China business climate worsening

April 20, 2010

, BEIJING, Apr 20 – Growing nationalism and lobbying by local firms is making China more protectionist and hostile towards foreign firms, European businesses claimed on Tuesday.

Market-opening reforms had unmistakably slowed as Beijing gains more economic clout, Joerg Wuttke, president of the European Union Chamber of Commerce in China said, warning it could spark a backlash in Europe.

"The pie is getting bigger and the door is getting narrower," Wuttke told reporters at a press briefing, adding, "we are losing out on opportunities."

He said China had increasingly taken a "we don\’t have to listen to you anymore" attitude toward the rest of the world and said part of the blame lay with growing nationalist sentiment on the Chinese Internet, he said.

"When we meet officials they are very worried about the netizens. They really feel they have to be responsive to these interest groups," he said.

He added that Chinese companies and industrial groups also were becoming better at lobbying the government "to make sure markets don\’t open as fast as they should or that markets remain closed".

Wuttke said EU concerns will be raised next week during a visit by European Commission President Jose Manuel Barroso, who will meet Chinese Premier Wen Jiabao.

His comments were the latest in a series of accusations that China is skewing its business playing field against foreign companies.

Last month, the European Union expressed concern over growing protectionism and unequal treatment for European firms in China.

And the US Chamber of Commerce in China also in March released a member survey showing a growing number of American businesses felt unwelcome because of what they saw as discriminatory policies.

However, Wuttke pointed to China\’s backtracking on controversial procurement rules and Wen\’s recent pledge to foreign executives that China remained open to overseas investment as signs that the leadership was starting to listen.

Earlier this month, the government removed a clause from draft new rules that foreign business groups had criticised as excluding them from the government procurement market.

The clause would have required any firm selling high-tech goods to hold the Chinese intellectual property rights for them in order for them to be considered for government procurement.

"There seems to be a shift but we have to see what that means in real terms. Maybe there is hope," said Wuttke.

Wuttke said a continued protectionist slide in China could lead to "irrational China bashing" in Europe.

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