China Setting Up New Market-Investment Obstacles, Says EU Group

New government rule stipulates foreign firms can only own a maximum of 50% of a joint venture making components for clean-technology cars.

Foreign companies wanting to invest in the world's second largest economy are facing some difficulties, the European Union Chamber of Commerce in China said on Sept. 8.

The chamber's claim repeated calls from Beijing's main Western trading partners to ensure a level playing field for foreign firms. "Recent measures to further constrict market openness raise questions about stated intentions to create lasting opportunities for all market actors to compete on an equal footing," the group said.

Launching its 12th annual report, the group raised the example of a new government rule that stipulates foreign firms can only own a maximum of 50% of a joint venture making components for clean-technology cars.

A similar new rule applies for offshore wind farms. Overall though, foreign ownership in key industries -- such as the auto, telecommunications, finance and refinery sectors -- remains limited, thegroup said.

Davide Cucino, head of the chamber, welcomed China's new five-year plan for economic development, which focuses on developing the domestic market, consumption and services in a bid to move away from a dependency on exports. But he said "some of those goals are not reflected" in regulations governing foreign investment.

"We believe that European companies have perfect expertise and technology to match the goals of this [five-year] plan," he said.

The chamber also released a survey of its 1,600 member firms, which revealed that 43% think measures adopted by Beijing discriminate against foreign enterprises, compared to just 33% last year.

Of the member companies, 46% also feel that this discrimination will continue for another few years, compared to 36% in 2010.

Copyright Agence France-Presse, 2011

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