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EU companies hope faster reforms in China

EUROPEAN companies in China urged the government to push forward with market-orientated reforms and to allow more room for private business to participate in the country’s economic development, the European Union Chamber of Commerce in China said in a report released today.

“An increasingly strong role for the government in developing industries by directing capital into sectors that central planners have established as priorities will not allow China to realize its full economic potential,” the chamber said in its European Business in China Position Paper 2016/2017.

Growth of private investment in China dropped to 2.1 percent in the first seven months this year, compared with the growth pace of 11.3 percent during the same period last year, data from the National Bureau of Statistics showed.

The ebb of private participation in economy sparked concern that the government is playing a larger role in guiding economy and market reform is no longer a top priority.

“This could seriously damage China’s ambitions to establish a vibrant market economy,” said European Chamber President Jorg Wuttke. “Government has an important role to play in supporting basic research, but it simply should not be responsible for directing capital. Instead, private enterprises should be given room to determine where the future opportunities lie.”

Represented views of more than 1,600 member companies of the chamber, the paper highlighted top concerns among European business regarding discriminatory treatment, the existence of market access barriers, increasing tendencies towards protectionism and the resorting to import substitution policies, as well as China’s compliance with its WTO commitments.

The paper pointed to a sharp imbalance in market access European business face in China, compared with a number of high-profile deals by Chinese investors to acquire leading European companies in a wide range of sectors this year.

“This unbalanced situation is not politically sustainable and for its own benefit China should begin reciprocating by opening up and allowing European business to contribute more to its economy,” it said.

European companies welcomed Chinese authorities’ reform commitments and hoped actions to be taken without delay, the chamber said.

The chamber urged negotiation for a comprehensive EU-China investment agreement to be concluded to promote closer bilateral economic relation and ensure full reciprocity.


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