European Chamber's Statement on President Xi's Speech at the CIIE Go back »

2018-11-05 | Shanghai

Background

On 5^th November 2018, President Xi Jinping delivered the keynote speech at the opening ceremony of the China International Import Expo (CIIE). His speech echoed previous statements about the importance of globalisation and the need for China to continue to open up to the international economy. He specifically introduced five ways in which China will further open up:

1. Stimulate potential for imports
2. Broaden market access for foreign investment
3. Create a world-class business environment
4. Explore new horizons of opening up
5. Promote international cooperation multilaterally and bilaterally

Stance

Much of the content in the speech delivered by President Xi Jinping at the opening of the CIIE echoed what was previously announced at Bo’ao in April 2018. While the European Union Chamber of Commerce in China (European Chamber) has recognised several areas of progress since then, the vast majority of the commitments made by the Chinese Government remain unrealised. This constant repetition, without sufficient concrete measures or timelines being introduced, has left the European business community increasingly desensitised to these kinds of promises.

Nevertheless, there were two developments in the speech that were noted by the European Chamber as being potentially significant. The first was the brief reference made by President Xi to expand market access by removing caps on foreign investment in education and medical services, which may be of interest to some European enterprises. The second was President Xi’s stated support for an acceleration to the negotiations for the EU-China Comprehensive Agreement on Investment (CAI), which European businesses also hope to see successfully concluded as soon as possible. 

However, other announcements fell short of raised expectations. For example, President Xi specified that the soon-to-be-released draft foreign investment law will be implemented to provide a level playing field for international firms, while reiterating that the ultimate aim is to afford national treatment to foreign companies. If national treatment is the goal, laws that differentiate foreign-invested from domestic enterprises should be abolished, and all businesses in China should operate under a uniform company law.

Additionally, the stated ambitions to further strengthen free trade zones (FTZs) to pilot new policies and liberalise the Chinese economy indicate a timid approach to reform that is not representative of China’s economic weight and maturity. European businesses are increasingly disenchanted with FTZs, which separate producers from their consumers and present logistical challenges. After four decades of experiencing the fruits of economic liberalisation, China should focus on opening up new sectors of its economy to foreign investment, not ‘piloting’ reforms in areas that are ringfenced from the rest of the country. 

Expectations of the CIIE have been continuously stoked by the Chinese Government over the past year, with President Xi even announcing at April’s Boao Forum that it is “a major policy initiative and commitment taken of our own accord to open up the Chinese market.” With this in mind, European businesses think that the commitments made today do not go as far as is necessary.

“President Xi’s stated support for opening the medical services and education sectors as well as a speedy conclusion to the CAI negotiations is a welcome development. That said, European business had higher hopes for what had been marketed by the Chinese government as a milestone event,” said Carlo D’Andrea, vice president of the European Union Chamber of Commerce in China and chairman of the Shanghai Chapter. “What matters to us is that concrete actions are forthcoming and that reforms are clearly timetabled. If China really will continue to open up, we would have expected additional and specific commitments to have been announced by President Xi today.”

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