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2016-09-01 | All chapters

European Chamber Calls for Reciprocity

Beijing, 1st September, 2016 -- The European Union Chamber of Commerce in China has today released its European Business in China – Position Paper 2016/2017 (Position Paper) in which it calls for reciprocity in openness to foreign investment and for market forces to play the central role in driving innovation and developing China’s economy.

The Position Paper outlines how the recent increase in investment into Europe has highlighted the sharp imbalance in market access European companies face in China. Chinese companies have successfully completed a number of eye-catching deals to acquire leading European companies in a wide range of areas—including banking, automotive, robotics and critical infrastructure—yet European business is still heavily restricted from making similar investments in China. 

While Europe welcomes foreign investment, this lack of reciprocity is unsustainable and could lead to protectionism and increased tension. Furthermore, with economic growth in China now largely dependent on public investment after growth in private investment dropped sharply during the first half of 2016, it is in the country’s own interests to loosen restrictions and offer full reciprocity. Doing so will also help to confirm that China supports globally accepted principles.

Due to the lack of progress in market reforms, the Position Paper recommends ‘dusting off’ the Third Plenum’s Decision and taking concerted measures to enable market forces to play the central role in China’s economy. The European Chamber is concerned that as the Thirteenth Five-Year Plan appears to carve out a larger role for government in guiding China’s economy, 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 Jörg 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.”

The European Chamber therefore continues to advocate for the necessary market-orientated reforms to be pushed through, without further delay. “Finalising an EU-China Comprehensive Agreement on Investment in 2017, which provides full reciprocity through an ambitious market-opening component, is an essential part of the reform agenda,” said President Wuttke.

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Lance Noble

June yu

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