LONDON, April 15, 2008 -- EU Trade Commissioner Peter Mandelson said here Tuesday that the European Union will not be able to "dictate" solutions to China's internal issues.

Europe needs to help China come to terms with the vast challenges it faces rather than directly confront it on certain issues, the EU official told a forum, named "China and UK -- Partners in Sustainability," sponsored by the China-Britain Business Council.

Europe's challenge is to build and sustain a constructive working relationship with China that can address issues like trade barriers and Tibet, without coming off the tracks, Mandelson said in his speech titled "Living with China."

Rather than seeing China as simply an "unstoppable juggernaut", the West must also recognize that the country is grappling with a virtually unprecedented governance challenge, he said.

"Some Europeans appear to assume that a course of direct confrontation in connection with the Olympics and Tibet serves Europe's interests, and indeed Tibet's ... but we will not be able to dictate the solutions to China's problems," he said.

Meanwhile, "we must also not lose sight of the fact that we are bound to work with China, to live alongside China too," he said.

"We have the biggest stake imaginable" in China's successful transformation, said Mandelson, noting that China's economic failure or its isolation from the international security or trading system would be "catastrophic", for China as well as the West.

China is also an indispensable partner for a serious climate change strategy, he noted.

Meanwhile, China has to transform its superheated growth model into one that is economically more balanced, and politically and environmentally more sustainable, he said.

"Whatever our political differences, our interdependence remains a central fact of the global political economy," Mandelson said.

As China grows, so will Europe and China's mutual interests, he added.