The EU’s trade chief told Beijing on Monday that strict security laws and a more “politicized” business environment have left European companies struggling to understand their obligations and questioning their future in China.
China’s refusal to condemn ally Russia for its war in Ukraine also poses a “reputational risk” to the world’s second-largest economy, Trade Commissioner Valdis Dombrovskis said in a speech at Tsinghua University in Beijing.
He said transparency and openness are “a winning strategy in the long term” at a time when trade tensions between the European bloc and China are rising.
“China is undergoing a challenging transition from an investment-led economy to a broad-based economy,” he said.
“That’s why it has to stay open.”
Dombrovskis’ four-day trip, which started on Saturday, follows a report from the EU Chamber of Commerce that showed business confidence was at one of the lowest levels in years.
It also follows Brussels’ decision to launch an investigation into Beijing’s electric car subsidies.
The investigation could lead to the EU seeking to protect European carmakers by imposing punitive duties on vehicles it believes are being unfairly sold at a lower price.
China’s Commerce Ministry has condemned the EU’s “naked protectionism” and said the measures “will have a negative impact on economic and trade relations between China and the EU.”
On Monday, Dombrovskis emphasized that China remains an attractive investment opportunity for European companies.
“The EU and China have both benefited enormously from being open to the world,” he said, adding that “European companies still want to invest here – but only if the conditions are right.”
From ‘win-win’ to ‘lose-lose’
The increasing challenges for European businesses in China mean that “what many saw as a ‘win-win’ relationship in recent decades could become a ‘lose-lose’ dynamic in the coming years,” the commissioner said.
A new foreign relations law aimed in part at combating foreign sanctions and a recent update to China’s tough anti-espionage regulations are of “great concern for our business community,” Dombrovskis said.
“Their ambiguity leaves too much room for interpretation,” he warned.
“This means that European companies are struggling to understand their compliance obligations: a factor that is significantly reducing business confidence and deterring new investments in China.”
He also criticized China’s refusal to condemn Russia’s war in Ukraine, which he said “damages the country’s image, not only among European consumers, but also among the business community.”
China has sought to position itself as a neutral party in the conflict in Ukraine, while offering Moscow a crucial diplomatic and financial lifeline as its international isolation deepens.
Chinese President Xi Jinping visited Moscow in March, while Russian leader Vladimir Putin will visit China next month.
“Territorial integrity has always been a key principle in international diplomacy for China. The Russian war is a blatant violation of this principle,” Dombrovskis said.
“So it is very difficult for us to understand China’s position on Russia’s war against Ukraine because it is contrary to China’s own fundamental principles.”
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)