EU business group laments China’s ‘reform deficit’

FOREIGN COMPANIES can’t compete on a level playing field in China because the world’s second-largest economy is stuck in a “reform deficit,” the European Union (EU) Chamber of Commerce in China said Tuesday. In contrast to the massive trade surplus China has run for years, pledges from Beijing for a transformative year of reforms and liberalizations have moved too slowly and incrementally, the chamber said in its annual report.

BEIJING — Foreign companies can’t compete on a level playing field in China because the world’s second-largest economy is stuck in a “reform deficit,” the European Union (EU) Chamber of Commerce in China said Tuesday.

In contrast to the massive trade surplus China has run for years, pledges from Beijing for a transformative year of reforms and liberalizations have moved too slowly and incrementally, the chamber said in its annual report.

The 394-page position paper details the problems EU firms face in China, and represents the voice of 1,600 European companies.

The chamber said it received “a clear no” when it asked member companies whether international companies compete on a level playing field in China.

European firms face myriad issues in China, the report said, including preferential treatment for monopolistic state-owned companies, market access barriers and government red tape, as well as IP protection and forced technology transfer.

The roped-off Chinese internet was also identified as a headache by over half of businesses, according to the chamber’s survey.

The report comes as trade tensions with Washington have skyrocketed, with US President Donald Trump announcing Monday new tariffs on $200 billion in Chinese goods that will take effect next week.

As Washington shows signs of ironing out trade frictions with Brussels, Beijing is increasingly worried its top two trade partners could gang up together.

European companies and officials share many of the same concerns as Washington, but they have not endorsed Mr. Trump’s provocative use of tariffs as a bargaining chip.

Beijing had pledged the year of 2018 — the 40th anniversary of former leader Deng Xiaoping’s reform and opening policies that jump-started China’s economic miracle — would be a big year for further changes.

But the continual battle for a market versus state-led economy remains unresolved, despite the Communist Party emphasizing five years ago “the decisive role of the market in allocating resources”, the chamber’s report said.

A number of sectors remain “heavily dominated” by state-owned firms, suppressing the possibility for competition, according to the report. —