布鲁盖尔研究所-中国的商业环境对欧美公司来说有多困难？（英文）-2021.5-21页_609kb

Summary of "How difficult is China's business environment for European and American companies?"

Core Content

This document evaluates the business environment in China from the perspective of European and American firms, highlighting both the challenges and the improvements in recent years. It also compares China's business practices with those of other large economies and discusses the implications for trade and investment negotiations.

Main Views and Key Information

1. China's Business Environment: Improved but Still Challenging

• China's trade and investment appeal remains strong, despite geopolitical tensions and trade disputes.
• The business environment in China has improved significantly, especially in areas like intellectual property protection, contract enforcement, and manufacturing.
• China is now more favorable than many large economies at similar levels of development, and in some areas, it even outperforms OECD members.
• However, uneven enforcement of laws and regulations continues to be a major concern, especially in the services sector.

2. Economic Integration and Growth

• China's integration into the global economy is deep and growing, even amid trade tensions.
• Goods exports have doubled over the last decade, and China is the largest export market for 32 countries.
• China's manufacturing value added is now 167% of the US and 160% of the EU.
• Consumer spending in China has grown rapidly, reaching over 170% increase in the decade to 2020.

3. Foreign Investment and Market Access

• Foreign direct investment (FDI) in China has grown rapidly, especially in recent years.
• In 2020, China overtook the US in terms of FDI inflows.
• Portfolio investment in China has increased, driven by the growth of onshore stock and bond markets.
• China's 2019 Foreign Investment Law (FIL) aims to liberalize and encourage foreign investment by:
  • Providing equal treatment for foreign and domestic firms.
  • Repealing outdated regulations.
  • Simplifying legal structures for foreign companies.
  • Enhancing market access and investment protection.
• Despite these reforms, implementation remains uncertain, and regulatory and enforcement challenges persist.

4. Challenges Faced by Western Firms

• Common concerns include:
  • Slower growth in China.
  • Increased competition from local firms.
  • Rising labor costs.
  • Uncertainty due to US-China trade tensions.
  • Ambiguous or inconsistent regulations and enforcement issues.
• IT and digital sectors face specific challenges, including:
  • Internet access restrictions.
  • Slow cross-border internet speeds.
  • Limited access to online tools.
  • Data security and IP leakage concerns.
• Discrimination is perceived in certain sectors, especially strategic industries like automotive and technology, where local firms are favored.

5. Western Firms Are Not Leaving China

• Despite concerns, most foreign firms remain committed to China and are increasing their investments.
• 83% of US firms and 89% of EU firms are not considering relocating their manufacturing operations.
• Over 93% of Japanese firms plan to stay in China, with 43% planning to expand.
• 75% of companies surveyed by HSBC in 2020 expect to increase their supply-chain footprint in China.

6. International Comparisons

• China's business environment is more favorable than that of many large emerging economies.
• China ranks higher than countries like Brazil, Indonesia, Mexico, Russia, Thailand, and Turkey in several key areas.
• However, it lags behind in services sector access and regulatory enforcement, even though these areas have seen significant improvements.

7. Policy Recommendations

• The EU and US should reject calls for decoupling and instead pursue trade and investment agreements that open markets and condition reforms in China.
• Improved enforcement of existing rules and regulations should be a priority in negotiations.
• China's special responsibility as a major economy should be recognized in discussions to raise its business practices to a higher standard.

Conclusion

While geopolitical and human rights concerns are important, the economic relationship with China should be guided by market-opening reforms and enhanced rule enforcement. The business environment in China has improved, and foreign firms continue to invest despite challenges. Trade agreements that promote fair treatment and transparency are essential for long-term economic cooperation.