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EUCCC report calls for urgent reforms in China
31 May '19
3 min read
Pic: Pixabay
A recent report by the European Union Chamber of Commerce in China (EUCCC) and Roland Berger raised major concerns, saying issues like the Chinese economic slowdown and the US-China trade war pose tough challenges, making the removal of remaining market access barriers, regulatory burdens, unequal enforcement and the remnants of China’s planned economy essential.
In the ‘European Business in China Business Confidence Survey 2019’ conducted with Germany-based global consultancy firm Roland Berger, optimism on growth was found to drop from 62 per cent in 2018 to 45 per cent in 2019, according to a press release from the chamber.
While 47 per cent of respondents expect the number of regulatory obstacles to increase in the next five years, 25 per cent expect the number to remain the same.
About half of respondents expect it will take five years to see competitive neutrality realised, while a third never expect it to be realised.
One-fifth of respondents felt compelled to transfer technology as a condition for market access, nearly two thirds of which occurred over the last two years, and a quarter of which were taking place at the time the survey was being conducted.
As the Chinese economy settles into more mature and stable development, and supply-side reforms continue to be pursued, China needs more than ever to create a business environment with mechanisms to deal with the consequences of slower growth and bolster a functioning market economy.
This implies deploying stronger tools like better bankruptcy rules alongside predictable legislative processes, while providing sufficient lead-times for regulatory change, according to the report.
Creating the open and fair market that European companies expect of China would also remove any justification for the ongoing US-China trade war. European companies share many of the US’ concerns, but strongly oppose the blunt use of tariffs, which have impacted US-bound exports of 25 per cent of survey respondents.
While few companies are yet making significant changes to their China strategy, concerns that tensions will escalate saw the trade war ranked fourth on the list of concerns over future business, outranked only by the Chinese and global economic slowdowns and rising labour costs.
Despite the mounting pressure of such challenges, European companies continue to see solid revenue growth and 62 per cent of respondents view China as a top three destination for present and future investment.
They are increasingly in China, for China, both to access local customers and for exposure to pioneering private Chinese firms that for a second year in a row were viewed by a majority of respondents as equally or more innovative than their European counterparts. (DS)
In the ‘European Business in China Business Confidence Survey 2019’ conducted with Germany-based global consultancy firm Roland Berger, optimism on growth was found to drop from 62 per cent in 2018 to 45 per cent in 2019, according to a press release from the chamber.
While 47 per cent of respondents expect the number of regulatory obstacles to increase in the next five years, 25 per cent expect the number to remain the same.
About half of respondents expect it will take five years to see competitive neutrality realised, while a third never expect it to be realised.
One-fifth of respondents felt compelled to transfer technology as a condition for market access, nearly two thirds of which occurred over the last two years, and a quarter of which were taking place at the time the survey was being conducted.
As the Chinese economy settles into more mature and stable development, and supply-side reforms continue to be pursued, China needs more than ever to create a business environment with mechanisms to deal with the consequences of slower growth and bolster a functioning market economy.
This implies deploying stronger tools like better bankruptcy rules alongside predictable legislative processes, while providing sufficient lead-times for regulatory change, according to the report.
Creating the open and fair market that European companies expect of China would also remove any justification for the ongoing US-China trade war. European companies share many of the US’ concerns, but strongly oppose the blunt use of tariffs, which have impacted US-bound exports of 25 per cent of survey respondents.
While few companies are yet making significant changes to their China strategy, concerns that tensions will escalate saw the trade war ranked fourth on the list of concerns over future business, outranked only by the Chinese and global economic slowdowns and rising labour costs.
Despite the mounting pressure of such challenges, European companies continue to see solid revenue growth and 62 per cent of respondents view China as a top three destination for present and future investment.
They are increasingly in China, for China, both to access local customers and for exposure to pioneering private Chinese firms that for a second year in a row were viewed by a majority of respondents as equally or more innovative than their European counterparts. (DS)
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