European business group points to ‘troubling signs’ of China turning inwards

Self-reliance strategy, rising nationalism and focus on national security are a challenge for EU companies, chamber of commerce says

It also warns growth could be sacrificed in move towards tighter political control and calls for more conciliatory approach to diplomacy

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The outlook for European firms doing business in China is positive overall but there are ‘considerable doubts over the country’s future growth trajectory’, according to the chamber of commerce. Photo: Bloomberg

Published: 9:00am, 23 Sep 2021Updated: 10:59am, 23 Sep 2021

China’s inward-looking economic strategy has put European firms in a more challenging position and it could also hit the country’s growth, an EU business group warned on Thursday.

It said Beijing’s goal of self-reliance, rising nationalism and more focus on national security had left European companies “between a rock and a hard place” in terms of their operations in the country.

In its annual position paper, the European Union Chamber of Commerce in China also called on Beijing to reinvigorate its reform and opening up that began in 1978 and to take a more conciliatory approach to diplomacy to improve soft power.

“China has a DNA of trying to stay independent as far as possible from other countries. The big question is to what degree it is willing to pay for it,” chamber president Joerg Wuttke said.

Although the outlook for European firms doing business in the country was positive overall, the paper said there were “troubling signs that China is increasingly turning inwards, as can be seen in the 14th five-year plan [for economic and social development], and this tendency is casting considerable doubts over the country’s future growth trajectory”.

Wuttke urged Beijing to “keep embracing globalisation”. “We hope that the national security [and] self-reliance will not impact innovation, but we see a receding diversity,” he added.