China Should Open Up Markets Like It Says It Will, European Group Urges The Second Largest Economy

The European Union Chamber of Commerce in China warned that China needs to make good on its own repeated calls to open up its markets, or face consequences.

With President Xi Jinping making speeches on openness and globalization, China has publicly avowed to do so in recent years. A document on measures to attract more foreign investment and to promote fair, open markets was released by China’s State Council in January. But there are few actions to follow up China’s many words critics say.

“We don’t know if China will implement its promises. As business people we have to be accountable for our business today, we can’t build our future plans on only dreams,” Mats Harborn, president of the EU Chamber of Commerce in China, said. “We need to have tangible measures from the Chinese state to show that China is going down the path of more openness.”

European business “is suffering from accumulated ‘promise fatigue,’ having witnessed a litany of assurances over recent years that never quite materialized,” the EU Chamber wrote in its latest paper. “It appears that in many areas, China is no longer opening up, but selectively closing up.”

When it comes to China, an opaque regulatory environment and an uneven playing field have bene complained against by foreign firms for long. According to the Chamber, they perceive they’re treated less favorably than domestic companies, said about 54 percent of European firms.

In order to move forward with reforms, China was urged to take advantage of a top leadership shuffle in October by the Chamber. continued engagement between China and Europe was supported by the paper which draws on observations and recommendations of the Chamber’s more than 1,600 member companies.

Having access to policies that support research and development and to take a greater role in setting industry standards should be allowed for foreign companies by the Chinese government, it also demanded.

“If China is ultimately unwilling to offer reciprocal access to its own market, it cannot assume that it will indefinitely continue to enjoy open and unhindered access to the EU’s,” the paper warned. “The liberal approach to [mergers and acquisitions] will only work if all parties move toward equal access and the removal of barriers, otherwise it is politically untenable.”

While European business into China dropped by 23 percent to $3.7 billion during the first half of this year Chinese investment into the EU remained stable at $10.4 billion in that period and therefore there is a vast difference in the amount of money flowing both ways.

In a restriction that they worry could expose them to the theft of intellectual property or trade secrets, in order to do business in the world’s second-largest economy, international companies must often find a local partner to work with.

“It seems to us that the authorities often times are using the old tool box in the new world and that is causing regulatory frameworks to be blurred, unclear and unpredictable.”

(Adapted from CNBC)

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Categories: Economy & Finance, Geopolitics, Regulations & Legal, Strategy, Uncategorized

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