HONG KONG (Reuters) - The European Union is moving ahead with the process of giving China market economy status to boost trade, but is concerned about overcapacity, a senior European Commission official said on Thursday.

"We are in favor of free trade...as long as overcapacity is harming fair trade it's very difficult to do free trade," Jyrki Katainen, EU Commission vice-president for jobs, growth, investment and competitiveness, said at an event in Hong Kong. "We are willing to fulfil our legal commitment but we are not naive."

He told reporters the EU was seeking discussions with China on how to tackle overcapacity.

The EU expects increased investment from China in infrastructure projects, said Katainen, who was in Hong Kong after attending a two-day China-EU summit in Beijing.

He said Britain's referendum to exit the EU will not have any impact on investments.

"Brexit doesn't have any impact on investments into Europe...of course the overall uncertainty is always bad for investments and overall economic growth."

(Reporting By Sumeet Chatterjee; Editing by Sam Holmes)