What kind of relationship does China want to have with foreign enterprises?

Since China initiated its reform and opening up efforts, European companies have been able to thrive in the Chinese market, as its efficient and welcoming business environment provided them with an unmatched value proposition.

European Chamber President Jens Eskelund

However, with confidence about China’s growth prospects deteriorating among European companies operating in the country,[1] expectations for investment returns are also being moderated. The conclusion being drawn from China’s slowing economic growth is that not everyone will be able to prosper the way they could when the economy was hurtling along at annual growth rates of eight to 10 per cent.

At the same time, the disruptions to supply chains that materialised over the past few years have made companies increasingly risk averse, with improving supply chain resilience one of the top reasons cited in the European Chamber’s Business Confidence Survey 2023 onwhy some European companies are considering shifting or have shifted investments out of China.[2]

Mixed messaging from the Chinese Government only adds to the sense of uncertainty that is unfavourable for investment decisions. The annual work report delivered by China’s outgoing premier, Li Keqiang, at the 14th National People’s Congress held in March 2023 highlighted that the government aims to encourage more foreign investment.[3] However, China’s push for technological self-reliance in strategic areas continues to restrict foreign businesses’ market access.[4]

Topping a growing list of questions over what to expect from the Chinese market is that of what kind of relationship China wants to have with foreign enterprises. Clarity on policy direction and concrete action demonstrating a recognition of the challenges faced by private companies¾Chinese or foreign¾will do much to change the mood and restore foreign companies’ eagerness to continue engaging with China and perhaps even expand their investments in the country.

Some hopeful signals were given at the 10th European Union (EU)-China High-level Economic and Trade Dialogue (HED) in September, co-chaired by European Commission Executive Vice President Valdis Dombrovskis and State Council Vice Premier He Lifeng.[5] The Chamber was in close and regular contact with both the EU Delegation and the Commission in the preparatory stages of the HED and provided input on some of the key challenges experienced by European industry in China – from both a cross-sectoral and a sector-specific perspective. The Chamber welcomes commitments made by the Chinese side to look into issues creating market access barriers for European companies in China, and hopes to see tangible steps taken to address these. We will continue our engagements with stakeholders on both sides to help find a path for strengthening cooperation in areas where it can be fruitful.  

[1] European Business in China Business Confidence Survey 2023, European Union Chamber of Commerce in China, p. 8, 21st June 2023, viewed 10th August 2023, <https://www.europeanchamber.com.cn/en/publications-archive/1124>

[2] European Business in China Business Confidence Survey 2023, European Union Chamber of Commerce in China, pp. 10-11, 21st June 2023, viewed 10th August 2023, <https://www.europeanchamber.com.cn/en/publications-archive/1124>

[3] Full text: Report on the Work of the Government, Xinhua, 15th March 2023, viewed 28th June 2023, <http://www.china.org.cn/china/2023-03/15/content_85169057.htm>

[4] European Business in China Business Confidence Survey 2023, European Union Chamber of Commerce in China, p. 25, 21st June 2023, viewed 10th August 2023, <https://www.europeanchamber.com.cn/en/publications-archive/1124>

[5] EU calls for greater market access and fair competition at EU-China High-Level Dialogue, European Commission, 25th September 2023, viewed 26th September 2023<https://ec.europa.eu/commission/presscorner/detail/en/ip_23_4609>