 EU group: China still treats foreign firms unfairly Beijing (AFP) May 31, 2017 - Doing business in China remains difficult for many European companies and most are still being treated unfairly, a lobby group said Wednesday, undermining Beijing's claims that it welcomes foreign investment. China is facing growing pressure to provide a level playing field and increase market access for overseas firms who have long complained about the country's hostile and biased business environment. The survey comes ahead of an EU-China talks in Brussels on Thursday where two-way investment and trade will be high on the agenda. In recent months Chinese leaders have taken the mantle to defend free trade and denounce protectionism as the United States retreats into "America First" policies under Donald Trump. But the results of the latest business confidence survey by the European Union Chamber of Commerce in China suggest Beijing has a long way to go before its rhetoric matches reality. Forty-nine percent of the 570 respondents said operating in China became more difficult in 2016, a slight pick-up from the previous year's reading of 56 percent. But 45 percent said conditions were "about the same", up from 38 percent a year earlier. A steady six percent said there had been an improvement. And 54 percent said foreign-invested companies were treated unfairly compared with their Chinese competitors, little changed from previous years. That was particularly obvious in environmental regulation, with the vast majority of European companies saying foreign firms were subjected to far more stringent enforcement than Chinese enterprises. More than half said there had been no increase in market access in their industry, unchanged from the previous survey. "European companies are not afraid of competition, they just want to compete on a level playing field," said Mats Harborn, president of the lobby group. Of the companies polled, most of whom have been in China for more than 10 years, half said they felt less welcome than when they first entered the Chinese market. Competition is also intensifying with 60 percent of European companies expecting Chinese firms to close the "innovation gap" by around 2020. "Chinese firms are catching up," said Harborn. "The Chinese government should feel comfortable that it does not need to protect its industries." Looking beyond 2017 European companies are largely pessimistic, with only 15 percent expecting regulatory obstacles to decrease and 40 percent expecting the situation to worsen.
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The EU and China will attempt to deepen ties at a summit Thursday amid rising worry about the direction taken by US President Donald Trump on trade and climate change.
Chinese Premier Li Keqiang will meet EU president Donald Tusk and European Commission head Jean-Claude Juncker with hopes of forging an answer to Trump's "America First" challenge.
But years of skirmishes over trade and human rights will make a deeper alliance difficult.
The incentive to strengthen links with Beijing is strong after German Chancellor Angela Merkel, the EU's most powerful leader, on Sunday warned that the EU can no longer depend on longtime ally US as a reliable partner.
Li, China's second most powerful leader after President Xi Jinping, will also visit Germany where he will meet Merkel and sign a cooperation deal on electric cars.
"There's a lot we can offer each other," said vice foreign minister Wang Chao in the run-up to the European tour by Li.
The Brussels talks follow a tense international tour by Trump in which the unpredictable tycoon refused pleas by his European counterparts to adhere to the 2015 Paris climate accord.
The EU, US and China each roughly represent the same weight in the world economy and an exit by Washington from the climate deal would leave its only chance of survival in the hands of Brussels and Beijing.
Given the context, China's premier and the heads of the European Union's main institutions are expected to deliver a strong statement in support of the Paris agreement.
But besides climate, big obstacles to a deeper diplomatic breakthrough remain.
- 'Walk the talk' -
Also on the agenda is an EU-China investment accord that has been under negotiation since 2013 and that is largely seen as a dry run for a full trade deal.
But those talks are at a standstill over longstanding disagreements on the lack of access given to European companies in China and a fight over cheap Chinese exports that Europeans say are unfairly flooding their market.
China, the EU's second-largest trade partner, "needs to walk the talk," said EU Trade Commissioner Cecilia Malmstroem at a business conference last week.
"The welcome commitments from China about liberalisation have not been matched by concrete action," she added.
Many had hoped that President Xi Jinping's fervent defence of globalisation at the World Economic Forum in January would signal a new open trade era for China.
"We have heard a lot of positive signals coming out of China when it comes to market opening and freer trade, but we hope this week we will lead to some concrete result," the European Chamber of Commerce's Mats Harborn told Bloomberg TV.
But Li Chenggang, assistant minister of commerce, told a news briefing in Beijing that "the two sides don't see eye to eye on all issues".
China's militarisation of islands in the South China Sea and the increase in authoritarianism under Xi have also rung alarm bells for Europeans.
"EU leaders need to make good on their pledges and make human rights and the freeing of peaceful activists a top strategic priority in the EU's relationship with China," said Human Rights Watch's EU director Lotte Leicht.
In a letter to Juncker and Tusk, several groups of rights activists, including Human Rights Watch, urged the EU to take up these concerns with China's leadership.
"While EU officials are willing to engage in very public, critical battles with China over steel tariffs, solar panels, or the South China Sea, most EU officials are not willing to engage publicly in such debates over China's use of torture and arbitrary detention," the letter said.
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