Archive for September 7th, 2009

Monday, September 7, 2009

Quote: Wartime Childhood

My childhood years were lived in the chaos of war. The school where I studied was run by my grandfather, but was destroyed in the flames of war. I know that this world isn’t peaceful, but we are striving for peace and harmony.


Chinese premier Wen Jiabao (温家宝), inspecting Beijing’s 35th (Middle) High School, September 4

Monday, September 7, 2009

EUCCC on Business in China: Growing Interest and Growing Caution

The European Union Chamber of Commerce in China (EUCCC, 中国欧盟商会) has published its European Business in China Position Paper 2009. The Chamber’s Business Confidence Survey 2009, referred to in a 10-pages summary, asked its interviewees:

What else [besides the stimulus package] do you think China’s economic planners should do to re-launch the economy in response to the crisis?


Liberalize Labor Markets 8%
Lower Import Tariffs
or Abolish Totally
Reduce Taxes 29%
Promote more fair Competition,
fewer Monopolies

(300 respondents, PDF file page 7, download here (“executive summary” »)

The position paper summary reiterates the survey’s major issue:

The EU’s trade deficit with China of EUR 170bn in 2008 makes headlines. But as staggering as this figure is, its significance is overrated. The European Chamber does not believe that a perfect balance of trade between the EU and China would in itself be desirable or normal.

What matters are the barriers to trade and investment in China, which in 2006 were estimated to cost EU businesses EUR 21bn in lost trade opportunities every year (..). That is the equivalent to one-fourth of current EU exports to China.

Given that the EUCCC is generally lobbying for more, rather than less business with China, its caution here is noteworthy. Its 2009 Business Confidence Survey 2009 indicates that

European investors in high-tech and branded goods are more interested than ever in the Chinese market. However they are extremely cautious about further investment. They have concerns about the protection of Intellectual Property Rights if they transfer technology, and about the relatively unpredictable mergers and acquisitions policies. Meanwhile, the barriers to market entry – the establishment costs in capital requirements, licensing, forced joint ventures and ownership caps – are making China less and less appealing as an investment destination for European companies.

The position paper summary also quotes from the World Bank Group‘s “Doing Business”  project. According to the 2009 data, China only ranks 83rd (out of 181 economies) – which, however, is still an improvement by 7 ranks, compared to 2008. The summary roughly describes several specific cases of what one might call protectionism, and more data from the Business Confidence Survey 2009 can be found there, too (see link under the table above). Associated press quotes the chamber with some examples of government decisions  which led to limiting market access for foreign competitors, or pushed them out of industries.

In general, the position paper strikes a self-confident note. It emphasizes what European companies can do to create sustainable economic growth in China. And while the paper itself remains at standard pitch when describing obstacles to a better business environment, its president, Joerg Wuttke,  strikes some more brassy notes in the press, presenting the report in full – almost 600 pages of complaints.

Wuttke also called on Beijing to better define its ”national interests” after the opaque handling of the July 5 arrest of Rio Tinto’s iron ore marketing team in Shanghai, The Age reported on September 3.

A summary of the paper’s key issues can be found here.


Related: Every Fifth German Company Leaving China, August 4, 2008

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