European Business Group Urges China to Boost Growth and Reform Economy
European Chamber of Commerce calls on China to prioritize economic growth and reforms amid low business confidence. Over 1,000 recommendations proposed to address challenges faced by European companies in China.
The European Chamber of Commerce in China has issued a call for Beijing to refocus on economic growth and implement reforms to enhance investor confidence. This appeal comes as business sentiment among European companies operating in China reaches a historic low.
In its annual position paper, the European business group emphasized the need for China to create a level playing field for all companies and open its economy further. The document, released on September 13, 2023, outlines over 1,000 recommendations aimed at resolving challenges faced by European businesses in the world's second-largest economy.
Jens Eskelund, president of the European Union Chamber of Commerce in China, highlighted a growing concern among European companies:
This statement reflects the increasing apprehension among European investors about the Chinese market's potential risks outweighing its benefits.
The position paper reveals that two-thirds of surveyed European companies reported profit margins in China at or below the global average. This data underscores the challenging business environment that foreign firms are navigating in the country.
The document also addresses recent trade tensions between China and the European Union. In August 2023, Beijing filed a complaint with the World Trade Organization (WTO) regarding EU tariffs on Chinese-made electric vehicles. Simultaneously, China initiated anti-dumping and subsidy investigations into European dairy products, brandy, and pork exports. These actions have sparked concerns about a potential trade war between the two economic powerhouses.
To improve the business climate, the European Chamber recommends that China:
- Refrain from penalizing companies for their home governments' actions
- Ensure implementation of foreign investment attraction policies
- Avoid erratic policy shifts
- Introduce measures to stimulate domestic demand
The paper also advises the EU to maintain proactive engagement with China and keep its responses "measured and proportionate" when disagreements arise.
It's worth noting that China joined the WTO in 2001 after 15 years of negotiations, marking a significant milestone in its integration into the global economy. The EU has been China's largest trading partner, highlighting the importance of their economic relationship. However, recent years have seen increased tensions, with the EU pushing for more reciprocity in market access and expressing concerns about state subsidies and forced technology transfers in China.
As China pursues its "dual circulation" strategy to boost domestic demand and reduce export reliance, and the EU implements measures like the carbon border adjustment mechanism, both sides face challenges in maintaining a balanced and mutually beneficial economic relationship. The recommendations put forth by the European Chamber of Commerce aim to address these issues and foster a more open and equitable business environment in China.
