In a position paper released by the chamber Friday, it urged Beijing to close down retailers found selling fake goods for at least a month and amend Chinese laws to make counterfeiting of trademarks a crime.

'We're not saying that every counterfeiter will go to jail. It's totally impractical,' said Paul Ranjard, chairman of the European Union Chamber of Commerce's IPR Working Group and chief representative of Union des Fabricants.

'We're saying that every counterfeiter should be exposed to the risk of going to jail.

So far, Chinese laws still do not meet that standard. In most countries in the world, counterfeiting is a crime. In China, it is not a crime.'

A survey by the chamber, which represents 510 members including Siemens AG and Nokia, found that 70 per cent of those polled feel that China's enforcement of IPR is ineffective.

Europe displaced the US as China's largest trading partner with US$111 billion (S$187 billion) in trade up to August this year, after the European Union expanded to 25 members in May.

Sino-US trade totalled US$107 billion during the same period.

The European chamber's top complaint about doing business in China echoed comments by their American counterparts.

An American Chamber of Commerce survey released last month found that about 90 per cent of its companies saw 'virtually no enforcement' of IPR in China.

Said Serge Janssens de Varebeke, president of the European Chamber: 'Little has changed in the past year with regard to the enforcement of intellectual property rights.

'What has changed in the past year is the realisation that this is not just a problem for foreign companies.

'It is now an increasing concern for Chinese companies as well.'

The lack of IPR protection permeates through all industries here in China, according to the European chamber's China 2004 Position Paper, which will be presented to the Chinese government next month.

The problem appears to be especially serious in the car industry.