China and the European Union (EU) should observe the principle of mutual respect and consultation based on equality to address trade frictions, visiting Chinese Premier Wen Jiabao said yesterday.

"Each side should accommodate the concerns of the other side while pursuing its own interests, and should refrain from politicizing trade disputes," Wen said in a speech delivered at the China-EU Business Forum, whose theme was "Boosting Innovation."

As economic exchanges soared in recent years, there has also been an increase in trade frictions, such as textile disputes as well as the recent case where Chinese shoe makers were accused of dumping.

Bilateral trade reached US$217.3 billion last year, and in the first seven months of this year, totalled US$143.5 billion, a rise of 21 per cent over the same period last year.

"China's policy is to maintain a basic balance between imports and exports. It does not seek an excessive surplus," said Wen.

"We hope the EU will relax its restrictions on the export of high-tech and dual-use products to China and work with us to balance China-EU trade."

Wen reiterated China's determination to protect intellectual property rights (IPR).

"IPR protection is necessary, both for China to fulfil its international obligations and promote its development and enhance its capacity for independent innovation."

In his speech, Wen put forward four proposals to enhance the China-EU business partnership:

Expanding technological co-operation in various fields.

Strengthening co-operation in energy and environment protection.

Deepening partnership in agricultural and services sectors.

Promoting co-operation between small and medium-sized enterprises (SMEs).