European Chamber calls on China to demonstrate its commitment to economic globalization and openness

The European Union Chamber of Commerce in China last week released its European Business in China – Position Paper 2017/2018 (Position Paper) in which it calls on the Chinese leadership to follow through on the public commitments it has made to economic globalization and openness throughout 2017. Crucially, this will entail offering reciprocal access to China’s market for trade and investment.

The Position Paper fully recognizes the importance of China’s plan to open up its economy and establish a level playing field for all business, as first outlined in State Council Document No. 5 in January 2017, and later elaborated upon in State Council Document No. 39. However, to date, implementation of proposed measures has been slow and uneven. Of greater concern is that in some industries the Chinese market may be closing to foreign business. For example, new restrictions on food imports, coming into effect on 1st October, can be expected to impede trade. Furthermore, the ongoing trend in multiple industries of huge state-owned enterprises being established through mergers poses a real threat to private businesses.

Moving forward with rapid and comprehensive implementation of market-driven, economic reforms is very much in China’s own interest. Foreign investment into the country has already been declining year-on-year during the first half of 2017. The Position Paper outlines many practical measures that can be taken to establish China as a more attractive destination for investment. It also presents examples of non-reciprocal treatment, such as in the areas of strategic technologies and legal services, where Chinese investors currently enjoy far greater access to the European market than Europeans do in China. The fact that this is generating political tensions within the European Union (EU) increases the need for the EU and China to successfully complete their negotiations for a Comprehensive Agreement on Investment, preferably within the next 12 months.

“The State Council documents provide a solid framework for China to open its markets to the outside world and attract more foreign investment, and throughout this year the authorities have been very clear about what needs to be done,” said European Chamber President Mats Harborn. “The European Chamber is fully prepared to help turn their commitments into tangible outcomes. We hope that the Chinese authorities will begin the process of implementing market-driven reforms and establishing a level playing field for all businesses once the 19th Party Congress has concluded,” the press release of the Chamber explained.