EU Chamber of Commerce in China concerned about Beijing’s ‘insular’ approach
Beijing, Sep 23 (EFE).- The European Union Chamber of Commerce in China expressed concern on Thursday about the shift towards self-sufficiency advocated by Beijing and expressed doubts about the Asian country’s “future growth trajectory.”
“Signs that China is turning inward – as can be seen in its 14th Five-year Plan’s (14FYP’s) aim to increase self-reliance, and even achieve self-sufficiency, in parts of the economy – are a real cause for concern,” the Chamber said in its annual report.
“European companies are unsure about the extent to which they will be able to contribute to China’s future growth, with some fearing market exit, and there are now doubts over China’s future growth trajectory,” it added.
The Chamber argued that adherence to its 14FYP, approved in March 2021, will require China “to deviate from the spirit of the 1970s reform and opening as it increasingly relies on its own companies to service its vast domestic market.”
“While China seems to currently accept the costs of pursuing such a course, the European Chamber believes that the damage it will cause to China’s economy in the long-run will not be acceptable,” it added.
In this sense, Joerg Wuttke, president of the European Union Chamber of Commerce in China, expressed concern that the country’s economy will “continue to underperform if it steers away from bold reforms in favor of a more insular approach” moving away from the “bold reforms in the late 1970s” that were based on an open approach.
“Our member companies play a pivotal role in China’s economy,” added Wuttke, who advocates the development of “an optimal business environment that will allow China to reach its full economic potential.”
However, the agency indicated in its report that “despite the many difficulties experienced in 2020, due to the Covid-19 pandemic and increasing geopolitical tensions, European businesses in China did well overall, and remain firmly committed to the market.”
In March this year, the Chinese legislature approved the 14FYP (2021-2025), which advocates the so-called “dual circulation” strategy to divide the economy into two parts so that it continues to take advantage of international trade while protecting its domestic market.
The commitment to self-sufficiency is one of the focal points of this plan that must be understood in the context of China’s trade dispute with the United States, which tried to cut off the Asian country’s access to key technologies and sanctioned Chinese tech giants including Huawei and Tencent.
The plan is to establish supply chains within the Asian country in key sectors – in addition to manufacturing, staple foods and energy – while technological knowhow continues to be imported.
Beijing has said that dual circulation does not mean it is closing up, but that it is a strategy to transition towards domestic demand while foreign trade maintains its importance.
High-quality, sustainable and green growth, and shifting the burden on the economy from polluting industries to the service sector are other development goals that the Chinese authorities have long advocated. EFE