EU Business Chiefs Attack China Industrial Policy

China can still make a difficult trade partner. Aly Song/Reuters

A report by EU business leaders based in Beijing, released Tuesday, warns of the dangers of trading with China, which it describes as remaining highly protectionist.

The report, published by the European Union Chamber of Commerce in China, criticises China's industrial policy, referred to as China Manufacturing 2025.

"It seems that the Chinese Government is determined to maintain a prominent role in guiding the economy," the report states, adding that policy measures it is using to do so are "highly problematic."

In a warning to foreign businesses, which it says should be treated equally under Chinese law, the report says that "Chinese policies will further skew the competitive landscape in favour of domestic companies."

The report found that Chinese government contracts are "largely closed to foreign suppliers," while deals that force foreigners to give up advanced technology are an "increasing requirement" for access to Chinese markets.

Substantial local and central government subsidies are available for favored companies in priority industries, the report says.

Commitments made by Chinese President Xi Jinping in Davos in January to treat foreign companies more equally and boost foreign investment were welcome, the report said. But, it warned: "In the interests of mutual benefit, and to ensure that China reaches its full technological potential, the European Chamber hopes that China follows through on these commitments."