HONG KONG — Amidst growing concerns over China’s economic growth and investment climate, the European Chamber of Commerce in China has called for the country to reprioritize its focus on economic reforms and boost investor confidence by creating a level playing field for all companies operating in the country.
In its annual European Business in China Position Paper released on Wednesday, the Chamber pointed out that business confidence in China is at an all-time low due to issues such as lagging domestic demand and overcapacity in certain industries. The paper highlighted the need for China to open up its economy and allow for a more free market, which would ultimately result in better resource allocation and increased domestic demand.
According to the paper, the profit margins of two-thirds of the companies surveyed earlier this year were at or below the global average. This is a concerning trend that needs to be addressed in order to attract more investments and foster a healthy business environment in China.
Amidst this backdrop, China’s recent actions such as filing a complaint with the World Trade Organization over European Union tariffs on electric vehicles made in China, as well as launching anti-dumping and subsidies investigations on European dairy products, brandy and pork exports, have added fuel to the fire and raised fears of a potential trade war.
The European Chamber’s President, Jens Eskelund, stated that many European businesses are now questioning the returns on their investments in the world’s second-largest economy and are deterred by factors such as China’s economic slowdown and a politicized business environment. This trend is only set to intensify if key business concerns are not addressed.
In light of these challenges, the European Chamber’s paper proposes over 1,000 recommendations for China to resolve issues faced by European businesses and improve the investment climate. One of the key recommendations is for China to refrain from punishing companies for the actions of their home governments. Additionally, the paper calls for proper implementation of policy packages aimed at attracting foreign investment and urges the Chinese government to avoid erratic policy shifts.
The report also highlights the importance of proactive engagement between the EU and China and emphasizes the need for measured and proportionate responses when disagreements arise.
In conclusion, the European Chamber of Commerce in China urges China to take swift action in addressing the concerns of European businesses and creating a more favorable investment climate. As the world’s second-largest economy, China has an immense potential for growth and can greatly benefit from the presence of European businesses. By leveling the playing field and fostering a more open and stable business environment, China can boost investor confidence and continue on its path towards sustainable economic growth and reforms. The European Chamber of Commerce stands ready to work with China in achieving this goal and looks forward to a fruitful and mutually beneficial relationship between the EU and China.
