09/03/2009, 00.00
CHINA – EUROPEAN UNION
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EU accuses China of greater trade protectionism

According to the European Union Chamber of Commerce in China, Beijing is putting up more obstacles to foreign goods and services. Experts note all countries are taking protectionist steps. Planned social and labour market reforms are shelved.
Beijing (AsiaNews/Agencies) – The European Union Chamber of Commerce in China yesterday charged Beijing with reversing economic reforms to free up trade and raising instead trade barriers to squeeze foreign players out of mainland markets.

Although China has never been an open market to foreign goods and investors and has always pursued protectionist policies and favoured domestic businesses, it has on several occasions pledged to remove obstacles to free markets. As late as last June Chinese Premier Wen Jiabao told German Chancellor Angela Merkel that the mainland would create a level playing field for foreign companies and would not take any measures to discriminate against overseas companies and their products. At the same time such changes were seen as part of cooperative efforts to counter the global financial crisis.

Instead for example Beijing has been squeezing out European suppliers of technological solutions for mainland banks and telecommunications companies after imposing a requirement for government certification that it has failed to approve for foreign suppliers.

Similarly, in the vehicle sector foreign companies that want to set up manufacturing facilities on the mainland have to enter into a 50-50 joint venture.

The collapse of the merger between Coca-Cola and Huiyuan is another example of government interventionism, and this despite the Ministry of Commerce's claim that the failed deal violated the country's new competition law.

Experts have never the less pointed out that in the context of the present world economic crisis, all countries have adopted some form of protectionism.

But for European Chamber President Joerg Wuttke, this is an ideal moment for China to adopt a bolder cycle of reforms to liberalise capital markets and trade practices.

By contrast, Yi Xianrong, a researcher at the Chinese Academy of Social Sciences, a central government think tank, said the EU should offer solutions rather than just criticising China. in fact European countries have far more advanced economies than China's.

In the meantime the world economic crisis has greatly affected the mainland’s economy, leading to a collapse in exports towards the United States and Europe.

One consequence is that planned reforms to salaries, welfare and workers’ compensation have been shelved.

The European Union is China's largest trading partner, with mainland exports accounting for 7 per cent of mainland GDP and EU exports to China at 0.7 per cent of the union's GDP last year.

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