European companies are “worried” and wondering about their future in China: this is the warning issued on Monday in Beijing by EU Trade Commissioner Valdis Dombrovskis.
During his four-day visit to mark the economic and trade dialogue between China and the European Union (EU), Mr. Dombrovskis spoke to students from the prestigious Tsinghua University in Beijing.
“European companies are concerned about the direction China is taking,” the commissioner said, and “many of them are questioning their place in this country” due to a “more politicized business environment.”
And “this has led to less transparency, unequal access to public markets, discrimination in security standards and requirements, and localization and data transfer requirements.”
The EU Commissioner referred to China’s recently passed national security laws.
“The new Foreign Relations Act and the new version of the Espionage Protection Act are causing great concern for our economy,” he emphasized, because “their lack of clarity leaves too much room for interpretation.”
The European Union Chamber of Commerce’s latest annual report also came to worrying conclusions, pointing to an “increasingly unclear” business climate, with the “ambiguity” of regulations exposing companies to more “risks”.
According to the Chamber, this context led 11% of European companies surveyed to move their current investments out of China.
“Loser-loser”
The European Commission’s head of digital, Vera Jourova, also traveled to Beijing last week and called for more “clarity” on local regulations.
This increase in contacts between Brussels and Beijing comes as the bloc appears to be raising its voice on Chinese trade practices, denounced as “unfair” by President Ursula von der Leyen.
The latter announced the launch of an anti-subsidy investigation against Chinese electric vehicles in a speech in Strasbourg on September 13th.
Beijing condemned a “protectionist” measure that would have a “negative impact on economic relations.”
Commissioner Dombrovskis assured on Monday that China remains attractive for investments by European companies.
“Both the EU and China have benefited enormously from their cosmopolitanism,” “which is why I will continue to defend openness as a long-term successful strategy.”
But now European companies are wondering “whether what many viewed as a “win-win” relationship in recent decades could become a “lose-lose” dynamic in the coming years.”
Wang Wenbin, spokesman for China’s Foreign Ministry, was asked about this during a regular press briefing and assured that China will continue to “protect the legitimate rights and interests of individuals and organizations.”
“We will continue to provide a market-oriented, compliant and international business environment for companies around the world that operate legally in China,” he added.
“China is not a source of risk (for these companies), but a powerful force to prevent and mitigate them.”
Ukraine
The EU Commissioner also warned China about another problem that is damaging its image: the conflict in Ukraine.
Beijing’s refusal to condemn the Russian invasion is “damaging China’s image,” he warned.
“There is (…) a reputational risk for China” and this attitude “damages the country’s image, not only towards European consumers, but also towards companies”.
“Territorial integrity has always been a key principle for China in international diplomacy” and “China has always advocated that every country can freely choose its own development path,” he stressed.
“Therefore, it is very difficult for us to understand China’s position on Russia’s war against Ukraine because it violates China’s basic principles,” he said.
China and Russia view each other as strategic allies, with the two countries often touting their “borderless” partnership and economic and military cooperation.
Since the start of the Russian invasion of Ukraine in February 2022, which China does not want to condemn, they have grown even closer together.
Chinese President Xi Jinping visited Russia in March, while his counterpart Vladimir Putin is expected in China in October.