European group warns of protectionism in China

GUANGZHOU, CHINA (Sept. 2, 12:25 p.m. ET) — The slowing global economy has prompted China to roll back some market opening policies and put in place more protectionist measures to benefit domestic companies at the expense of foreign firms, according to a Sept. 2 report from the largest European business organization in China.

In releasing its annual position paper in China, the European Union Chamber of Commerce said China has made progress in some areas like food safety, insurance and banking laws, but said the economic crisis of the past year has resulted in more problems accessing China’s market. It also cited continuing key concerns over vague government rules and lack of intellectual property protection.

“Over the past year, the European Chamber has noted a gradual slowdown — and in some cases a partial reversal — in the economic opening up process,” said Joerg Wuttke, president of the chamber and China head for German chemical company BASF AG. “The financial and economic crisis has increased the risks of protectionism.”

The group said China has favored local companies in government spending in areas like wind power projects, and it said China’s economic stimulus spending and relaxed loan policies are in effect helping Chinese state-owned companies at the expense of both European firms and smaller, privately-held Chinese companies.

“SOEs [state-owned enterprises] are the big winners of this crisis and monopolies are growing,” Wuttke said at a Sept. 2 press briefing. He said the problem is not always China vs. Europe — some Chinese provinces were raising barriers to domestic companies from other regions in the country as well.

Wuttke said the European chamber was also concerned about rising protectionism in Europe, and noted an increase in dumping cases filed by European industry against China.

But he said China has launched dumping cases as well, and he said the EU Chamber does not consider dumping cases filed as an indication of protection, as governments have established trade rules to follow to handle them.

The EU Chamber also called for the abolition of Chinese requirements for 50/50 joint ventures in sectors like automobile manufacturing, and it raised concerns about technical regulations and certification procedures being used to limit market access in China.

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