Brussels/Tianjin, China - China is failing to attract European investment as effectively as competing economies such as Russia and India and must open its markets if it wants to reverse the trend, the European Union's top trade official said Friday.

"European companies have invested more in both Russia and India since 2003. China is winning a decreasing share of the EU's foreign investment in the emerging economies. These are lost opportunities for China," EU Trade Commissioner Peter Mandelson said.

"European investment in China dropped again in 2007 to just 2 per cent of all European foreign direct investment (FDI) outflows - despite the fact that, globally, European FDI is actually growing strongly," he told the European Chamber of Commerce in Tianjin.

China is the EU's largest supplier of manufactured goods and its fastest-growing export market, with exports growing by 75 per cent between 2003 and 2007.

But European companies complain that they face serious obstacles to investment in the country.

Europeans "fear the theft of intellectual property if they transfer technology here. They come up against an unpredictable mergers-and-acquisitions policy," Mandelson said.

Moreover, bureaucratic obstacles such as state requirements that they form joint ventures with Chinese firms and complex licensing rules "make it difficult or impossible for European companies to choose China as an investment destination," he said.

To reverse the trend, the EU and China should work harder to protect intellectual-property rights, guarantee the same rights for each other's businesses as for local firms and make sure that China's investment market is "genuinely open," he said.

"We should end outdated rules like 50-50 joint venture requirements and compulsory technology transfer requirements that are counterproductive, because they turn away the most innovative firms," Mandelson said.

In particular, he called on both sides to work together on technologies that will limit global warming.

"China's green technology producers are already free to invest in European markets. Removing the restrictions on European investment in environmental services or low-carbon technologies in China ... should be the core of our joint climate-change policy," he said. (dpa)