We want China to ‘wake up’ and open its economy even more - European business group

China’s efforts to open up its economy have not been enough to improve foreign companies’ access into the domestic market, according to a paper released on Tuesday by the European Union Chamber of Commerce in China.

One major hurdle that foreign firms operating in China face is the presence of Chinese state-owned enterprises, the paper said. Those firms, also known as SOEs, receive preferential treatment from the government such as priority to get financing — and that special treatment distorted competition in many industries, according to the report.

The situation has worsened in recent years with the Chinese government “pursuing SOE reform with Chinese characteristics,” it added.

“Rather than cutting SOEs down to a manageable size, determining the industries that would be most appropriate for them to operate in and privatising the rest, the goal has been to make them ‘stronger, better and bigger’,” Joerg Wuttke, the chamber’s president, wrote in the report.

Wuttke said China has made some inroads in terms of restructuring its economy in recent years. But the authorities have appeared to support growth by pumping more money into the economy, not by making the much-needed reforms, he said. “Sometimes, you want actually China to wake up and see you can’t only throw money at the economy. You actually have to change the structure,” he said.