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China and the European Union (EU) inked an agreement on the creation of a China-EU competition policy dialogue yesterday, indicating their sincerity in promoting co-ordination in resolving international trade disputes, analysts said.

"It (the agreement) is very promising, and it provides a framework for systematic co-operation between the two sides," visiting European Commissioner Mario Monti said yesterday.

It is China's first competition policy dialogue agreement.

"I'm impressed by our Chinese colleagues' strong willingness to co-operate with the EU," Monti said yesterday after his meeting with officials from China's Ministry of Commerce. Monti is responsible for competition policy in the EU.

Competition policy is a way of ensuring wider consumer choice, technological innovation and effective price competition, thus contributing to consumer welfare and the competitiveness of industries.

The primary objective of the dialogue is to establish a permanent mechanism for consultation and transparency between China and the EU in this area, and to enhance the EU's technical and capacity-building assistance to China in the area of competition policy, according to the agreement.

"The establishing of such a dialogue mechanism will benefit both sides and improve the transparency of markets," said Xue Rongjiu, president of the Beijing-based World Trade Organization Research Association.

"Competition policy will be a crucial element of China's efforts to restructure its industries and make them more competitive, given the size of the Chinese economy and the level of investment in China," Xue said.

Zhou Shijian, an adviser at the China-EU Research Centre, said that the dialogue would help establish smooth and sustainable trade relations between China and the EU.

The EU has provided nearly 20 Chinese enterprises with "market economy treatment" since 1999.

The dialogue is of great significance, as it will help resolve trade disputes through co-ordination rather than retaliatory means, said Zhou.

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