President's Statement

More positive signals, some promising steps

As the Year of the Dragon began, the Chinese Government continued to send positive signals to business and emphasise its commitment to support the economy. When Premier Li Qiang presented the annual government work report at this year’s ‘Two Sessions’, he said that China would open up more sectors of the economy to foreign investment. Li outlined actions that would achieve this, including further reducing the ‘negative list’ of industries closed to foreign investment and easing market access restrictions in more sectors. He vowed that issues related to cross-border data transfer and public procurement would also be addressed.

At the same time, the work report retained a clear focus on security. The potentially contradictory objectives of strengthening China’s self-reliance, while committing to reform and further opening of the economy, continue to cause uncertainty for business.

On 19th March, the State Council released an action plan listing 24 measures aimed at boosting foreign investment. The plan evoked a sense of déjà vu, given that it came seven months after the release of a previous State Council document which also contained 24 points on boosting foreign investment. The two documents overlap in certain areas and have discrepancies in others, but the points listed will resonate with the foreign business community. If implemented in a timely, coordinated and consistent manner, they could go a long way to improving business confidence.

But more than words, business needs to see action. Some progress had been made, such as the four-year extension of the Individual Income Tax benefits for foreign nationals, but businesses are still wondering when they will see implementation of the measures that tackle the key issues they face. One such issue is the facilitation of cross-border data transfers, something the new action plan also mentions. The Cyberspace Administration of China (CAC) issued its draft Provisions on Regulating and Promoting Cross-border Data Flow (Provisions) in September, which ease at least some of the relevant requirements on business. On 22nd March, the CAC released the final version of the document, which was greatly welcomed by the business community. The European Chamber was particularly pleased that some of the requirements have been made in line with our recommendations. We will continue to assess the concrete impact of the Provisions, and look forward to seeing more actions being taken that genuinely improve the business environment in China.

With that in mind, at the start of 2024 we surveyed our members to find out how European businesses are faring in China. I look forward to presenting the findings in May, and providing Chinese and European officials, media and other organisations with a snapshot of how European companies find the business environment, highlighting both the hurdles they face and improvements they have experienced.