EU sets out 10-point plan to rebalance China ties

The EU is concerned about China's failure to open up its markets to foreign competitors and the distorting influence of subsidies for state-run enterprises. (AFP/THIERRY CHARLIER)

European leaders will be asked to sign off on the proposals at when they meet next week in Brussels, with senior officials urging them to take action to protect EU values and standards, warning that China is a "rival" as well as the bloc's biggest trading partner.

The move comes with the US urging European allies to abandon plans to use Chinese firm Huawei in telecom infrastructure plans, especially 5G networks, arguing it could serve as a front for spying.

The EU last month also took a major step towards toughening up scrutiny of foreign takeovers, with trade commissioner Cecilia Malmstroem acknowledging there was "no secret" about concerns over China.

Trade between the EU and China is worth more than a billion euros a day but European Commission Vice President Jyrki Katainen said the EU needed "more balanced and reciprocal conditions" in economic ties.

"The EU must ... more assertively promote reciprocity in our trade and investment relations, foster a level playing field and protect our economic, social and political models," Katainen said.

The EU is concerned about China's failure to open up its markets to foreign competitors and the distorting influence of subsidies for state-run enterprises.

Tuesday's proposals include measures to push Beijing to agree to reforms of World Trade Organization rules, particularly on subsidies and forced transfers of technology.

The Huawei controversy has thrust the issue of 5G networks - which promise near-instantaneous connectivity, vast data capacity and futuristic technologies to Europeans - to the top of the agenda.

Huawei strenuously denies its equipment could be used for espionage, but a number of countries have bowed to US pressure and banned the company's 5G equipment.

Katainen said 5G technology would "profoundly change the way our societies are working" and urged EU countries to follow a united approach.

The commission will issue a separate statement on 5G later this month. Katainen said the bloc was open "for all operators who comply with our rules".