European Union Chamber of Commerce in China Position Paper 2024/2025

 

 The European Chamber has recently published its European Business in China Position Paper.  It si described by Jens Eskelund, President of the European Union Chamber of Commerce in China, as "the culmination of six months’ hard work by the European Chamber’s working groups, all of which remain committed to the China market." The Press Release nicely summarized the Report and its principal point:

Beijing, 11^th September 2024 – The European Chamber today published its European Business in China Position Paper 2024/2025 (Position Paper 2024/2025). The report focuses on the urgent need for the Chinese authorities to follow through on reform pledges announced in the past year, with business confidence now at an all-time low. 

European companies previously viewed the complex challenges of doing business in China as the ‘growing pains’ of an emerging market. However, with the risks of doing business increasing and the rewards decreasing, many investors are now confronted with the reality that their approach to the China market requires a strategic rethink.

There have been positive signals that China intends to address some of the challenges faced by foreign enterprises, most notably via the State Council’s 13^th August 2023 Opinions on Further Optimising the Foreign Investment Environment and Increasing the Attraction of Foreign Investment (Opinions). However, one year on from the Opinions’ publication, limited progress has been made on the implementation of key points contained in the document. Meanwhile, some European Chamber members have begun both siloing their China supply chains and operations, and shifting investments previously planned for China to other markets to increase supply chain resilience, take advantage of comparatively lower labour costs and hedge against future geopolitical shocks.

The Position Paper 2024/2025 details the challenges faced by European companies operating in China and provides more than 1,000 constructive recommendations to the Chinese Government on how they can be resolved. It provides a blueprint for rebuilding business confidence in the Chinese market and restoring it as the preferred destination for global investment.

“For a growing number of companies, a tipping point has been reached, with investors now scrutinising their China operations more closely as the challenges of doing business are beginning to outweigh the returns,” said Jens Eskelund, president of the European Chamber. “While China still holds significant potential, this situation urgently requires more action from the Chinese Government, not more action plans.”

Click here to download the report. 

 中国欧盟商会呼吁中国政府更加注重实际行动，而非行动方案

2024年9月11日，北京—中国欧盟商会今日发布《欧盟企业在中国建议书2024/2025》（简称《建议书》）。报告强调，如今商业信心处于低谷，中国有关政府部门应及时采取切实行动，践行去年宣布的改革方案。

欧盟在华企业曾认为，在华营商面临的复杂挑战是新兴市场的“成长痛”。然而，随着营商风险增高、回报降低，许多投资者不得不直面现实挑战，重新思考对于中国市场的战略规划。

多项政策释放积极信号，表明中国政府有意解决外资企业面临的相关挑战。其中，国务院于2023 年8月13日发布的《关于进一步优化外商投资环境 加大吸引外商投资力度的意见》（《意见》）尤为瞩目。然而《意见》发布一年至今，政策文件中重点举措落实进展有限。同时，部分中国欧盟商会会员企业开始在华建立孤立于全球体系的供应链和运营，并将计划投入中国市场的投资转至其他市场，以提高供应链韧性、利用相对较低的劳动力成本、防御潜在地缘政治风险的冲击。

《建议书》详细列举了欧盟在华企业经营难题，并向中国政府提供了1000余条建设性的建议，以期解决相关问题。《建议书》提出了新蓝图，以重建企业对华市场商业信心，重塑中国作为国际投资首选目的地的地位。

中国欧盟商会主席彦辞强调：“越来越多的公司表示其在华业务已达临界点。营商挑战逐步超过投资回报，投资者开始重新审视其在华运营。诚然中国潜力巨大，但是目前的局面亟须中国政府更加注重实际行动，而非行动方案。”

点击这里下载报告全文。

 In some interesting ways, its serves as an effort to  enhance the many recommendations in the Chnese 3rd Plenum deicion but in ways that might stimulate China's economic relations with the European Unon.  The United States remains, of course, sui generis.

The Executive Summary, Report pp. 4.10,  follows below.

Executive Summary
More action needed, not more action plans
While doing business in China has always required a high degree of flexibility in order to adapt to the
rapidly changing environment, companies previously viewed the complex challenges they encountered as
the ‘growing pains’ of an emerging market. There was a common perception that the difficulties faced were
worth bearing in exchange for access to China’s large and dynamic market, world-leading manufacturing
clusters and comparatively cheap labour. However, with the risks of doing business mounting and the
rewards seemingly decreasing,1&2 many investors are now confronted with the reality that the problems
they are facing in the China market may be permanent features that require a substantial strategic rethink.
The central concern for European Chamber members is China’s economic slowdown. 3 However, several
other factors are dragging on business confidence, including perennial market access and regulatory
barriers; a highly politicised business environment; lacklustre domestic consumption; 4 overcapacity;
the persistence of ambiguous rules and regulations; and the government’s continued focus on national
security and developing a high degree of self-reliance. 5 The foreign business community had been looking
to the Third Plenum of the Central Committee of the Chinese Communist Party for signals that at least
some of these concerns would be addressed, in particular policies aimed at boosting domestic demand, a
renewed focus on reform and opening up, and greater weight being given to market forces.
Instead, the Third Plenum Decision continues to promote investment in manufacturing as a key driver of
China’s economic development, albeit under the moniker ‘new quality productive forces’ – i.e., the aim is
to increase production capacity in strategic, higher value-added goods and technologies. The intention to
“step up efforts to develop a complete domestic demand system” is asserted, but the document contains
nothing concrete as to how consumption will be stimulated. 6
A scheme was announced by the National Development and Reform Commission on 24th July 2024, three
days after the Decision was published, which sets aside Chinese yuan (CNY) 300 billion to subsidise
the replacement of outdated commercial equipment and certain consumer goods. 7 However, given that
the total amount budgeted works out to approximately CNY 210 per capita, only a portion of which will
reach household consumers, it is unlikely that this scheme alone will significantly increase domestic
consumption.

1 In each of the past three iterations of the European Chamber’s Business Confidence Survey (BCS), a record number of respondents reported that doing business in China
had become more difficult year-on-year. In the BCS 2024, 68 per cent of respondents reported this to be the case. European Business in China Business Confidence
Survey 2024, European Union Chamber of Commerce in China, p. 19, 10 th May 2024, viewed 2 nd July 2024, <https://www.europeanchamber.com.cn/en/publications-
business-confidence-survey>
2 In the BCS 2024, record numbers of respondents reported being pessimistic about the outlook for both growth (26 per cent) and competitive pressure (61 per cent) for their
sector over the next two years. Ibid, p. 28.
3 55 per cent of respondents to the BCS 2024 ranked China’s economic slowdown one of the top-3 challenges that will have the greatest impact on their future business in
China, a 19-percentage point increase year-on-year (y-o-y). Ibid, p. 10.
4 Hancock, T, China’s Deflation Shows Domestic Demand is Big 2024 Challenge, Bloomberg, 13 th January 2024, viewed 13 th August 2024, <https://www.bloomberg.com/
news/articles/2024-01-12/china-s-deflation-shows-domestic-demand-is-big-2024-challenge>
5 European Business in China Business Confidence Survey 2024, European Union Chamber of Commerce in China, 10th May 2024, viewed 2 nd July 2024, <https://www.
europeanchamber.com.cn/en/publications-business-confidence-survey>
6 Wang, Z, Full Text: Resolution of the Central Committee of the Communist Part of China on Further Deepening Reform Comprehensively to Advance Chinese
Modernization, Pekingnology, 21 st July 2024, viewed 15 th August 2024, <https://www.pekingnology.com/p/full-text-resolution-of-the-central>; Blancehtte, J; Kennedy, S;
Mazzocco, I; McElwee, L; Reade, C; Rosen, D.H. & Wright, L, Third Plenum Hot Takes: Skepticism and Concern, Center for Strategic and International Studies, 22nd July
2024, viewed 16 th August 2024, <https://https://www.csis.org/blogs/third-plenum-hot-takes-skepticism-and-concern.csis.org/blogs/third-plenum-hot-takes-skepticism-and-
concern>
7 Areas targeted include large-scale industrial equipment, marine transportation, lorries, agricultural equipment and public transport vehicles, with consumer-targeted
subsidies for personal vehicles, home appliances and home renovation. On stepping up support for large-scale equipment replacement and consumer goods trade-in,
National Development and Reform Commission, 24th July 2024, viewed 16 th August 2024 <https://www.gov.cn/zhengce/zhengceku/202407/content_6964409.htm>

Executive Summary
Executive Summary5European Business in China Position Paper
欧盟企业在中国建议书 2024/2025
The Decision does state that the market should play “the decisive role in resource allocation”, but it also
calls for state-owned enterprises (SOEs) and state capital to “get stronger, do better and grow bigger”,
and notes that state capital “will be steered towards major industries and key fields that are vital to
national security and serve as the lifeblood of the national economy, towards sectors such as public
services, emergency response and public welfare […] and toward forward looking and strategic emerging
industries.” 8 This dual mission of taking the lead in future-orientated industries and continuing to play a
central role in maintaining the social fabric in China—while the dynamism of the private sector continues
to decline—is one of the main arguments as to why China’s total factor productivity has stagnated.
The creation of a section in the Decision dedicated to national security tells its own story. It highlights
that it is pivotal to the Chinese Government’s plan to ensure “steady and sustained progress in Chinese
modernization.”9 While all state actors must do what is necessary to ensure economic security, to maintain
a dynamic business environment this should be done in a way that is restrained and proportionate to the
perceived risks. The concern among foreign-invested enterprises (FIEs) is that China’s prioritisation of
security could lead to policies that go beyond legitimate concerns and create insurmountable business
risks. European companies are already struggling to understand their compliance obligations under a slew
of recent security-related legislation, including the Law on Guarding State Secrets, the recently amended
Anti-espionage Law and the new Foreign Relations Law.
As a result of these issues, a sentiment is emerging at company headquarters (HQs) and among
shareholders that the returns on China investments are no longer commensurate with the risks faced.
Profit margins in China are equal to or below the global average for approximately two thirds of European
Chamber members, 10 and pessimism about future profitability is at an all-time high. 11 In the past,
international companies operating in China, particularly large multinational corporations (MNCs), would
have been able to leverage their global operations to spread the costs of their China operations. However,
many Chamber members are now less able to do this after having been pushed to adopt ‘in China for
China’ strategies, essentially becoming Chinese companies with foreign shareholders, at least in some
aspects of their operations. At the same time, many foreign businesses face structural disadvantages
compared to domestic Chinese competitors, including policies that restrict the ways in which they can
finance their acquisitions, and the inability to establish legitimate China holding companies, among
others.12 With many other markets offering greater predictability and legal certainty along with the same
return on investment, continuing to invest at previous levels in the China market is simply becoming
harder to justify.
There are indications that FIEs have already begun adjusting their expectations for and approaches to
the China market, 13 with foreign direct investment (FDI) decreasing by 29.1 per cent year-on-year during

8 Wang, Z, Full Text: Resolution of the Central Committee of the Communist Part of China on Further Deepening Reform Comprehensively to Advance Chinese
Modernization, Pekingnology, 21st July 2024, viewed 15 th August 2024, <https://www.pekingnology.com/p/full-text-resolution-of-the-central>
9 Ibid.
10 European Business in China Business Confidence Survey 2024, European Union Chamber of Commerce in China, p.15, 10 th May 2024, viewed 2nd July 2024, <https://
www.europeanchamber.com.cn/en/publications-business-confidence-survey>
11 Ibid, p.28.
12 Other structural disadvantages that they face are in relation to the application of national and local requirements, and taxation.
13 There are outliers to this trend – predominantly a small number of very large MNCs that are continuing to make large investments in China. These companies are
concentrated in terms of both the sectors in which they operate and the nationality of ownership structure. Rhodium Group found that in 2021, 10 investors made up 71
per cent of all FDI into China (a trend that had peaked at 88 per cent in 2019), coming mainly from Germany, the Netherlands, the UK and France, and concentrated in
just five sectors – automotive equipment and components, food processing and distribution, pharmaceuticals and biotechnologies, chemicals, and consumer products
manufacturing. More than 30 per cent of this FDI was in the automotive equipment and components sector, and more than 40 per cent originated from Germany. Kratz,
A; Barkin, N & Dudley, L, The Chosen Few: A Fresh Look at European FDI in China, Rhodium Group, 14th September 2022, viewed 16 th August 2024, <https://rhg.com/
research/the-chosen-few/>. This trend continued over the next two years, with it being reported that German FDI into China remained high in 2023 and increased over a
comparable period in 2024, predominantly in the automotive industry, and that German investment overall had made up more than half of the EU’s total FDI into China
over the past five years. Chazan, G, German investment in China soars despite Berlin’s diversification drive, Financial Times, 13 th August 2024, viewed 16 th August 2024,
<https://www.ft.com/content/339ac2c7-f570-4ec0-8753-54f431c6aa10>

Executive Summary
Executive Summary6
the first half of 2024.14 Furthermore, the volume of investments into China by European Union (EU) and
American firms is now roughly half that of a decade ago,15 with smaller MNCs and small and medium-
sized enterprises in particular opting to invest elsewhere.
In past years, this shortfall would have at least been partly offset by reinvestments – businesses using
profits earned in China as opposed to capital injections from their HQs to fund projects. However, this
metric is also trending downwards, 16 as is the number of businesses that plan to expand their China
operations. 17
In tandem, the nature of the FDI that China is able to attract is changing, as focus shifts from cost and
efficiency considerations, to building resilience and ensuring the continuity of company operations. New
investments are increasingly defensive, geared towards creating China-specific value chains, separate
IT and data storage systems for China due to regulatory requirements, localising business functions,
and enhancing compliance capacity, rather than beefing up China research and development or capturing
market share.18&19 These kinds of investments will neither create new jobs in China nor drive innovation. Similar
defensive trends can be seen when it comes to diversification of supply chains. European Chamber members
have begun both offshoring and onshoring,20&21 often at additional cost and loss of efficiency, as they seek to
mitigate risks.
These changes are by no means a sign that European companies are running for the exit, but they do
represent a strategic shift towards siloing China operations from the rest of the world. While this creation
of autonomous, and sometimes divergent, systems may provide greater operational resilience, it will likely
set the EU and China on course for a future of reduced engagement resulting in missed opportunities.
Meanwhile, a small minority have begun thinking about contingency plans should a serious escalation of
regional tensions occur. This was precipitated by Russia’s invasion of Ukraine, which pushed companies
to conduct scenario planning to see what the impact may be on their China operations if a similar event
were to happen closer to home.

14 The country absorbed 498.91 billion yuan of foreign investment in January-June 2024, Ministry of Commerce, 12 th July 2024, viewed 12 th August 2024, <https://www.
mofcom.gov.cn/xwfb/rcxwfb/art/2024/art_40c540bd5d994587a7e3e364c43e594a.html>
15 Kratz, A & Boullenois, C, Irrational Expectations: Long-Term Challenges of Diversification Away from China, Rhodium Group, 13 th September 2023, viewed 10 th August
2024, <https://rhg.com/research/irrational-expectations-long-term-challenges-of-diversification-away-from-china/>
16 Decreases in FDI are often—at least partially—attributed to the fact that rather than relying on capital injections from their overseas HQs, many foreign-invested enterprises
(FIEs) reinvest their profits in China to fund new projects or expand or strengthen existing operations. However, in the BCS 2024, 35 per cent of respondents reported they
will reinvest less than their historical average. European Business in China Business Confidence Survey 2024, European Union Chamber of Commerce in China, p. 3, 10 th
May 2024, viewed 2 nd July 2024, <https://www.europeanchamber.com.cn/en/publications-business-confidence-survey>
17 Ibid, p. 5.
18 In the BCS 2023, a notable 75 per cent of respondents reported having reviewed their supply chains primarily for defensive reasons, including the need to increase resilience due to
geopolitical factors and to mitigate the impact of domestic policy developments, such as China’s self-sufficiency drive. The primary reasons that respondents gave for either shifting
or considering shifting existing investments were also defensive in nature – i.e., to mitigate the impact of decoupling between China and third countries, because China’s business
environment is too uncertain and to increase supply chain resilience. European Business in China Business Confidence Survey 2023, European Union Chamber of Commerce in
China, p. 15, 21st June 2023, viewed 11th August 2024, <https://europeanchamber.oss-cn-beijing.aliyuncs.com/upload/documents/documents/European_Business_in_China_
Business_Confidence_Survey_2023[1124].pdf>; There are some outliers to this trend, predominantly very large MNCs that continue to double down on their China
investments, as noted in footnote 3.
19 This trend was also corroborated by multiple interviews with Chamber members for the Chamber’s 2024 report on risk management. Riskful Thinking: Navigating the
Politics of Economic Security, European Union Chamber of Commerce in China and China Macro Group, 20 th March 2024, viewed 16 th August 2024, <https://www.
europeanchamber.com.cn/en/publications-archive/1175/Riskful_Thinking_Navigating_the_Politics_of_Economic_Security>
20 76 per cent of respondents to the European Chamber’s BCS 2024 reported having reviewed their China supply chain strategy over the past two years, with 22 per cent
shifting parts of their supply chains either into or out of China as a result. European Business in China Business Confidence Survey 2024, European Union Chamber of
Commerce in China, p. 34, 10 th May 2024, viewed 2 nd July 2024, <https://www.europeanchamber.com.cn/en/publications-business-confidence-survey>
21 The BCS 2023 found that 63 per cent of respondents had ‘moderately’ or ‘significantly’ localised their junior staff; 67 per cent their mid-level staff; 63 per cent their senior
management; and 41 per cent their company board positions. IT infrastructure and data storage were both reported as having been localised by 60 per cent of respondents,
while 67 per cent reported having localised their supply chains. The same question was not asked in the BCS 2024. European Business in China Business Confidence
Survey 2023, European Union Chamber of Commerce in China, p. 15, 21st June 2023, viewed 11th August 2024, <https://europeanchamber.oss-cn-beijing.aliyuncs.com/
upload/documents/documents/European_Business_in_China_Business_Confidence_Survey_2023[1124].pdf>

Executive Summary
Executive Summary7European Business in China Position Paper
欧盟企业在中国建议书 2024/2025
Reform plans need to be backed by meaningful implementation
At the start of the new millennium, reform plans announced by the Chinese Government were seen by
foreign companies as credible, following years of concrete improvements to the business environment
in the periods immediately preceding and following China’s World Trade Organization accession. 22 Now,
after more than a decade of largely unfulfilled pledges, doubts over China’s commitment to reform are
increasing. Furthermore, with national-security considerations increasingly being balanced against—
and sometimes taking precedence over—economic growth, 23 it raises the question of whether Chinese
officials have sufficient space to introduce pragmatic, pro-business policies.24
It is against this backdrop that the State Council’s 13 th August 2023 Opinions on Further Optimising the
Foreign Investment Environment and Increasing the Attraction of Foreign Investment (Opinions) was
initially hailed as a potential turning point. 25 While not a silver bullet for the headwinds China’s economy
is facing, the European Chamber believed that full implementation of the Opinions would help prevent a
further deterioration in business confidence, and provide a solid foundation to build on.
However, one year on from the document’s publication, momentum has been lost.
To quantify this, the European Chamber asked the members of its 50 working groups, sub-working groups
and fora, as well as its seven local chapters, to provide feedback on the progress they have seen on the
measures so far. This ‘reality check’—detailed in Section 2.3 of this year’s Executive Position Paper—
makes for sober reading.
While the Opinions do contain several big-ticket items that could really move the needle, limited
implementation has taken place. With a few exceptions, the areas in which progress has been made
have been those that will have little material impact on business, or which are too narrow in scope to
meaningfully address the challenges faced by foreign companies.
Below is a summary of the key takeaways of the analysis, organised across six thematic areas:
• Market access and procurement: The Opinions contain several points of real substance here. This
includes measures proposing the revision of the Government Procurement Law, the clarification of
standards for goods that are ‘made in China’ and the creation of a level playing field for procurement
processes. However, progress has so far largely been incremental and restricted to initiatives of limited
sectoral and geographical scope, and foreign companies continue to face discrimination in China’s
procurement market.

22 China’s accession to the World Trade Organization (WTO) in 2001 saw it abolish, revise or introduce more than 2,300 national laws and nearly 200,000 local regulations,
which led to further market opening: China and the World Trade Organization, State Council Information Office of the People’s Republic of China, June 2018, viewed 10th
August 2024, <https://english.www.gov.cn/archive/white_paper/2018/06/28/content_281476201898696.htm>; and China’s Economic Rise: History, Trends, Challenges,
and Implications for the United States, Congressional Research Service, 25th June 2019, viewed 10 th August 2024, <chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/
https://sgp.fas.org/crs/row/RL33534.pdf>
23 Riskful Thinking: Navigating the Politics of Economic Security, European Union Chamber of Commerce in China and China Macro Group, 20th March 2024, viewed 10th
August 2024, <https://www.europeanchamber.com.cn/en/riskful-thinking-report>
24 “For China to implement necessary structural reforms through policies that are practical and implementable, it will be important for space to be given to policymakers to
‘make mistakes’, openly discuss ideas and ultimately change course, something that was previously a characteristic of policymaking in the country. However, with red lines
becoming more blurred, and the scope of issues deemed as ‘sensitive’ constantly expanding, people’s willingness to speak out is bound to diminish.” European Business
in China Position Paper 2022/2023, European Union Chamber of Commerce in China, 21 st September 2022, viewed 16 th August 2024, <https://europeanchamber.oss-cn-
beijing.aliyuncs.com/upload/documents/documents/European_Business_in_China_Position_Paper_2022_2023[1068].pdf>
25 The document includes 24 proposed measures, which further divide into 59 sub-measures, that closely mirror some of the key concerns raised by the European Chamber
in recent years. Opinions of the State Council on Further Optimising the Environment for Foreign Investment and Increasing the Efforts to Attract Foreign Investment, State
Council of the People’s Republic of China, 13 th August 2023, viewed 10 th August 2024, <https://www.gov.cn/zhengce/content/202308/content_6898048.htm> ; Ministry of
Commerce: More than 60% of the "24 foreign investment" policy measures have been implemented or seen positive progress made, People's Daily Online, 26 th January
2024, viewed 10 th August 2024, <http://finance.people.com.cn/n1/2024/0126/c1004-40167385.html>

Executive Summary
Executive Summary8
• Human resources (HR) and business travel: There was an early welcome breakthrough with the
extension of China’s preferential individual income tax policy for foreign nationals, 26 and the waiving of
visa requirements for citizens from several EU Member States. 27 However, only citizens from less than
half of all EU Member States can currently benefit from the visa-free travel scheme, and the tax policies
are not only temporary, but also merely a continuation of the status quo. This early progress therefore
needs to be followed by further action, and additional measures need to be introduced that address the
main HR-related concerns of European companies, which are related to the attraction and retention of
both domestic and foreign talent.
• Digital and cyber: Some initial momentum has been built in this area, most notably with the revision
of China’s regulations for cross-border data transfer. At the same time, if China’s cyber regulations are
to ultimately facilitate rather than hinder business, further action is required. It will be necessary that
upcoming rules, such as what constitutes ‘important data’ and ‘sensitive personal information’, are not
defined in an expansive manner, as well as for industry-specific regulations to be better aligned with the
revised Provisions on Promoting and Regulating Cross-border Data Flows. 28
• Access to green energy: Despite now being a key concern for most foreign companies, this issue
featured only as a bit-part in the Opinions. Some incremental progress has been made, but more
needs to be done if FIEs are to meet their global corporate decarbonisation goals, which for many is
needed to legitimise their continued presence in the China market. Concrete improvements have been
seen at the local level, most notably with the green electricity trading mechanism in Tianjin, which was
introduced in July 2021. Chamber members in Tianjin hope that this pilot will be made permanent so
that they will have guaranteed, long-term access to sustainable sources of green electricity.
• Intellectual property rights (IPR): Practical challenges continue to undermine the enforcement of IPR
in China, while little progress has been made on sectoral-level challenges.
• Investment promotion and facilitation: Concerted efforts have been made to increase government-
industry dialogues. However, in many instances, such dialogues have not produced results. Exchanges
are often carefully choreographed, with companies’ speaking points having to be submitted and vetted
in advance. There are several points in the Opinions related to the provision of support and incentives
for investment in China, but their impact has been largely underwhelming, which is in part due to the
related text lacking both ambition and specificity.
The main cost of failing to take further action to address business concerns more comprehensively, is that
the negative trends witnessed over the past few years can be expected to continue.
At the business-level, this would equate to a further loss of investment for China, the continued siloing of
supply chains and company operations, and the current fissure between HQs and their China operations
expanding to become a chasm. 29 Beijing would also be opening the door wider for other regions to court

26 Previously due to expire at the end of 2023, China’s preferential individual income tax regime for foreign nationals was extended until the end of 2027 within a week of the
Opinions’ publication. China Extends Preferential Tax Policies for Foreigners to 2028, Bloomberg, 28 th August 2023, viewed 10 th August 2024, <https://www.bloomberg.com/
news/articles/2023-08-28/china-extends-preferential-tax-policies-for-foreigners-thru-2027>
27 At the time of writing, the citizens of 11 EU member states are permitted to enter China visa-free and remain in the country for 15 days. These include Austria, Belgium,
France, Germany, Hungary, Ireland, Italy, Luxembourg, the Netherlands, Poland and Spain. Other countries’ citizens that have been able to enjoy visa-free travel to China
since the introduction of this policy include those of Australia, Malaysia, New Zealand, Singapore and Switzerland.
28 Provisions on Promoting and Regulating Cross-border Data Flows, Cyberspace Administration of China, 22 nd March 2024, viewed 8 th May 2024, <https://www.cac.gov.
cn/2024-03/22/c_1712776611775634.htm>
29 41 per cent of respondents to the European Chamber’s BCS 2024 reported some form of decoupling between their China operations and their HQs in the past two years.
European Business in China Business Confidence Survey 2024, European Union Chamber of Commerce in China, p. 39, 10 th May 2024, viewed 10 th August 2024, <https://
www.europeanchamber.com.cn/en/publications-business-confidence-survey>

Executive Summary
Executive Summary9European Business in China Position Paper
欧盟企业在中国建议书 2024/2025
investment at its expense. Figure 1—which shows annual greenfield FDI flows into China, Indonesia,
Malaysia, Vietnam, India and Mexico between 2003 and 2023—illustrates that this dynamic is already in
play, and that it intensified from 2018 onwards.
Source: UNCTAD world investment report
At the intergovernmental level, failure to implement meaningful economic reforms will likely result in
an increase in EU-China tensions. The EU has already begun taking a more assertive stance towards
China on key areas of concern to European business in China. Moreover, it now has the legal muscle to
exert real pressure, having introduced in recent years a set of tools aimed at protecting the integrity of its
Single Market, and ensuring reciprocal market access and a level playing field for European companies
operating in third markets. 30
Tensions could be dialled down if the Chinese authorities were to fully implement the measures detailed in
the Opinions. While this would not be a panacea, responding positively to the following recommendations
could turn the tide and begin the process of rebuilding investor confidence in the China market:
• Reprioritise economic growth.
- Refocus on reform and opening-up.
- Allow market forces to play the decisive role in the allocation of resources.
- Introduce policies to boost domestic demand.
- Ensure that security-related policies are proportionate to the risk faced.
• Create a level playing field for all enterprises, regardless of size and ownership structure.
• Expand the scope of visa-free travel policies to cover passport holders from all European Union
Member States and introduce measures to ease the challenges faced when it comes to the attraction
and retention of both domestic and foreign talent.
• Ensure digital and cyber regulations facilitate business operations.
- Define ‘important data’ and ‘sensitive personal information’ in forthcoming rules and regulations in a

30 During the second half of 2023 and the first half of 2024, the EU demonstrated its willingness to deploy its toolbox, following the launching of several anti-subsidy probes,
as well as an investigation into the procurement of medical devices in China. Blenkinsop, M & Melander, I, EU investigates fair access to China’s medical device market,
Reuters, 24 th April 2024, viewed 11 th August 2024, <https://www.reuters.com/world/europe/eu-opens-investigation-into-chinese-medical-device-market-2024-04-24/>; Trade
defence investigations, European Commission, viewed 11 th August 2024, <https://tron.trade.ec.europa.eu/investigations/ongoing>
Figure 1: Value of announced greenfield FDI projects, 2003–2023

Executive Summary
Executive Summary10
narrow and precise manner.
- Align industry-specific cyber regulations with the revised Provisions on Promoting and Regulating
Cross-border Data Flows.
• Implement comprehensive policies and measures to increase corporate entities’ access to sustainable
sources of green energy.
• Improve the enforcement of IPR in China, including by addressing sectoral-level challenges.
• Increase both the level of ambition and specificity of polices and incentives aimed at attracting/
facilitating investment in China, and ensure that such measures are inclusive of all companies
regardless of size and ownership structure.
This would be just the beginning, however. If China is to re-establish itself as the preferred destination
for foreign investment, significant additional steps are needed to improve the business environment. This
requires deepening collaboration with industry players and chambers of commerce to address the 1,043
detailed and constructive recommendations put forward in this Position Paper.31

31 This number includes 19 recommendations for the European Union and European businesses related to their engagements with China.

Section One1
Executive Position Paper
European Business in China Position Paper
欧盟企业在中国建议书 2024/2025