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With state-owned companies controlling half of China’s economy and strengthening their position abroad, the government should allow competition neutrality, according to an annual report released by the European Union Chamber of Commerce in China.
China should also allow the return of foreign workers who have not been admitted since the start of the Covid-19 pandemic.
European companies, which see China as home to a fifth of the world’s consumers, are increasingly involved in political issues and disagreements over the lack of reciprocity in trade and investment conditions. While some parts of the economy are gradually opening up, the establishment of local companies in business means that foreign companies in some sectors are only getting crumbs from the table, says the Chamber of Commerce.
According to them, the more market-oriented part of the economy also includes saturated sectors, which China has opened only to establish a narrative that it intends to open its doors more widely to foreign investors. The Chamber of Commerce refers specifically to the abolition of ownership restrictions on foreign companies investing in Chinese financial services.
“The fact that this reform was carried out so late can be interpreted as allowing foreign investors to enter the railway platform after the train left,” the report reads.
The European Union Chamber of Commerce represents more than 1,700 foreign companies and has made more than 800 recommendations to the Chinese government in its report.
Contrary to recent media reports that foreign companies are in a rush to get out of China, many European companies want to stay and expand their positions in the country, the report emphasizes. However, China’s actions and policies are undermining business optimism, and even in sectors like insurance, which are currently open to foreign companies, regulatory barriers still hamper new business development.
“The increasing long-term challenges faced by European companies in this part of the economy are weakening business confidence,” the document read. “The Covid-19 outbreak has created new obstacles that make Europeans feel less and less welcome in China.”
The Chamber especially drew attention to the fact that many of its worker members are still unable to return to China after the country closed its borders to foreigners due to a pandemic in late March. These restrictions have consequences: hundreds of international school teachers and staff from European companies can no longer enter the country.
This is in stark contrast to the situation in Europe, where almost all EU member states have kept their doors open to Chinese citizens, the report underlines. China’s lack of reciprocity was a recurring theme in the report, not just in terms of immigration.
“Bridging the gap between rhetoric and reality, promoting market potential and market entry, and promoting the progress and regression of the Chinese private sector in the state sector are both immediate and long-term interests of China,” said Joerg Wuttke, Speaker of the House. “European companies, with their technology and experience, are ready to act as the transition catalyst that China needs if it is to continue on the development path to reach its enormous potential.”
Given that China’s industrial technologies “lag far behind Europe, Japan and the United States,” the continent needs to attract other partners to help it survive its alienation from the United States, according to the report.
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