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European firms fear Chinese discrimination, survey says

2010. 29 June

by Andrew Willis
( A new survey has shown that European firms operating in China expect the regulatory environment to tighten over the next two years.

At the same time, other indications suggest EU member states are increasingly clamouring for a slice of the Asian behemoth's foreign direct investment, with a number of infrastructural projects in cash-strapped Greece recently benefiting from Chinese capital, for example.

The results of a poll of some 500 European companies, carried out by the European Chamber of Commerce in China and published on Tuesday (29 June), indicate that CEOs are worried the country's Communist leaders will become more discriminatory towards foreign firms.

Intellectual property rights issues and discretionary enforcement of local laws are cited among the list of frustrations.

The chamber warned that concerns over Beijing's policies, including those aimed at supporting 'indigenous innovation,' could result in foreign firms leaving the country, despite expectations for solid growth in China in the coming years.

"Nobody should take for granted that European companies will continue investing whatever the business environment," Jacques de Boisseson, president of the European business group in Beijing, told a news conference, according to various media reports.

"If things turn sour, China is not necessarily a must for them," he added.

Chinese capital in Europe

Moving in the other direction, there are signs that Chinese capital is being increasingly sought after in Europe, with firms and government officials flocking to the Chinese stand at the Expo 2010 in Shanghai this year.

China is set to pump billions of dollars into Greece's ports this year, with investors also reported eyeing the country's train network.

Recently-joined EU members Romania and Bulgaria have also successfully solicited funding from China, as European credit markets suffer from a shortage of liquidity.

But the head of research at the Brussels Institute of Contemporary China Studies, Jonathan Holslag, recently warned that the rising level of investment was not without its dangers.

"These growing commercial ties could have important political consequences," he wrote in an opinion piece in the Financial Times. "Especially if Beijing's closer links with eastern Europe undermine the formulation of a more coherent EU policy towards China.