China and the EU have agreed to set up a bilateral steel “platform” to address European concerns over Chinese steel dumping, smoothing the way for Europe to grant China its coveted market economy status.

A jump in steel shipments from China had stiffened political and industry opposition to Brussels granting China market economy status under the terms of its accession to the World Trade Organisation, 15 years ago. Granting the status would make it harder for major economies to bring anti-dumping cases against Beijing.

Jean-Claude Juncker, European Commission president, said the agreement would allow the “verification and monitoring” of steel shipments from China, enabling confirmations of Chinese pledges to trim the excess capacity that is swamping world steel markets.