Wed, May 30, 2012 - Page 10 News List

EU might reduce China investments

ENOUGH IS ENOUGH:Companies and countries worldwide say Beijing continues to protect its industries with subsidies, violating its international trade commitments


Frustrated by China’s market barriers, European companies might shift future investment to other economies, a business group said yesterday, in an unusually pointed warning about a possible backlash over Beijing’s trade policies.

Beijing faces a flurry of complaints by the EU, the US and other nations that it is violating its trade commitments by protecting or subsidizing its companies in industries from steel to solar power. With a weak global economy threatening to push up unemployment, Washington and other governments face political pressure to respond.

Half of about 557 European companies that responded to a survey say regulatory barriers have limited their business opportunities and hurt profits, according to the EU Chamber of Commerce in China. One in five companies said that might prompt them to shift future investment to other economies.

“Companies feel as if they missed business opportunities, and if this continues, they might consider to shift their business operations outside of China,” group president Davide Cucino said at a news conference.

Cucino said that if he were a Chinese official, “I would think this sounds alarming.”

He appealed to Chinese authorities to give foreign companies access to banking, insurance and a wide array of other “strategic industries” that are dominated by state enterprises.

Foreign business groups have complained for years that Beijing improperly favors Chinese enterprises, but global companies have continued to invest and are reluctant to talk publicly about their frustrations for fear of angering communist authorities. The report was unusually explicit in saying companies’ frustration has grown so severe that they might scale back investment plans.

The potential threat to investment could be a setback to Chinese government efforts to reverse a sharp economic downturn. The Cabinet said last week it wants more private sector spending, but gave no indication whether foreign companies would be eligible for tax cuts and other proposed incentives.

Cucino said that while Chinese Premier Wen Jiabao (溫家寶) and other top leaders have promised to open more areas of the economy to foreign companies, the Ministry of Finance last week ordered local agencies to buy Chinese goods.

Companies have to look “not to the statement, but to the facts,” Cucino said.

Cucino also appealed to Chinese authorities to treat foreign companies equally with state-owned Chinese enterprises and to promote free-market competition.

The World Bank and private sector analysts have urged similar steps, warning that they are needed to keep China’s economy growing.

The Cabinet said last week it would give private investors more access to China’s energy and other government-dominated industries, but Cucino said European companies have yet to see any sign they might benefit from that.

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