European chamber wants equal access to markets in China

A LONG-RUNNING complaint by European firms operating in China is that they face far tougher conditions than their Chinese counterparts when it comes to market access.

The European Chamber of Commerce in China said last week that the forthcoming 18th Party Congress, which will see Xi Jinping take over as China’s top leader, will offer a serious opportunity to reform market access.

The chamber’s complaints of “massive asymmetry” in market conditions for foreign and Chinese firms, including poor access to China’s enormous government procurement market and weak intellectual property protection, are a grim if familiar chorus.

However the launch of the group’s annual position paper came with a warning that the country’s new leaders could have a harder time overcoming a host of ills, from diminishing cheap labour to the global economic crisis.

“The state-led investment model has reached the end of its shelf life. It has fostered 30 years of breakneck growth and lifted millions out of poverty, but it is no longer sustainable because it is by nature unequal,” Davide Cucino, president of the European Chamber, said at the launch of the paper in Beijing.

“Incremental and piecemeal reforms must give way to urgent and comprehensive reform.”

The chamber represents 1,700 members, mostly from the 27 EU countries.

EU firms have been subject to “raw deals” and forced to form joint ventures with Chinese companies and offer technology licensing in return for market access.

By meeting promises to open previously closed markets to foreign competition, China could increase innovation and spur another wave of growth, it said. “These changes are now urgently required not only for China, but also for global economic growth,” Cucino added.

Chinese economic growth fell to 7.6 per cent year-on-year in the second quarter, the slowest in more than three years.

The Chinese have a different view of what is needed.

Song Hong, a senior researcher at the department of international trade of the Chinese Academy of Social Sciences, told the China Daily that the complaints were familiar ones.

“However, compared with [local] private enterprises, foreign companies enjoyed more favourable tax policies and greater market access, but we rarely hear that mentioned,” Song added.

The chamber’s words are in line with warnings from other organisations such as the World Bank, which say China needs to rein in state companies and promote free-market competition to keep the world’s second-largest economy growing strongly.

“To realise the new growth model and avoid the middle- income trap, bias against foreign and domestic private investment must change,” Cucino said.

“Equal access for all is needed, not only to markets, but to public procurement, treatment under the law, finance and subsidies and technology innovation.”

The European Chamber welcomed the Chinese government’s efforts to allow foreign firms greater leeway to comment on regulations, but noted that new laws were often linked to the demands of state-owned corporations and interest groups.