Debt crisis: EU 'refusing to recognise China as a market economy'

China has signalled that the West must do more to recognise it as a market economy if Europe wants further help in fixing its debt crisis.

Beijing's warning comes as Spain, Portugal, Greece and Italy have all turned to the Asian superpower as a potential buyer of their debt.

Already the biggest foreign creditor to the US, the still strong economic growth enjoyed by China may hand it extra sway in trade negotiations with Europe. The Chinese government wants the European Union to recognise China as a full market economy under World Trade Organisation (WTO) rules, which would remove many restrictions for Chinese companies.

"It would help the US and the EU break away from their current financial woes should they ditch protectionist measures and sincerely open their arms to Chinese investments, allowing China to make the most of its rich foreign exchange reserves," said state-run news service Xinhua on Tuesday.

China agreed to adopt non-market status for 15 years when joining the WTO in 2001 but Chinese Premier Wen Jiabao said last week that China had reformed enough for his country – the world's fastest-growing major economy – to have its WTO status changed now.

Despite the leverage the crisis in Western economies has handed China, a US official on Tuesday warned Beijing it must do more to open up its own economy. "China's current business climate is causing frustrations among foreign business and government leaders," Gary Locke, the US Ambassador to China, said in a speech in the Chinese capital. He also told Beijing to allow its currency to trade more freely and stop intellectual property theft. more