China-EU relations: Beijing calls on European business group to help ‘clear up doubts’ tarnishing economic relations

·4-min read

Beijing has called on the European business community in China to do more to “enhance trust” and “clear up doubts” threatening to hold back the bilateral economic relationship.

At a meeting on Tuesday, commerce minister Wang Wentao told Joerg Wuttke, president of the European Union Chamber of Commerce in China, the government hoped the association would continue to play a bridging role between the two economies, according to a summary of the talks released by the Chinese commerce ministry.

The meeting was the latest effort by China to deepen engagement with the European Union (EU) at a time when bilateral relations are at their lowest point in decades, following tit-for-tat sanctions over alleged human rights abuses in the Xinjiang Uygur autonomous region.

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In recent weeks, Chinese President Xi Jinping spoke to Germany’s outgoing Chancellor Angela Merkel and European Council President Charles Michel, with the latter agreeing to hold a summit with Beijing to resolve issues over Xinjiang.

Tuesday’s talks took place against a backdrop of heightened concern among European firms in China overBeijing’s new strategy of increased economic self-reliance and rising nationalism.

Investors from the EU, United States and Japan are fearful Beijing’s deeper focus on national security will put foreign companies between a rock and a hard place.

Last month, Wuttke said in a chamber position paper there were troubling signs that China is “increasingly turning inward”, which could cast doubts on its growth trajectory.

On Tuesday, Wang reportedly told Wuttke China was not pursuing a closed economy, but a more open system under its so-called dual circulation strategy, which aims to unleash domestic consumption while providing foreign investors more opportunities to operate in the world’s No 2 economy.

Reform and opening up is a fundamental national policy of China, the door of China’s opening up will only open wider

Wang Wentao

“Reform and opening up is a fundamental national policy of China, the door of China’s opening up will only open wider and wider,” Wang was quoted as saying.

“China-EU bilateral trade maintains rapid growth in this year … the EU is also an important source of foreign investment and destination of outbound direct investment for China.”

Leaving aside political relations, Wuttke said despite challenges posed by the coronavirus pandemic, European firms were running well in China, with many EU chamber member companies doing much better than in other markets.

Wuttke expressed gratitude to the Chinese government for addressing the concerns of European companies in a timely manner, according to the official release.

The EU chamber would promote bilateral business between Brussels and Beijing, and member companies have shown willingness to increase cooperation with China, particularly in clean energy and technological innovation, Wuttke said.

He also asked Beijing to continue to improve the business environment and support European companies in the country.

The EU, US and Japan are drawing up separate plans to lure their companies out of China, amid rising costs, the impact of the US-China trade war and supply chain shocks caused by the country’s coronavirus shutdown.

But new data shows foreign direct investment (FDI) into China is still strong, growing 25.2 per cent in the first nine months of the year from a year earlier to US$29.26 billion.

The gain was lower than the 27.8 per cent rise in the January-August period and the 30.9 per cent increase in the first seven months of the year.

The ministry did not release details of foreign investment from the EU between January and September. The latest available figure showing EU investment was a jump of 64.2 per cent in FDI from Luxembourg during the first seven months of 2021.

In a separate survey by the EU chamber in June, about 59 per cent of 585 European companies planned to expand their businesses in China this year, up the 51 per cent the year before.

China’s exports to the EU rose by 28.61 per cent from a year earlier to US$44.47 billion in September, while imports rose by 1.13 per cent to US$25.97 billion, according to Chinese customs data.

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