China Warned Over Hostility Towards Foreign Companies

American government officials and European business heads have highlighted concerns that doing business in China has become increasingly difficult in recent times. The ongoing Sino-US talks are the last discussions to be led by the current U.S administration who have sought to address issues such as market distortion caused by China’s overcapacity.

In a statement, Jack Lew, US Treasury secretary, said,

Concerns about the business climate have grown in recent years, with foreign businesses confronting a more complex regulatory environment and questioning whether they are welcome in China

China is currently the fastest-growing source of foreign investment for the U.S. but the total amount of Chinese FDI in the country is just around $10.2 billion, as shown by reports from the Treasury department.

Reuters

The European Union Chamber of Commerce in China released its latest report which has also reflected the increasing pessimism amongst European businesses with regards to doing business in China. It has said that companies are facing a hostile environment in China reporting that it is in fact less favourable than the world average.

JörgWuttke, chamber president has said that there were a number of unfulfilled promises regarding opening up China’s market for foreign companies which were committed in China’s Third Plenum reforms. The country has in fact moved in the other direction with many new initiatives such as new security related laws and reduced internet access which have harmed businesses.

The chamber’s report has observed that the odds are highly in favour of the country’s domestic enterprises, making the slowdown more intense for European businesses. The report which surveyed 500 respondents has showed that only 47 per cent propose to expand their operations in China this year, down from 56 percent last year.

Chinese leaders have stated that the country faces a tough challenge to meet the 6.5 percent growth target it has for the next five years. In an attempt to counter the slowdown, China has proposed several plans such as Internet Plus and Made in China 2025 which are aimed at making the country a world leader in markets like semiconductors and robotics. Foreign leaders and business executives believe that such measures would encourage protectionism and hinder efforts to open up its market.

Overcapacity continues to hurt the country. European companies in the industries of car, transport and logistics, chemicals, and the IT and telecom sector have been the worst-hit by the overcapacity and have seen the maximum drop in revenues

Charlie Harrison

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