Welcoming the commitment in favour of free trade made by the Chinese President, Xi Jinping, at the World Economic Forum of Davos at the end of January, the European Commissioner for Trade, Cecilia Malmström, called on China, on Monday 6 February, to suit its actions to its words by speeding up reforms and opening up its market, particularly for European investments, the situation for which has worsened in 2016.
“This year, we should be firm in holding China to the ambitions and aspirations President Xi set out in Davos”, Malmström said at a seminar hosted in Brussels by the European employers' association, BusinessEurope, and the Chamber of Commerce of the EU in China. “I am confident this time it will translate into action”, she added.
The prospects for increasingly open trade and investment in the coming years (...) depend very much on China's ability to continue reforms, Malmström stressed, regretting the fact that the promise made by the Chinese regime in 2013 of a new phase of reforms to give the market a more decisive role in the economy, and to reinforce the rule of law and the independence of the judiciary, has not materialised.
“Sometimes, reforms have gone in the opposite direction, reinforcing the role of the State and reducing space for the private sector. Today, the state remains in control over much of the economy, distorting competition and investment. Meanwhile, foreign investors face a flood of opaque and obscure barriers: restrictions, discrimination, unfair competition, questionable inspections and audits, discretionary licensing procedures and more”, she said.
Malmström also called upon China - the EU's second-largest trade partner, which absorbing just 10% of the EU's imports whilst the EU takes 20% of Chinese exports - to offer more trade reciprocity. “I am not one of those who see a trade deficit as inherently bad. But belief in open trade does not mean being naive. Many irritants remain to EU-China trade and we are far from balance or a reciprocal approach”, she stressed.
On investment, Malmström said that she hoped to see a “new impulse” this year in the negotiations for a bilateral investment agreement, which will help to resolve a massive imbalance in China's favour.
Malmström stressed that this agreement offers China, whose investment in the EU are nearly five times higher than those of the EU in China, many opportunities. And it will help to re-establish the balance in favour of the EU, whose investments have fallen to a level below €8 billion in ten years, a sign of a “worsening investment climate” in the country, when Chinese investment in the EU reached a record level in 2016 of nearly €40 billion.
“The agreement must be credible and with a high level of ambition (for European businesses: Ed). And as an absolute priority, it must improve and expand market access conditions in China”, she said.
Malmström also called for China's economic openness to be accompanied by political and social reforms. “But trade also needs to go hand-in-hand with and be based on values: such as respect for the rule of law and human rights, and environment and labour protection”, she said, stressing the expectations of EU consumers and businesses in terms of the rule of law, the independence of the judiciary, freedom of expression and of association. “We will continue to urge the authorities to fulfil their international obligations in respect of their commitment to the rule of law”, she pledged.
Lastly, stating that China is a “difficult negotiating partner” on the questions of steel overcapacity, reduction of customs duty, environmental goods (in the framework of negotiations for the EGA agreement: Ed), but also on the protection of geographical indications, Malmström expressed her hopes that China will support the EU and Canada's proposal for a multilateral court to rule on investment disputes. (Original version in French by Emmanuel Hagry)