Lack of transparency, unequal access to public markets, discrimination… European Trade Commissioner Valdis Dombrovskis warned Beijing of the concern that is affecting European companies established in China. Visiting for four days on the occasion of the Economic and Commercial Dialogue between China and the European Union (EU), Valdis Dombrovskis spoke to students at the prestigious Tsinghua University in Beijing.
“European businesses are worried about the direction China is taking,” said the commissioner, and “many of them are questioning their place in this country,” due to a “more politicized business environment.” And “this has resulted in less transparency, unequal access to public markets, discrimination in security standards and requirements, as well as requirements in terms of localization and data transfer”.
The European commissioner cited China’s recently approved national security laws. “The new foreign relations law and the new version of the anti-espionage law are of great concern to our business community,” he stressed, because “their ambiguity leaves too much room for interpretation.”
The recent annual report of the Chamber of Commerce of the European Union also drew worrying conclusions: European companies in China are faced with an “increasingly ambiguous” business climate and the “vagueness” of regulations exposes them to to more “risks”. This context has led 11% of European companies surveyed to move their current investments out of China, according to the Chamber.
Traveling to Beijing last week, the head of digital at the European Commission, Vera Jourova, pleaded for more “clarity” in local regulations.
“Unfair” commercial practices
This increase in contacts between Brussels and Beijing comes as the Union seems to be raising its voice regarding Chinese commercial practices, denounced as “unfair” by President Ursula von der Leyen. The latter announced on September 13, in a speech in Strasbourg, the launch of an anti-subsidy investigation into Chinese electric vehicles. Beijing denounced a “protectionist” measure which will have “a negative impact on economic relations”.
On Monday, Commissioner Dombrovskis assured that China remained attractive for investments by European companies. “Both the EU and China have benefited enormously from their openness to the world,” “which is why I will continue to defend openness as a winning strategy in the long term.” But now European businesses are “wondering whether what many saw as a ‘win-win’ relationship in recent decades could become a ‘lose-lose’ dynamic in the years to come.”
The European Commissioner also warned China about another issue penalizing its image: the conflict in Ukraine. Beijing’s refusal to condemn the Russian invasion “harms the image” of China, he warned. “There is (…) a risk in terms of reputation for China” and this posture “harms the image of the country, not only vis-à-vis European consumers, but also businesses”.
“Territorial integrity has always been a key principle for China in international diplomacy” and “China has always advocated that each country be free to choose its own development path,” he stressed. “So it is very difficult for us to understand China’s position on Russia’s war against Ukraine, because it violates China’s basic principles,” he said.
China and Russia consider each other strategic allies, with the two countries frequently touting their “limitless” partnership and economic and military cooperation. They have grown even closer since the start of the Russian invasion of Ukraine in February 2022, which China refuses to condemn. Chinese President Xi Jinping visited Russia in March, while his counterpart Vladimir Putin is expected in China in October.
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