China has failed to honor promises to the World Trade Organization to open its oil and phone markets, a European business group said Thursday, adding to complaints of worsening conditions for foreign companies.
European companies believe market-oriented reforms have stalled and Beijing’s treatment of foreign enterprises is becoming more unfair, the European Union Chamber of Commerce in China said in a report.
The complaints echoed criticism by American business groups that Beijing is improperly using regulation to promote its companies at the expense of foreign rivals in violation of market-opening pledges.
Premier Wen Jiabao, China’s top economic official, responded in April to rising complaints by promising companies a "level playing field." But business groups say Beijing has yet to repeal discriminatory measures and is moving ahead with other restrictions.
"I do believe the words of Premier Wen when he says that foreign investment is welcome," said the EU chamber’s president, Jacques de Boisseson, ahead of the report’s release. But he said some officials are "not welcoming foreign investment" and "would probably be satisfied with a lower level of foreign investment and a higher share for Chinese companies."
The EU chamber said Beijing has failed to keep pledges made when it joined the WTO nearly a decade ago to open its telecommunications market by setting up an independent regulator and giving foreign companies equal access to broadcast spectrum.
China also has failed to open its airline reservation market as promised and allow foreign competitors direct access to Chinese travel agents and airlines, the group said in an annual report on business conditions.
Beijing has blocked access to its wholesale market for refined oil by requiring that distributors own at least 51 percent of an oil refinery, above the 49 percent that foreign investors are allowed to own, the group said.
The chamber also complained about Beijing’s effort to promote "indigenous innovation" by favoring Chinese companies in its multibillion-dollar annual purchases of computers and other technology.
Following U.S. and European protests, Beijing promised in May to make it easier for foreign companies in China to qualify as domestic suppliers but said it was going ahead with the overall strategy.
An annual survey of 500 European businesses in China released in June by the EU chamber found 36 percent believe government policies have become less fair in the past two years and a slightly higher percentage expect the situation to get worse in the future.
"This backward trend confirms the overall sentiment of frustration among the foreign business community caused by the perception that market reforms have stalled in many areas," the report Thursday said.
Boisseson said European companies are weighing whether to continue investing in China.
"Who knows at what point the obstacles will outweigh the benefits and they will take the decision to invest elsewhere?" he said.
