Many European companies believed that the Chinese government is willing to fulfill its vows to the Word Trade Organization (WTO), and they are optimistic about investment in China, according to a survey released on Thursday ahead of top-level talks between China and the European Union scheduled next week.
The good news is some 25 percent of the companies said the Chinese government is willing to carry out its free trade pledges and has fully prepared itself for it, compared with 20 percent in the 2006 survey, and 45 percent believe China is willing to do so though not doing enough, down from 50 percent last year, said Jorg Wuttke, president of the European Union Chamber of Commerce in China, which released the survey results.
The survey of 220 European companies indicates those who believed in the willingness of the Chinese government to fulfill the WTO pledges added up to about 70 percent, which is great improvement from previous results.
However, 38 percent of the companies also expressed concerns on China's fulfillment of free trade pledges, with 16 percent saying China is "only" willing to carry out the vows and 22 percent saying China is actively avoiding or putting off its obligations.
The 22-percent figure represents an increase from 19 percent for 2006, which was "the bad news", said Wuttke.
The survey indicated that such concerns are most strongly expressed by companies in the consumer products sector and professional service providers.
The survey also found mixed responses to China's WTO obligations from these companies, as only 16 percent of the respondents believed China's fulfillment of WTO obligations would have a positive impact on them, in sharp contrast with 43 percent in 2006, while those who worried about the negative impact rose from three percent last year to 30 percent this year.
Wuttke said he was himself perplexed about the result, and had no explanation, but indicated two possible elements behind it, more competition in the market after the opening up of the market and government rules leveling corporate income taxes.
However, he also said the new tax policy offers "a level ground for market players", and European companies would not retreat from the Chinese market just because of equal taxes.
The survey also indicated the majority of companies would increase investment in China in the next two years, and only a third said they would consider investment outside. Most said they would either invest in their home country or in China, which has enjoyed double-digit growth in recent years.
Many companies agreed that competition in the Chinese market would become fiercer in the future, but most are confident of improving their corporate performance, according to the survey.
The survey found out that major barriers to doing business in China remain transparency and consistency of government policies and concerns over protection of intellectual property rights (IPR).
"The recent adjustment of guideline on foreign investment has come as sudden news," said Wuttke citing an example of difficulties caused by government policy changes.
He said China needed to have more expertise, such as IPR judges and special IPR courts, to improve the IPR protection in China. He also urged the government to adopt more severe punishment for IPR violators for a better implementation of laws.
Jose Socrates, Prime Minister of Portugal, which currently holds European Union's rotating presidency, and European Commission (EC) President Jose Manuel Durao Barroso are expected to attend the 10th China-EU Leaders' Meeting in Beijing on Nov. 28,at the invitation of Chinese Premier Wen Jiabao.
Liu Jianchao, spokesman for the Chinese Foreign Ministry said China expects "substantial results" from the summit, and said "many issues will be touched upon at the meeting."
Reports said the EU leaders will press China for faster action on the trade gap between the two sides and China's currency controls at the summit.
Source:Xinhua
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