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China will continue to have an "enormous impact" on the world economy, said a report published by British parliament on Sunday.

The growth of China's trade provides consumers with cheap goods, and China's companies are striving to "increase the technological content of their products" and so the challenge for companies competing in this sector will be very likely to intensify, said the report entitled "East Asia", which was conducted by the Foreign Affairs Committee (FAC) of the House of Commons.

"However, foreign investors and traders can profit greatly from these transformations, provided China adheres to its World Trade Organization commitments," the report said.

According to the report, the world must take account of the economic changes occurring in China and cannot simply close the door on Chinese goods, and any attempts at protectionism would damage attempts to bind Beijing effectively into the existing international order.

"The preservation of the global multilateral trading structures has become more important than ever with the emergence of the Chinese economy," said the report, adding Britain should "maintain its championship of free trade between the European Union and China, by working with other advocates of free trade within the EU to support trade with China".

Britain must urge its counterparts in Washington and in the EU not to succumb to the temptations of protectionism, even in the face of growing trade frictions such as those over the value of the Chinese currency, said the report.

It is the FAC's seventh report of session 2005-06. The FAC, appointed by the House of Commons, is responsible for scrutinizing the administration, expenditure and policy of British Foreign Office and its associated agencies.