Mandelson urges action to reverse sliding EU investment in China Go back »

2008-09-27 | All chapters

EU Trade commissioner Peter Mandelson has today urged China to act to reverse sliding EU investment rates in China. Noting that EU investment rates in China had been falling since 2005 and that Russia and India had both attracted more EU investment than China, Mandelson said China was facing "tough competition for the world's most productive investment". He urged Chinese authorities to tackle "outdated and unnecessary" restrictions on EU direct investment. Mandelson argued that the EU and China should aim to create an open investment market in green technologies and to use their joint weight to shape the global investment environment that would emerge from the current banking crisis.
 
Mandelson argued that in the important debate over new regulatory approaches to risk in financial globalisation, the case for open productive foreign investment should remain clear. Warning that the conditions for a "protectionist turn" in the global climate for foreign direct investment would only be compounded by the banking crisis, Mandelson urged China and the EU to preserve an open flow of foreign investment in both directions.
 
Mandelson:
 
Welcomed the comprehensive strategy for attracting foreign investment set out by Chinese Vice Premier Wang Qishan earlier this month. However, he noted that EU investment in China was still restricted by intellectual property theft, unpredictable mergers and acquisitions oversight, heavy licensing costs for foreign businesses and rules requiring forced joint ventures with Chinese firms. He said: "China appears to have put out the welcome mat for foreign investment, but the door is still half closed. In some cases it appears to be swinging shut." Mandelson argued that the EU and China should set the joint goal of reversing the reduction in EU investment rates by the end of the decade.
 
Said that the European Commission was "committed to ensuring that China gets a fair hearing on any issues involving investment in Europe". Mandelson said he believed that Chinese investments in European petrochemicals, banking and logistics sectors had been good for both sides.
 
Argued that the EU and China should aim to create as a matter of priority a fully integrated market for green investment and trade in green goods to encourage the development of low carbon industry.
 
Argued that as Chinese global investment grew, it would have an increasing interest in an open global investment climate. He said that the EU and China should adopt an openness in their own investment ties that could act as a benchmark for the investment frameworks that would emerge from the current financial crisis. Mandelson noted that Chinese expectations of transparency and access abroad will "inevitably be judged by politicians and policymakers by the standards China imposes at home…going global means competing internationally on your merits, not on the artificial advantages that go with special treatment in the domestic market".
 
EU direct investment in China
 
European investment in China dropped again in 2007 to around 2% of all European FDI outflows, despite the fact that, globally, European FDI is actually growing strongly. European companies invested €1.8 billion in China in 2007, down from €6.0 billion in 2006 and €6.2billion in 2005.
 
European FDI in as a share of all FDI in China dropped from 8.26% in 2006 to 5.13% in 2007 according to the Chinese government. The Chinese government rates EU investment as particularly valuable because of its association with high quality management and sophisticated technology.
 
Although China is leading the emerging economies globally as an investment destination, European companies have invested more in both Russia and India since 2003. Between 2003-2007 China attracted 18% of EU investment in the 'BRICs' - Russia attracted 39% and India 25%.
 
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