Chamber President Mats Harborn Speaks at 12th EU-China Business Summit Go back »

2017-06-14 | All chapters

Chamber President Mats Harborn Speaks at 12th EU-China Business Summit

Distinguished guests, ladies and gentlemen,

Two days ago, we presented the 2017 Business Confidence Survey in China. If one was to summarise the findings of the report. Those findings would show how there is a lack of a level playing field for business in China and at the same time it would point to the new economic reality, a dynamic and innovative Chinese economy.

As a chamber we must understand the challenges facing our member companies and China as a whole. Knowing where China is in its development path can lead to more tailored and well-constructed proposals.

The 'old normal’ is dead – but the 'new normal’ is not entirely what we have come to believe it is. New forms of economic development must continue to be sustainably done: socially, economically and environmentally.

Sustainable development will not happen without a level playing field.

This entails having an agreed upon set of rules that are enforced and applied equally to everyone in the marketplace.

Sustainable development starts with appropriate regulation. In our BCS improvement was noted in anti-corruption efforts, as indices showed it moving from 7th to 9th place, indicating that the issue was no longer as much of a hurdle to businesses in China as it once was. Regulation, on the other hand, still remained as one of the top three issues foreign enterprises face. Our members feel that industries are often over-regulated. Regulation is often applied wantonly, it is written in a confusing manner, and too little time is given for proper implementation.

Internationally, having a level playing field is synonymous with reciprocity. On this issue, our members were clear. 79% put market access barriers as one of the top three issues affecting business success.

Reciprocity means that European companies should have the same access to the Chinese market as Chinese companies have to the European market. This is what we hope the CAI will achieve.

But what’s in it for China? In the Chamber, we call the CAI the WTO 2.0, as it would help continue to deepen economic reform inside China. European companies want to be strategic partners in the economic opening up of China.

Should China fear a more level playing field? The innovation boom in China suggests no. What we see in pockets with little industrial policy and little to no regulation, is a fast and robust amount of innovation. Today it is especially true in B2C andareas of B2B that seek a greater amount of global market access.

In the BCS, 90% of responding members believe Chinese companies will have caught up to European firms in their ability to innovate within 10 years.

This can offer opportunities for foreign companies. Innovation and competition on equal terms, we welcome. That is the very nature of fair competition. The fight goes on. Every day is a new day. Stay alert.

Competition is also good between nations.

The theory of comparative advantage is alive and kicking – with many seeing global trade not behaving as a  zero-sum game. The result of fair competition is a more evenly distributed allocation of resources and increased sustainability.

Timing is important.

Two developments make the early conclusion of the CAI important:

With the US spreading uncertainty in a number of areas, due to them leaving the Paris Climate Accord –– China has expressed a willingness, and can indeed play a global role in promoting globalisation, free and fair trade and efforts to combat climate change.

But China now needs to increase their credibility. We have heard many promising speeches: Xi’s speech at the G20 meeting in Hangzhou, the speech at Davos and the statement concerning State Council Document No.5 that promises further access to the Chinese market for foreign enterprises. Now China needs to walk the talk and go from rhetoric to action. Therefore, the EU and China need to commit to reaching an early conclusion of the CAI – within 12 months.

The second thing that makes a CAI timely, is that it would coincide with a turnover of new people in China’s government, starting in March of next year, and would be a great start to the next five-year period under President Xi Jinping. China has high ambitions and faces many challenges. Climbing up the value chain, as outlined in the China Manufacturing 2025 plan, requires further integration into global value chains and dealing with the urgent restructuring of Chinese industry. This can be further helped along by allowing foreign capital in more areas of the economy and retooling support given to SOEs.

From the Chamber, we will do what we can to support the creation of more level playing field that will be good for China and good for our member companies.

Thank you!