European group: China imposing new market barriers

[September 08, 2011]  BEIJING (AP) -- China is imposing new obstacles to access to its markets, including sweeping national security rules, raising questions about its promises to treat companies equally, a European business group said Thursday.

The complaint by the European Union Chamber of Commerce in China comes at an especially sensitive time as foreign governments look to China's relatively robust economy to help drive global growth amid fears of a worldwide recession.

Beijing faces mounting complaints that it is obstructing access to its markets in violation of free-trade pledges and might be trying to push foreign companies out of promising fields such as clean energy.

The European group cited restrictions including a proposed limit of 50 percent foreign ownership in new energy vehicle companies. It said Beijing also has made little progress on long-standing complaints about market barriers in construction, banking and other fields.

Such limits "raise questions about stated intentions to create lasting opportunities for all market actors to compete on an equal footing," the group said in a statement.

"There are alot of funny restrictions in the construction sector," said Piter de Jong, managing director of Dutch investment bank ING NV in Shanghai, who chairs the EU Chamber's Shanghai branch. He pointed to a requirement that companies seeking Chinese licenses provide portfolios of projects already done in China.

"This is a chicken-and-egg situation," he said.

Chinese leaders including Premier Wen Jiabao, the country's top economic official, have promised to treat foreign companies equally. But business groups say Beijing has yet to take action on major problem areas and in some cases is imposing new restrictions on access to the world's second-biggest economy.

Other governments are looking to China's economy, which is forecast to expand by more than 9 percent this year, to help drive global growth as the United States, Japan and European economies barely grow at all.

The EU group represents 1,600 companies from the 27-nation European Union, China's biggest trading partner.

Its report echoed complaints by American and other business groups about lack of clarity in Chinese regulations and uncertainty about how Beijing will apply its 3-year-old anti-monopoly law and other possible restrictions.

The European group pointed to increased use of "vague and unprecedented" national security regulations that limit access to areas from computers to wind farms. It noted Beijing has told banks and other companies to limit use of foreign data security products and caps foreign ownership of wind farms to 50 percent on national security grounds.

Automakers must have approvals from four different government agencies to get a vehicle on the roads, de Jong noted.

"There is no shortage of regulations or regulators in China but we feel there is a need for more efficiency," he said.

Foreign companies also are locked out of China's booming telecommunications industry because they are permitted to operate only through joint ventures with the three state-owned carriers, which refuse to open up their networks, the report said.

The group appealed to Beijing to clear up uncertainty about regulation by speeding up the release of enforcement regulations for the anti-monopoly law and to disclose more details about how other policies will be applied.

Shanghai needs to reconsider its overall investment environment, especially surging labor costs, said Thierry Laurent, Asia managing director for French food maker Roquette Freres. He also pointed to the city having the country's slowest Internet access, relatively high taxes and lagging but expensive medical and educational services.

"Shanghai's main attraction is to be near to the heart of a major market," he said.

[Associated Press; By JOE McDONALD]

AP business writer Elaine Kurtenbach in Shanghai contributed.

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