In Paris, a French government spokesman confirmed French President Nicolas Sarkozy, whose country holds the rotating EU presidency, would go ahead and meet the Dalai Lama in Poland next month despite Beijing's displeasure.

'The president of the Republic will meet the Nobel Prize winners. So he will meet the Dalai Lama in that framework,' the spokesman, Luc Chatel, told reporters.

'Nicolas Sarkozy ... is free to decide his agenda,' he said.

In a statement, the 27-nation bloc expressed regret at China's decision and said it would continue to promote a strategic partnership with Beijing, 'particularly at time when the global economic and financial situation calls for very close co-operation between Europe and China'.

China's foreign ministry and the Chinese embassy in Paris had no immediate comment. But the ministry warned earlier this month that Mr Sarkozy risked losing 'hard-won' gains in ties with Beijing if he met the Dalai Lama.

China tried to persuade French officials only last week not to let any meeting between Sarkozy and the Dalai Lama take place when Zhu Weiqun, a vice minister who handles relations with ethnic minorities and religious leaders, visited Paris, a diplomatic source said.

It was not immediately clear what commercial fallout, if any, there would be from the disagreement.

'If there are problems between the two sides, the best step would be to work hard to solve the problem,' he said.

The meeting between Mr Sarkozy and the exiled Tibetan spiritual leader is scheduled to take place in Poland on Dec 6 at a ceremony to mark the 25th anniversary of the award of the Nobel Prize to former Solidarity leader Lech Walesa.

The Dalai Lama, another Nobel Peace laureate, is also due to visit the European Parliament next week.

He fled Tibet in 1959 after a failed uprising against Chinese rule in the mountainous region, occupied by Chinese troops from 1950. China calls him a 'splittist' for advocating self-determination for his homeland.

Trade disputes between Brussels and Beijing have been on the rise as the EU's trade deficit with China has ballooned, hitting 160 billion euros (S$313 billion) last year.

This month Brussels imposed anti-dumping duties on Chinese-made candles and non-alloy steel products and added tariffs to imports of some citrus fruits products.

China routinely denies it breaks trade rules and says Europe resorts to protectionism against its low-cost advantage.

At a meeting between Asian and EU leaders in Beijing last month the EU side backed a greater say for China in global financial bodies but urged China to use its clout to help to resolve the current global economic crisis.

That mood for that meeting was strained by a decision a day earliert by the European Parliamant to award its annual human rights prize to Hu Jia, a Chinese dissident jailed for subversion after testifying to the assembly last year. -- REUTERS