The two sides, which held their third Economic and Financial Dialogue in Brussels, said in a joint statement that they agreed to create joint working groups to take measures on making a final decision on equivalence of Chinese accounting standards next year.

    Two days earlier, a monitoring session on accounting between the EU and China had concluded that they would continue cooperation on a political and technical level and discuss the final decision by the EU on equivalence around mid 2008.

    During Wednesday's meeting, both sides acknowledged the progress been made on bilateral exchanges and cooperation in the development and implementation of accounting standards since the last meeting of the Financial Dialogue in May 2006.

    The EU welcomed China's adopting 39 new accounting standards ina bid to achieve substantial convergence of those standards with the International Financial Reporting Standards (IFRS) and to improve transparency of financial information.

    It is a major step in the direction of convergence with the IFRS, adopted by the EU as its accounting standards, the joint statement said.

    The EU Commissioner for the Internal Market and Services Charlie McCreevy said last month that the European Commission was to approve Chinese accounting standards in line with the IFRS by the end of 2008.

    If so, China would be the fourth country following the United States, Japan and Canada, to hold accounting standards equivalent to those in the EU. Then Chinese companies listed in European stock markets would have no need to change their annual financial reports.