EU Chamber of Commerce suggests policy support for China's demand side

In a recent position paper titled ‘European Business in China 2023/2024’, the chamber said this is particularly important given that supply-side policies have been a contributor to the significant trade imbalances China has accumulated with both the EU and the United States.

“There is a danger that, if not addressed, this may lead to reactions by overseas governments—the growing trade imbalance and the lack of reciprocal market access are often cited by European politicians as key grievances and reasons for dissatisfaction with the relationship with China,” the paper noted.

Implementing policies that can help companies attract and retain foreign talent to work in China is another area that needs to be addressed if China wants foreign companies to optimise the contributions they can make to the country’s development, it said.

This challenge was exacerbated by the pandemic, during which many companies experienced an outflow of foreign workers.

Furthermore, the number of foreign workers from developed economies that work in international companies was shown to be falling in some key cities.

This trend is not beneficial to China’s economy, as high-level foreign talent tend to make significant contributions to innovation, efficiency and productivity in areas that are important to the country’s high-quality development, the chamber observed in its paper.

Some market access challenges in certain sectors are due to ‘one-size-fits-all’ regulations, and can act as a deterrent to foreign investment across multiple industries, it added.

While economic indicators at the beginning of 2023 showed momentum was gathering, as the year progressed, China’s recovery began to wane, with many areas of the economy not performing as expected.

A key factor in this was that the much-anticipated release of pent-up demand simply did not take place, resulting in an extended contraction of manufacturing activity, producer prices and industrial profits.

China’s demographic dividend is also fading, and urban youth unemployment broke historic records for several months in a row in 2023, adding more pressure to the country's recovery.

Fibre2Fashion News Desk (DS)