China urged by foreign chambers of commerce to take firmer hand with private sector support

China urged by foreign chambers of commerce to take firmer hand with private sector support

China urged by foreign chambers of commerce to take firmer hand with private sector support

Foreign chambers of commerce in China have repeated their now-familiar call for action from Beijing to back its pro-business rhetoric – part of a larger effort to rekindle investment – even after the August unveiling of a 24-point plan to support overseas firms.
Chambers that took part in a round table discussion hosted by Deputy Minister of Commerce Ling Ji specifically requested traceable implementation of policies in reference to the omnibus package, announced amid Beijing’s charm offensive to prevent an exodus of foreign capital.

“European businesses look forward to a timeline detailing the full implementation of the remaining measures listed [in the package],” said Jens Eskelund, president of the EU Chamber of Commerce in China, who attended the round table on Wednesday.

Beijing said most of the 24 policies, including better intellectual property protection and tax incentives, had been enforced.

Retaining foreign investment and optimising the business environment are among the more pressing issues that Chinese lawmakers will discuss next week, as they meet in the capital for the country’s annual parliamentary gatherings, known as the “two sessions”, to review and approve the government work report and economic plans for the year.

Fixed-asset investments by foreign firms rose a mere 0.6 per cent year on year in 2023, compared to 3.2 per cent for mainland Chinese firms, while foreign direct investment dropped 11.7 per cent year-on-year to 112.7 billion yuan in January.

02:31

China GDP: Beijing’s long to-do list to boost its economy in 2024

China GDP: Beijing’s long to-do list to boost its economy in 2024

The most recent survey by the British Chamber of Commerce in China also found its members were having a harder time doing business in 2023, with many treading water on investment into the country.

“Whilst many strides have been made to see the guidelines and goals put into policy, this didn’t necessarily translate into a return to confidence,” said the chamber in a statement.

China has to decide if it wants to be fully open to foreign business or not

Maximilian Butek, German Chamber of Commerce in China

Maximilian Butek, executive director of the German Chamber of Commerce in China, said the utmost priority would be real work to revitalise the Chinese economy, not just “window dressing.”

“This includes measures to build confidence among consumers and the private sector,” he said.

Chambers have also registered concerns over a perceived tangling of priorities, as top Communist Party meetings continue to put the onus on politics and national security rather than a flourishing economy.

China’s foreign firms fear golden era over as Beijing aims to ‘solidify control’

“China has to decide if it wants to be fully open to foreign business or not,” Butek said. “To increase confidence, signals and messages must be aligned.”

But for now, exiting China outright is an “unpopular choice” for Europe’s CEOs, according to a report from The Conference Board, an American think tank.

While two-thirds of Europe’s CEOs are planning supply chain changes in the near future, less than 2 per cent plan to exit China, the researchers found, adding the appetite for decoupling is “less popular” among Europe’s CEOs than peers in other surveyed regions.

But with an EU probe into subsidies for China-made electric vehicles under way, and persistent complaints from the bloc about “lopsided” trade ties with China, sentiments may change.

“If you look at container movement, it’s 6.4 million containers going west to Europe [from China] but only 1.6 million coming back,” said Joerg Wuttke, former president of the EU Chamber, in a recent interview with Phoenix TV. “The ratio goes from 2.9:1 years ago to 3.7:1 or 3.8:1 now.”

Trade between China and the EU dropped 7.1 per cent year on year in 2023 – steeper than the 5 per cent decline in China’s overall trade – and China came close to losing its perch as Germany’s biggest trading partner the same year.

With the two sessions fast approaching, hope springs eternal for Beijing to do more to reassure businesses.

At a Politburo meeting on Thursday, China’s leadership vowed to make its policy environment “transparent and predictable” and take a firmer hand in boosting growth as well as confidence.

Foreign chambers expressed guarded optimism in response.

“The 24-point guidelines saw issues regularly raised in British Chamber advocacy cemented in policy with a clear commitment to address them, followed by a broader Chinese government move to open communication channels, which attracted positivity from members,” said the British chamber.

Source link