China’s efforts to boost its beleaguered private sector are falling short of what’s needed to aid foreign business and support the struggling economy, according to the head of the European Union Chamber of Commerce in China.
(Bloomberg) — China’s efforts to boost its beleaguered private sector are falling short of what’s needed to aid foreign business and support the struggling economy, according to the head of the European Union Chamber of Commerce in China.
President Xi Jinping’s government has stepped up pledges to help private firms in the past month, with a vow to treat them on par with state-owned enterprises, or to seek more input from entrepreneurs on policy proposals. On Wednesday, a plan was unveiled to solicit tip-offs from citizens on obstacles for businesspeople.
But the European Chamber’s President, Jens Eskelund, said there are already signs of “promise fatigue” among foreign businesses, with skepticism over whether meaningful policy support was on the way.
The chamber has “not yet seen signs of willingness to implement structural reforms needed to address the fundamental challenges facing China’s economy and allow foreign and private companies to deliver on their potential for supporting the Chinese economy,” he said by email.
Read More: China Asks Public to Inform on Obstacles to Private Sector
After a strong start to the year, China’s recovery is cooling off. Growth in the world’s second-largest economy is expected to reach around 5% this year, in line with government targets but short of the 6% rate seen before the pandemic.
China’s economic activity lost more steam in July with manufacturing contracting again and the services sector weakening. In response, Beijing promised relatively modest measures to boost consumption, and stopped short of major monetary or fiscal stimulus.
The chamber has been able to meet with government officials since the end of the country’s Covid Zero policy, Eskelund said. None of them, however, was willing to have a “serious discussion about the specifics on how to address the core issues facing China’s economy,” he said. “We would be pleased to share our views at any time.”
He was responding to Bloomberg News questions about the State Council’s proposal to invite citizens to inform officials about problematic behavior that’s hindering private firms, or to offer suggestions on how to boost the private sector.
While welcoming the plan, Eskelund said that for two decades the European Chamber has put forward many policy proposals, and only a “minor fraction” have been adopted. Its last position paper, in September 2022, called for China to open up more sectors of the economy to foreign businesses, ensure fair competition with state-owned firms, and de-politicize the business environment.
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