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    Economy

    EU lobby pushes for balance in market access

    1
    2016-09-02 08:47Global Times Editor: Li Yan ECNS App Download

    Lack of investment opportunities, financial crisis to blame: experts

    The EU Chamber of Commerce in China released a position paper on Thursday calling for reciprocity in openness for foreign investment.

    The position paper mentioned that the recent increase in Chinese investment into Europe has highlighted the sharp imbalance that European companies face in market access in China, and continued to say that this lack of reciprocity is unsustainable and could lead to protectionism and increased tension.

    During the first seven months of this year, China's non-financial overseas direct investment into foreign markets totaled $102 billion (681 billion yuan), up 61.8 percent from a year ago, according to a statement on the website of the Ministry of Commerce (MOFCOM) on August 17.

    Overall foreign direct investment into China during the same period stood at $77 billion, increasing 4.3 percent from a year earlier, a separate MOFCOM statement reported on August 12.

    Chinese experts said reciprocity in openness for foreign investment should not be seen from a restricted span of the last year or two but should be viewed in a greater context of the history of China's reform and opening-up over the past three decades.

    "Back then, European companies enjoyed favorable policies when they came to invest in China but almost no Chinese firms went abroad," Chen Fengying, a research fellow at the China Institutes of Contemporary International Relations, told the Global Times on Thursday.

    In general, Chinese firms in Europe are quite welcome. Recent notable deals include the takeover of German industrial robot maker Kuka by Chinese household appliance company Midea Group and ChemChina's $43 billion takeover of Swiss pesticides and seeds group Syngenta.

    "Chinese investors are desirable suitors for those companies - some of which are already in trouble at the time of the deals - offering cash in one hand and a huge domestic market in the other," Chen said.

    For instance, the Geely-Volvo deal saved the European company that was once in trouble, Chen noted. China is now Volvo's largest market, according to a Reuters report on May 17.

    EU Chamber President Joerg Wuttke was quoted in a Reuters report on Thursday saying that he was worried about protectionist sentiments brewing among European officials as a result of China's slow progress in opening markets.

    Experts said the outcry of looming protectionism is a reflection of a growing trend of protectionism within Europe, stemming from the belief that Europe is being victimized by globalization, and pointed out that the call for reciprocity could be an effort by some within the EU to create a bargaining chip in regard to granting WTO China market economy status.

    The EU has until December to decide whether to grant China market status.

    The EU Chamber of Commerce, a top European business lobby, also went on to say that opening up to foreign investment is in China's own interest as the country's growth in private investment dropped sharply during the first half of 2016.

    Chen said the drop in private investment reflected a scarcity of investment opportunities in China, which has also been adversely affected by the global financial crisis, and that it is natural for the Chinese government to "look after the needs of domestic investors first."

    Zhang Ning, a research fellow at the Chinese Academy of Social Sciences, said despite urging from the EU lobby, China is not likely to alter its pace in further reform and opening-up.

    In addition to four pilot free trade zones (FTZs) in coastal areas, China will establish seven new FTZs in seven different provinces, many of which are inland provinces, the Xinhua News Agency reported Wednesday.

    This week, Chinese lawmakers are also reviewing draft amendments to four laws regarding foreign and Taiwan investment. The amendment means that the current administrative approvals for foreign and Taiwanese investors setting up ventures regulated by the four laws will be suspended, according to the draft revisions.

    "What these developments show is that a negative list approach governing foreign investment will, in a few years time, become full-blown across China, greatly facilitating more foreign investment," Zhang said.

      

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