Foreign companies in China: A lot of growth, less openness

European companies active in China are faced with problems: China is sealing itself off instead of opening up – as has been promised for years. However, many companies are optimistic about growth.

At first glance, European companies are doing well in China. Many companies recently reported new records for sales and profits in the People’s Republic – and this will probably continue for the time being, estimates the European Chamber of Commerce.

“It’s going very well economically for China. But the essence of our position paper is that things could go even better,” says Jörg Wuttke, President of the European Chamber of Commerce in China. He complains that the state and party leadership is increasingly turning the People’s Republic inward and that the country’s economy is tending to seal off the rest of the world.

This is a worrying trend because the communist leadership is putting China’s innovative strength at risk. Wuttke believes that this would give away growth opportunities.

If you compare the neighboring economies of South Korea, Japan or Taiwan with China, you can see that 30 to 40 years after the start of economic opening, China has grown almost at the same rate as the other economies – in terms of gross domestic product per capita. But now you can see that the People’s Republic is falling behind in comparison.

China’s success story, evident by its huge population of 1.4 billion people, basically masks the fact that China needs reform. We hardly see this reform approach any more.

The Chinese leadership continues to speak of a reform course

This is in clear contradiction to the reports of the Chinese state media and the assurances of representatives of the communist leadership. You have been repeating for years that China would press ahead with the policy of opening up and reforms introduced in the late 1970s.

Wuttke reacts with a shrug of the shoulders: “Well, you have to live with that. We have created a nice English word for it: ‘Promise fatigue’, the tiredness of always hearing the same promises and then nothing comes of it.”

Pressure on the European Chamber of Commerce?

The European Chamber of Commerce in China publishes an annual report on the mood among foreign companies in China. The most important lobby association of European companies represents around 1700 companies that are active in China. This includes small and medium-sized companies as well as large corporations such as BP, Siemens, L’Oréal, Bayer and Volkswagen.

For years, the European Chamber of Commerce has denounced problems in China – much more openly, directly and honestly than the companies themselves do. As a rule, foreign companies do not dare to say anything critical because they fear economic disadvantages.

According to reports, the political pressure on the European Chamber of Commerce is increasing: China’s state and party leadership is even less likely to put up with criticism of its economic and social policy than in the past.