Europe seeks an open, rules-based trading system. So should China

Hans Dietmar Schweisgut says an EU proposal for investment screening is not motivated by protectionism, but is aimed at making Europe’s open markets more transparent. It is China that should show it is serious about its promises of market reform

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People cross a road in Shenyang, Liaoning province. In a recent survey, 56 per cent of EU companies said they would be interested to invest more in China if wider market access were granted. Photo: AFP

Published: 3:44pm, 28 Sep 2017Updated: 7:59pm, 3 Jul 2018

There has been quite a lot of noise recently about EU-China trade relations, touching on frustration at the slow pace of market reforms and other issues. There have been accusations of protectionism, calls for reciprocity, and debate on industrial overcapacity, investment screening systems or cross-border acquisitions.

These discussions should come as no surprise, considering the depth and breadth of one of the world’s largest economic relationships. And it should also come as no surprise that some of the opinions expressed are inaccurate or misleading, given the complexity of this relationship. That is why it is important to rise above the noise and set out clearly how we see this relationship, and what exactly is at stake.

As major trading partners, engaging in almost 1.5 billion euros (HK$13.8 billion) worth of trade every day, it is vitally important that we tend to this relationship that creates growth and jobs for both our economies.

Office towers in Beijing. Official figures from both the EU and China show that EU investment into China is decreasing. This should be of major concern to China, since European investors bring employment, tax revenue, innovation and technology. Photo: AP

A key engine of jobs and growth, and one with vastly more potential than trade, is investment. European Union investment into China is only a fraction of EU investment into the United States. More worryingly, official figures from both the EU and China show that EU investment into China is decreasing. This should be of major concern to China, since European investors bring employment, tax revenue, innovation and technology.

Beijing cuts red tape for foreign firms as it vies for investors

The EU welcomes foreign investors with wide market access and an investment regime that treats EU and foreign companies equally. Chinese investors have been able to buy 100 per cent stakes in EU car companies, banks or other key industries, while this would be impossible for European companies to do in China due to market access restrictions and forced joint-venture requirements. There is clearly a lack of reciprocity here, which cannot go on indefinitely.