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 verifiable implementation of the policies in the 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,” said Jens Eskelund, President of the EU Chamber of Commerce in China, who attended the round table on February 28. Beijing said most of the 24 policies, including better intellectual property protection and tax incentives, had been enforced.
Retaining foreign investment and optimizing the business environment are among the more pressing issues that Chinese lawmakers will discuss this 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 investment (FAI) by foreign firms rose a mere 0.6% year-on-year in 2023, compared to 3.2% for Chinese firms, while foreign direct investment (FDI) dropped 11.7% year-on-year to CNY112.7 billion in January. 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.
Other business leaders attributed the hurdles facing foreign companies in China to the country’s broader economic headwinds. Maximilian Butek, Executive Director of the German Chamber of Commerce in China, said the utmost priority would be real work to revitalize 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 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. While two-thirds of Europe’s CEOs are planning supply chain changes in the near future, less than 2% 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, sentiment may change. “If you look at container movement, 6.4 million containers are going west from China to Europe, but only 1.6 million are coming back,” said Jörg 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% year-on-year in 2023 – steeper than the 5% decline in China’s overall trade – and China came close to losing its position as Germany’s biggest trading partner the same year, the South China Morning Post reports.
The United States Chamber of Commerce has voiced apprehensions about potential overcapacity in a variety of Chinese industries linked to the nation’s ambitious “Made in China 2025” plan after a delegation visited Beijing. It “conveyed business concerns regarding China’s use of heavy-handed commercial pressure tactics, digital protectionism, and intellectual property theft”, the Chamber said. Launched by Beijing in 2015, “Made in China 2025” aims to transform the nation’s manufacturing sector by focusing on the rapid development of 10 hi-tech industries, including electric cars, telecommunications, robotics and artificial intelligence systems.
