Brussels, 02/12/2004 (Agence Europe) - In its latest report on the competitiveness of the EU (see also p.14), the European Commission indicates that although the dynamism of Chinese trade will have a positive impact on European companies, which will continue to benefit from increased exports, the Chinese economy is a potential threat to the economies of the new Member States. The combination of low costs and high-level professional qualifications on the Chinese labour market makes China a direct competitor for the newest Member States of the EU. The Commission gives the example of the steel industry, one of the sectors of the new Member States which could be in trouble in the face of Chinese competition. The Commission's report also points out that the Hungarian electronics industry has already been badly fragmented to the benefit of China, now the largest producer of high-technology products free from reproduction rights. China is not only a country rich in manufacturers of basic equipment- from computers to clothes- but it has also managed to attract companies on the cutting edge of technology, and make its own companies able to compete on the world markets. China, however, has still to develop a range of recognised brands which can stand up to competition from Europe and America, the commission notes.