European Chamber evaluates China’s opening up since President Xi’s Davos speech in January 2017
July 17, 2018 Category China News Round-up, Weekly
The European Union Chamber of Commerce in China has urged China in a new report to create ‘investment reciprocity’. China must strive to create reciprocity in investment relations to de-escalate the tension with its trading partners it said. The Chamber said China needs to act with urgency to rectify a lack of value for foreign companies in the country. “Failure to act now will only lead to an escalation of the significant tensions that are building in the global economic system,” the Chamber said in the report, which was released a week after the start of an all-out trade war between China and the U.S.
Among the issues that have stymied foreign companies in China, it said, are the dominance of state-owned enterprises (SOEs), a policy that requires transfer of technology from foreign companies to Chinese partners, a flawed regulatory framework and an overall lack of equal treatment for foreign investors. Titled “18 Months Since Davos – How China’s Vision Became a Reform Imperative”, the report traced the progress of China’s opening up since President Xi Jinping endorsed globalization in a landmark speech in January 2017. The European Chamber noted that the pace of reform in China on environmental protection, R&D and consumer goods has been much quicker in the past 18 months than at any other period since China joined the World Trade Organization (WTO) in 2001. But its progress so far has generated only limited value for foreign companies operating in the country, it said. China’s trade partners in Europe, especially Germany, also have raised concerns that an increasingly protectionist China is aggressively moving up the value chain faster than expected.
With 2018 marking the 40th anniversary of China’s opening up to the West, the European Chamber said China should abandon its reliance on outdated tools such as free trade zones (FTZs) and instead put its energies into promoting the reform of state-owned enterprises, improving intellectual property protection and enhancing the overall regulatory environment. The Chamber said foreign firms are “inundated” with information about free trade zones, industrial estates and development zones that are “a colossal waste of government resources”. Meanwhile, the foreign companies struggle against rules giving unequal access to licenses, government subsidies to targeted Chinese industries, lengthy scrutiny from authorities and “frequent and unforeseeable” shifts in governmental policy, the South China Morning Post reports.
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