Meeting with Anne Mettler, Head of the European Political Strategy Centre

2017-02-06 | All chapters

BdlN introduced key messages of the position paper 2016/17 and the fact that the business environment in China is becoming more confusing as, on one hand, there are encouraging messages (i.e. XJP’s speech at Davos or the SCLAOR Decision no.5), and, on the other hand, the facts which don’t prove there is more opening up or easing the operation conditions for business in China (i.e. capital outflows restrictions, CN 2025, 13 FYP). In fact, the role of the government is getting stronger, SOE are getting bigger and there is a push for indigenous innovation. Therefore, the picture we can observe in china is that on policy side it looks like there is opening but the reality is very different. Besides this there are other initiatives which create concern/confusion for foreign players in China: NGO Law, Cybersecurity Law, National Security Law, Foreign Investment Catalogue,…

In relation to the economy, we can observe areas in which there is real growth (i.e. auto, healthcare, e-commerce, consumption,…). However, investment is coming mainly from SOEs (20%) and less then 3% from private sector. Investment is directed by the government and not from entrepreneurs. In this scenario, debt is becoming and its coming mainly from the corporate side (SOEs). Forex reserves are decreasing quickly and the reaction from the government has been to limit the outflow of capital.

Nowadays, there is the general sentiment among foreign companies that they are less welcome than ten year ago. However, there is still hope and now it’s the right time to push China due to the current international scenario (geopolitics, US elections, …) China needs some success and the EU should leverage on XJP’s speech in Davos.

CETA was hard to sell in the EU and in order to have a EU-China CAI is necessary to sell it to the member states and make it popular.

AM mentioned she was at Davos and acknowledged XJP made a remarkable speech that had a big impact during the whole time of the forum. Besides this, China went with a very strong business delegation.

There was a discussion of the assets China has in the EU (i.e. in Greece, Portugal, Germany) and how this has encouraged VP Katainen to look at it. However, this initiative is still at an exploratory stage. The EPSC considers that if China wants to invest in the EU is necessary to look at our conditions in China. BdlN agree on this point and mention that ‘reciprocity’ is now in the language when talking about EU-China relations.  He also mentioned the lack of level playing field when doing evaluating acquisition targets.

It was discussed the difficulty of enforcing reciprocity.

 It was mentioned that VP Katainen has created a platform to attract investment to highly innovative SME in the EU; however, they bare a higher risk.

Participants discussed the need of China to be more active at the global stage.

Finally, AM mentioned that EPSC is working closely with EEAS on the EU Economic Diplomacy strategy. She also mentioned that it’s necessary also to look at what China is doing in the EU and use that as leverage.

She also requested to pass the message in China that the EU’s situation is not so bad. It’s growing, has created 10 million jobs and it’s outperforming the US generally. The EU is doing good and it’s not the end of the EU project. The EU still has many strengths that should make us confident with the EU project.