European business group calls on China to open economy
Forthcoming Communist Party meeting unlikely to yield meaningful reform
China’s president Xi Jinping. The OECD ranks China 59th out of 62 countries in terms of its openness to foreign direct investment. Photograph: Bloomberg
A European business group has called on China to open up the state-dominated economy if it wants to reverse falling foreign investment inflows.
Releasing the European Union Chamber of Commerce’s annual position paper, the lobby group’s president Mats Harborn said a forthcoming Communist Party congress, at which President Xi Jinping is expected to copper-fasten his grip on power, might see pledges to reform.
“Our members are suffering promise fatigue,” Mr Harborn told a news briefing in Beijing. “We hope that the new line-up after the 19th party congress will show that there are people in place that are committed to further opening up,” Mr Harborn said. “If you ask our member companies...they are not very optimistic that these changes will happen.”
Chinese companies face fewer impediments when they try to buy foreign technology and brands, while Beijing bars foreign acquisitions of most of its companies.
European and US businesses have long complained about the absence of level playing fields for Chinese and foreign firms, and the remarks come after the European Commission proposed tighter monitoring of non-EU investments in sensitive areas.
While Mr Xi has been making high-level anti-protectionist speeches at forums such as Davos and elsewhere, there has been little evidence of marketings opening at home in China.
“We are now at a critical point for China and the world. China is affecting all of us. We are seeing Chinese investments poured into Europe surging but investments into China are dropping,” said Mr Harborn.
The Organisation for Economic Co-operation and Development (OECD) ranks China 59th out of 62 countries in terms of its openness to foreign direct investment.
“In the paper we talk about reciprocity in the EU-China trade and investment relationship, and that a balance is needed more. Not only because it’s unfair but also because these restrictive measures in China are outdated and needs to be supplanted. China needs reputational leverage,” said Mr Harborn.
“In Davos Mr Xi said China would invest $750 billion in the next five years. Done in the right way it will benefit the world,” he said, adding that there needed to be real reform in China.
Mr Harborn said European firms needed China to succeed, and they were ready to expand in China. However, certainty was a requirement for investment.
“We are responsible for our profit-and-loss statements here and now. The reason we are frustrated is that we cannot live on only promises in documents and speeches. We live on business here and now,” said Mr Harborn.
“The most important thing is that the real economy needs to grow. That will happen when a level playing field is there.”