European Chamber Report Joins Calls for 'Competitive Neutrality' and SOE Reform

by Hans Diederichs

European Chamber Report Joins Calls for 'Competitive Neutrality' and SOE Reform

The European Union Chamber of Commerce in China today released its European Business in China – Position Paper 2019/2020, which delivers over 800 detailed recommendations to the Chinese Government, spread across 33 industry sectors and horizontal issues. Each recommendation represents a piece of the overall reforms that are urgently needed to improve China’s business environment. The report focuses in particular on the need for SOE (state-owned enterprise) reforms, which are crucial to the country’s future development.

While China’s market continues to inch open to foreign investment and the business environment marginally improves year after year, these advances have not been enough to offset the resurgence of the state-owned economy and mitigate the subsequent effects, such as the drying up of private-sector financing and flagging national productivity.

Fortunately, some of China’s top leaders have recently been discussing the idea of ‘competitive neutrality’ – that all companies should be afforded equal treatment irrespective of ownership type. Making this concept reality and embarking on a programme of systemic SOE reform will be key to making the most of China’s entrepreneurial potential and accelerating its development.

The European business community has witnessed previous Chinese leaders pursue bold economic liberalisation over the last four decades and believes that its accumulated experience, as well as its far more sophisticated regulatory system, now put China in a strong position to move towards installing a free-market economy.

“Many steps have been taken to address the symptoms of China’s growing SOE problem, but meaningful results require that the causes be addressed,” said Joerg Wuttke, president of the European Union Chamber of Commerce in China. “Realising competitive neutrality would level the playing field—which currently favours state-owned firms over both local and foreign private ones—and lay a strong foundation for resilient long-term development.”

Source and Photo: The European Union Chamber of Commerce

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