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European companies expect more business in China

European companies are generally optimistic about their business in China thanks to the strong economic growth and positive progresses on the business environment.

Trade imbalance, albeit still continuing, is not a big problem. But wider market access and more transparency is top on their wish list now. And they are seeking for more opportunity of engagement in the environmental protection industry.

European Chamber of Commerce in China, which represents more than 1,400 member companies, published its annual Position Paper Tuesday Sept. 9 in Beijing. It is the eighth edition and also the biggest one since the first was released in 2001 when China joined WTO. Joerg Wuttke, President of the Chamber, believed that the growing size of the book reflected the expanding trade and investment between China and EU.

The Position Paper will be presented to Chinese authorities and the European Commission and EU member states after it was published. EU trade commissioner Peter Mandelson will visit Beijing at the end of the month and the China-EU Summit will be held in December.

Wuttke highlighted significant developments on regulatory environment, economic relations and business environment since the launch of their 7th report was announced the same month last year. Government restructuring reduces overlapping responsibilities. New laws and regulations, such as the Labor Contract Law, the Anti-Monopoly Law and new Foreign Investment Catalogue, have been promulgated and put into effect. The Chamber had actively involved in the legislation of many of those laws and regarded the development of the legal framework as an advantage to European businesses.

The two way trade between China and EU has been growing. The figure from China’s Ministry of Commerce showed that China-EU trade rose 27% in 2007. From January to July, the trade increased by 27.9%, with China’s imports from EU up by 29.8% and exports to EU by 27.1%.

Trade imbalance was one of the top concerns of the Chamber in China and the Commission in Brussels last year. It is not this year although the EU’s trade deficit with China continues to widen. According to the Paper, the share of imports from Asia remains stable.

Europeans benefit from Chinese products which help restrain inflation in the EU, reduce households’ cost, and increase disposable income to purchase high-end locally produced goods and services. Wuttke added that a perfect balance of trade is nor desirable nor normal in the era of globalization.

Several issues raised in the Position Paper last year have been resolved or got remarkable progress. The Chamber noticed most positive development in banking, energy and petrochemical. In the IT and telecommunication sector, for the first time, a European telecom equipment manufacturer reached a tech transfer agreement with its Chinese partner.

The central and western parts of China represent new dynamics. Wuttke said he had been kept telling Chamber members about how diversified China was in terms of economic development model. The Chamber will host a forum at the end of October in Chengdu, Sichuan province which was hard hit by the strong earthquake in May. Market access was the top concern of European businesses in China. That happened against the backdrop that the investment issue was increasing important on the agenda of the economic relations.

European suppliers claimed that non-tariff barriers cost them more than €21 billion business opportunities a year. And they hope that they could participate more in public procurement projects and standard setting. Transparency and administrative coordination have improved as the legislation process is more open to the public comments. However, European companies require more time before they can respond.

Chinese government has adopted numerous policies to address the pressure of natural resources and energy supply. European companies believe they can be a part of if they are given more access to the bidding of infrastructure updating projects. The paper includes more than 300 proposals for business environment. Marianne Friese, Secretary General of the Chamber, said: “The Chinese leadership’s affirmation of the importance of innovation, openness and competition is encouraging. We firmly support China’s efforts to ensure a sustainable balanced growth.” (Xinhua)