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EU Chamber Warns China: Open Economy Faster or Risk Backlash

Monday, 18 September 2017 10:54 PM

BEIJING (AP) — A foreign business group appealed to China on Tuesday to move faster in carrying out promises to open its state-dominated economy and warned that inaction might fuel a backlash against free trade.

Beijing faces mounting complaints from Washington and Europe about barriers in industries from finance to medical equipment while its own competitors have largely unfettered access to foreign markets.

Beijing is backtracking in some areas, including by reducing access to its legal services market, the European Union Chamber of Commerce in China said in a report.

"The current lack of reciprocity in market access is not politically sustainable," the chamber president, Mats Harborn, told reporters ahead of the report's release. "We worry that if China is not moving from words to action that this could actually lead to a backlash against the desired economic globalization."

The report appealed to Chinese leaders for changes in fields from aerospace to cosmetics including opening more industry segments, easing limits on foreign ownership stakes in companies and simplifying regulation.

The chamber's American counterpart and other groups have issued similar appeals.

China is a key global market for autos, aircraft, smartphones, cosmetics and other goods. But Beijing bars foreign competitors from a wide range of fields including finance, telecoms and utilities.

The government of President Xi Jinping has made a series of high-profile pledges over the past five years to give market forces a bigger role and reduce the dominance of state companies. But reform advocates complain little has been done to carry out those pledges.

Tensions with Beijing's trading partners have mounted as Chinese companies buy foreign technology and brands while Beijing bars foreign acquisitions of most of its companies.

The president of the European Union's governing body last week announced plans to introduce a mechanism to screen foreign investments — a measure widely seen to be directed at Beijing.

Also last week, President Donald Trump blocked a Chinese-financed purchase of a U.S. semiconductor maker, prompting suggestions Washington might tighten scrutiny of future deals. American authorities are investigating whether Beijing should face penalties for pressuring companies to hand over technology in exchange for market access.

Conditions for foreign companies in China have changed little since Xi took power in 2012, said Harborn. He cited lack of progress on promises to open industries, give foreign companies a "level playing field" and simplify regulation.

The chamber noted the Organization for Economic Cooperation and Development ranks China 59th out of 62 countries evaluated in openness to foreign direct investment.

"We have seen very limited market access openings," he said. "That is a key issue."

European Union Chamber of Commerce in China: www.europeanchamber.com.cn

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A foreign business group appealed to China on Tuesday to move faster in carrying out promises to open its state-dominated economy and warned that inaction might fuel a backlash against free trade.Beijing faces mounting complaints from Washington and Europe about barriers in...
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2017-54-18
Monday, 18 September 2017 10:54 PM
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