The European Union (EU) acknowledges China as a new global trade force, saying it is essential the two regions manage to strike the right balance.

"China is having a major impact on every part of the global economy. It will be felt in people's daily lives, from the cost of petrol to the price we pay for our clothes," the European Commission, the EU's executive arm, said in a policy paper issued in Strasbourg, France, yesterday.

Entitled "EU-China: Closer Partners, Growing Responsibilities," the 10-page document expounds on the importance of developing EU-China relations, the increasing strength of China, and the policies and measures the EU would adopt to boost ties.

This is the sixth policy paper that the commission has issued on EU-China relations. It is also the first China policy paper released by the current EC, headed by President Jose Manuel Barroso.

Europe wants China to be "stable, prosperous and an open economy," and to do that, it said, China needs to rely less on exports for growth and help increase domestic demand by unlocking consumer and business spending power.

Europe reportedly had a US$133 billion trade deficit with China last year. The EU is China's largest export market.

Trade relations have not developed smoothly though, with Europe criticizing "unjustifiable" barriers to trade that European companies face, and increasingly slapping anti-dumping tariffs on Chinese firms.

Earlier this month, the EU agreed to impose duties of 16.5 per cent on leather shoes from China for two years, in a decision the Ministry of Commerce said lacked "sufficient legal and factual evidence."

China's Aokang Group has begun legal action to contest the EU decision, becoming the country's first shoemaker to do so, the company said yesterday.

Aokang Group, China's largest privately-owned shoemaker, has retained a lawyer to file the suit on the grounds that the tariffs on Chinese shoes violate EU laws, it said in a statement on its website.

Despite trade frictions, prospects for co-operation in all sectors remain bright.

French President Jacques Chirac, who arrives in Beijing today for a four-day visit, said "the success of China fascinates, and impresses."

"It is perceived today as one of the countries, if not the country, whose evolution will most affect the world of tomorrow," he said in an interview with Xinhua News Agency.