Foreign firms want action not words from China about opening up its markets
October 10, 2017 Category Foreign investment, Weekly
Foreign businesses are becoming increasingly frustrated by Beijing’s lack of action to open up its markets, according to the European Union’s Ambassador to China, Hans-Dietmar Schweisgut. “It is leading to more frustration among the European business community that they haven’t seen their words translated into action,” he told the South China Morning Post. “Companies see the rising gap between rhetoric and what’s happening.”
President Xi Jinping delivered a speech at the World Economic Forum (WEF) in Davos in January, firmly endorsing free trade and has promised to further open up the country’s market. The central government pressured its departments to work out a timetable by the end of September to ease market restrictions. In the meantime, however, there are signs of new trade and investment barriers in China. Foreign firms are also complaining about the possibility they will be forced to make technology transfers in exchange for market access.
“Foreign companies are increasingly discouraged by the fact that policy announcements and the objectives of market openness are not translated into action,” the Ambassador said. “There is a more cautious attitude and more reluctance to take those announcements at face value.” There is growing discontent about the lack of reciprocity, with the almost unlimited investment possibilities in the EU for Chinese investors compared with the restrictions foreign investors face in China in fields such as cars, health care, insurance and telecoms.
So far the EU does not have an agency like the Committee on Foreign Investment in the United States (CFIUS) to review foreign investments, but its member states have set up or tightened their own investment legislation. The EU Ambassador said the proposals were designed for security and to protect public order, and where not directed at any one country. “This is not designed to be an instrument to restrict Chinese investment into Europe,” Ambassador Schweisgut said.
China’s investment in the EU last year grew by 77% compared with 2015 to €35 billion, while the EU’s investment in China fell for the fourth straight year to €8 billion, down 23% last year. The EU Ambassador said the EU’s investment into China was only a fraction of the EU’s investment into the United States, and there was great potential to expand EU investment into China.
“In the future, if you look at the size and importance of our economies, it would be a huge waste of opportunity not to fully utilize this potential,” he told the South China Morning Post.
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