The EU’s trade chief yesterday told Beijing that tough security laws and a more “politicized” business environment have left European companies struggling to understand their obligations, and questioning their future in China.
China’s refusal to condemn Russia for its war in Ukraine also poses a “reputational risk” for the world’s second-largest economy, EU Commissioner for Trade Valdis Dombrovskis said in a speech at Beijing’s Tsinghua University.
He said transparency and openness were “a winning strategy in the long run,” at a time when trade tensions between the European bloc and China are mounting.
Photo: Reuters
“China is navigating a challenging transition from an investment-led economy to a broad-based economy,” he said. “For this it needs to remain open.”
Dombrovskis’s four-day trip, which began on Saturday, follows a report by the EU Chamber of Commerce that showed business confidence was at one of its lowest levels in years.
It also follows Brussels’ decision to launch a probe into Beijing’s electric vehicle subsidies.
The investigation could see the EU try to protect European automakers by imposing tariffs on vehicles that it believes are unfairly sold at lower prices.
The Chinese Ministry of Commerce has condemned the EU’s “naked protectionism,” and said that the measures “would have a negative impact on China-EU economic and trade relations.”
Dombrovskis yesterday insisted that China remained an attractive investment opportunity for European businesses.
“The EU and China both benefited immensely from being open to the world,” he said, adding that “European companies still want to invest here, but only if the conditions are right.”
Growing challenges for European business in China mean that “what many saw as a ‘win-win’ relationship before could become a ‘lose-lose’ dynamic in the coming years,” he said.
A new foreign relations law aimed at combating foreign sanctions, and an update to China’s tough anti-espionage regulations are of “great concern to our business community,” Dombrovskis said.
“Their ambiguity allows too much room for interpretation,” he added.
“This means European companies struggle to understand their compliance obligations: a factor that significantly decreases business confidence and deters new investments in China,” he said.
He said that China’s refusal to condemn Russia’s war in Ukraine “is affecting the country’s image, not only with European consumers, but also businesses.”
“Territorial integrity has always been a key principle for China in international diplomacy. Russia’s war is a blatant breach of this principle,” Dombrovskis said.
“So it’s very difficult for us to understand China’s stance on Russia’s war against Ukraine, as it breaches China’s own fundamental principles,” he said.
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