European Chamber Position Paper: disappointment

The latest Position Paper released by the European Chamber (EUCCC) confirms the general feeling of the business community: disappointment and unhappiness. And for good reasons.

The SCMP produced a pretty good analysis:
‘Disappointed’ EU businesses urge prompt reform and opening of market in China
SCMP article

Some excerpts:

The EUCCC has urged Beijing not to delay to deliver on promises it made years ago to create a level playing field for European businesses when their Chinese rivals have few limits on their investment in EU markets.

The business lobby group expressed, once again, its disappointment about stalled reforms that were announced in November 2012. It is not the first time foreign business associations have criticized the slower-than-expected process of reforming unproductive state firms and widening market access, or voiced concern about an increasingly hostile business environment and rising protectionism alongside sluggish growth in China.

“Unfortunately, the reform agenda still often appears to be confused, uncoordinated and subject to intense resistance from special interest groups and local governments,” the report said.
“In short, the decision [on economic reform] has yet to deliver on its promises, for European and private Chinese business alike. As it initially raised expectations quite significantly, this failure to follow through has contributed to rising level of pessimism.

Ties between Beijing and Brussels were challenged recently by a dispute on rising exports of cheap Chinese products in overcapacity sectors in EU markets. EU members said the flood of Chinese products threatened local production and put local employment at risk. The bloc also launched anti-dumping investigations and imposed high punitive tariffs on Chinese exports, especially on industrial products.

Beijing is unhappy with the EU connecting China’s overcapacity to a decision on whether and how to recognize China as a market economy, a status which is largely shrugged off by many economists in China but would be deemed a political triumph for Beijing.

In the report, the EU chamber also called for “reciprocity” in bilateral investment between EU and Chinese companies.
“It is an increasingly serious concern that reciprocal market access has yet to be fully extended to European business in China,” the report, adding that Chinese companies experience few limitations on buying European companies.

It also noted that 70% of the Chinese investment that flew into Europe last year came from SOE. Many of those investments were in advanced manufacturing and clean technology, which are priorities of China’s 13th five-year plan.
“It is therefore valid to question whether measures will be taken to close off participation by European business in China’s domestic market once their new technologies have been acquired by Chinese investors.”

Another good comment is from the Financial Times, see:
1 September 2016 – Europe lobby warns on China market barriers
Tom Mitchell and Christian Shepherd in Beijing
Financial Times article

Some excerpts:

“There is a small, rocky pathway to China [for foreign investors] and an autobahn from China to Europe,” said Jörg Wuttke, head of the EUCCC. “The increasing wave of Chinese investment into Europe, while European investment in China drops, highlights the lack of reciprocal market access.”
“It is almost impossible to imagine in the current climate that a European company would be permitted to make a significant investment in an equally prominent Chinese company with advanced technological capabilities,” the chamber said.

When the Australian government recently rejected a Chinese bid for its electricity grid by China State Grid on national security grounds, some foreign executives noted a similar sale in China to overseas investors would not be permitted by Beijing.
The Chinese government has not significantly reduced restrictions on foreign investors since it joined the World Trade Organization 15 years ago.

“It is no longer clear that reform is still a top priority,” Mr. Wuttke said, adding that “the current lack of reciprocity in market access is politically unsustainable”.

Many Chinese investments in Europe, such as Geely’s acquisition of Swedish carmaker Volvo in 2010, have been successful, saving thousands of local jobs.
But as attention has turned this year to pressure on EU and US steel mills from cheap Chinese exports, western governments’ patience with the barriers confronting foreign investors in China is wearing thin.

I can only agree with those complaints.
The main issues are lack of reciprocity, increasingly difficult market access, empty promises, delays in tackling overproduction and so on. China is “unhappy” the EU hesitates to grant Market Economy Status but many EU members feel China has failed to do its part.
Overall the mood in the business community is rather black than white. While some opportunities do still exist, many industries face a tide of nationalism, closed markets and unfair treatment.

See here more details provided by the EUCCC. Worth reading…
Executive_Summary_2016_2017[English Version]
Position_Paper_2016_2017_Launch_PPT[English Version]