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
“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.
It also warned growth potential could be sacrificed in the move towards tighter political control.
“Privately owned enterprises are increasingly being pushed to align with China’s political objectives, which further constrain innovation and growth,” the paper said.
It also touched on the setting of industry standards, saying this “has become a key battleground in the fight for supremacy in emerging technologies and will have an increasing impact on global geopolitical development”.
Meanwhile, the chamber said a declining number of foreign professionals working in China could hurt Beijing’s ambition to become an innovation powerhouse, noting that in 2020 there were more foreigners in Luxembourg than in Shanghai and Beijing combined.
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The European business group also urged Chinese diplomats to pull back from an assertive and combative style seen in recent years to avoid becoming further isolated from the rest of the world.
“European companies have no interest in politics, yet are increasingly having to respond to issues that result directly from the business environment becoming more politicised,” the paper said.
“China appears to be more concerned that it may lose credibility if its current rhetoric is de-escalated. Yet the opposite holds true: by making room for constructive discussions, China’s diplomats would be able to take a firmer stance on issues of genuine national concern,” it said.