China should remove barriers and provide better legal certainty for businesses, while all parties must observe international trade systems and their rules, European Commission President Jean-Claude Juncker said on Wednesday.
There has not been enough progress in China on reform of state firms and improved market access for foreign businesses, Juncker said while on a visit to Beijing.
Juncker said that excess industrial capacity should be prevented from adversely impacting relations between China and the European Union, while the issue should be addressed "at the root" so markets can play a bigger role.
China's reforms must feature the rule of law and independent courts, and Chinese lawyers must be free to support businesses, European Trade Commissioner Cecilia Malmström said.
Overcapacity in the steel industry needlessly pits Chinese and European workers against each other, Malmström said.
China is by far the world's biggest steel producer and its annual output is almost double that of the EU, with rival producers accusing China of selling into export markets at below cost after a slowdown in demand at home, causing a crisis for the industry that has led to job cuts and plant closures.
On Monday, Malmström said the EU still harbors many concerns about the Chinese market that could obstruct closer business ties, including discrimination against EU businesses.
China is the European Union's second-largest trading partner after the United States. Europe is China's top trading partner.
China wants the EU to grant China market economy status, which would make it easier for China to import into the bloc and defeat protectionist measures, but many EU officials are skeptical.
Negotiations for an investment deal between China and the European Union have accelerated, China's commerce minister Gao Hucheng said on Wednesday.
The EU will continue to be a major economic bloc and major source of exports despite the United Kingdom's vote to leave the European Union, Juncker said.