive edge in middle and low-end manufacturing and in labour-intensive industries.

In co-ordination with the restructuring and upgrading of EU industry, China provides many products that the EU is or will no longer be producing. Such co-operation helps the EU to focus on high-end industries and further boosts its international competitiveness. There is also a huge demand from the Chinese market for EU products. In 2007, China imported Dollars 111bn worth of products from the EU, at a rate of growth of 22.4 per cent a year, faster by 6 percentage points than the growth rate of imports from the US and Japan.

In the first quarter of this year, imports from the EU were almost Dollars 30bn, up by 25.6 per cent year-on-year. It is estimated that China's imports from the EU provide more than 2.2m jobs in member states. Against the backdrop of global inflation and resource shortages, high quality and low-priced Chinese products not only contribute to prosperity in the EU, but also help prevent inflation and improve living standards.

There are even more opportunities for the EU in the services trade. In Beijing, the famous "Bird's Nest" Olympic Stadium, the National Grand Theatre and the new Capital Airport Terminal 3 all feature designs and technologies from the EU.

With such an expansion in trade, some friction is unavoidable. Addressing it requires common effort. With China moving from low-end to middle and high-end goods in the international industrial chain, EU companies are likely to feel greater pressure from competition. By the same token, the opening up of the Chinese market and the influx of high-end products from the EU will bring pressure to Chinese companies.

We must maintain an open mind in dealing with this pressure and oppose trade protectionism. We must deepen our co-operation on the imbalances caused by trade and investment, as well as intellectual property rights and technology exports. Both sides need to co-operate more on future challenges, including energy and resources, the environment, climate change and the management of the global economy.

While the EU has many concerns, the Chinese side is also confronted with difficulties: the EU's denial of market economy status to Chinese enterprises; the discriminatory treatment they receive in the EU; the EU's frequent anti-dumping investigations in textiles and steel; special safeguard measures targeting China ; restrictions of technology exports; and the unfair treatment of Chinese enterprises for visas and display stands in conventions in the EU.

We believe that both sides should focus on the big picture of the China-EU relationship and resolve these issues in the spirit of fairness and co-operation.

The holding of the China-EU dialogue will allow the two sides to explore their potential for co-operation and ability to resolve common problems.

I firmly believe that as long as China and the EU are guided by the principles of increasing mutual trust, expanding co-operation, prioritising key areas and co-ordinating development we will be able to lift the development of China and the EU's strategic partnership to a new level.

The author is China's minister of commerce