March 16, 2017 10:00 am JST

EU business lobby blasts Beijing's protectionist ways

Reality facing foreign companies a far cry from 'equal treatment' pledge, body says

MARIKO TAI, Nikkei staff writer

President of the Chinese chapter of the European Union Chamber of Commerce Joerg Wuttke criticises China's protection of key industries and high barriers of entry for foreign companies. (Photo provided by the chamber)

BEIJING The European Union's business lobby has slammed China for failing to deliver on its promise of "equal treatment" for foreign companies and said Beijing's promotion of domestic manufacturers could distort the global market and cause job losses.

In a statement released on March 7, the EU Chamber of Commerce expressed growing concern over a "consistent approach to industrial development driven by political masters, not [the] market."

This approach is especially evident in technology-driven sectors, such as information technology, new energy vehicles, medical devices and biopharmaceuticals, which "remain largely closed to foreign suppliers," Joerg Wuttke, president of the Chinese chapter of the chamber, said.

These sectors are covered under Beijing's "Made in China 2025" initiative aimed at encouraging Chinese companies in 10 industries to supply their own high-tech components by 2020 and materials by 2025.

The chamber's criticism came during China's annual National People's Congress. Speaking at the opening session of the congress on March 5, Premier Li Keqiang said that under the manufacturing initiative, foreign companies "will enjoy the same preferential policies" as local entities.

But Wuttke, speaking on March 7, said foreign players are "facing increasing pressure to hand over [their] advanced technologies in exchange [for near-term market access]." This, he said, "is changing the perception of China in public, particularly in Germany. People are increasingly questioning that unfairness."

According to the chamber, EU investments in China declined by 23% to 8 billion euros ($8.52 billion) in 2016 from 10 billion euros the year before, while Chinese investments in the EU increased to 35 billion euros, a jump of more than 77% from the year before.

Concerns about China's manufacturing initiative are only adding to frustration over Beijing's lackluster efforts to cut excess capacity. The EU business lobby said Li's speech, which included promises to cut steel and coal output by 50 million tons and 150 million tons, respectively, "pretty much resembles what it was last year, and there was not much [action] in a positive sense."

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