China is making progress in opening up its economy.
(Photo: dpa)
Beijing China has made progress towards a more open economy over the past decade, but it still has some catching up to do, and reforms have recently stalled. This is the conclusion of a study by the Rhodium Group and the Atlantic Council, which was published on Tuesday.
Using a number of indicators, a team of experts examined where the Chinese government has kept its promises to further open the market – and where it has not. “In some areas, China has demonstrably made progress, but in most there is still a long way to go,” the study says.
According to the study, the People’s Republic is now comparable to Italy’s economy in terms of openness to trade. China, for example, has lowered its tariffs to a level comparable to that of the OECD economies. However, restrictions on trade in services – especially digital services – remained higher than in open market economies.
China has come under increasing pressure in recent years because of its interventions in the economy. On Monday, US Trade Representative Katherine Tai accused China of undermining global prosperity by ignoring global trade norms.
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Deficits in opening up the financial market, fair competition and access for direct investment
At the same time, China has made progress in converging to market standards. According to the study, the country has also improved its intellectual property protection. This is also observed by the foreign economy with local businesses. European companies have seen a steady improvement in the enforcement of intellectual property rights in China over the past ten years, according to a position paper presented by the European Chamber of Commerce in September. Among other things, this has been achieved through the introduction of special dishes in Beijing, Shanghai and Guangzhou.
However, since 2016, according to the study by the Rhodium Group and the Atlantic Council, reforms have slowed down. In particular with foreign direct investments, i.e. fair access to the domestic market, fair competitive conditions and the opening of the financial market, there is still a lot of catching up to do compared to Germany, the USA or France.
European companies repeatedly criticize the fact that the Chinese government has strengthened its state-owned companies in recent years at the expense of competition – even though they have considerable deficits in productivity and efficiency compared to private companies. But Beijing wants to keep control. This can also be seen in the measures taken over the past few years.
China picked the tree’s low-hanging fruit, says Daniel Rosen, partner at the Rhodium Group and one of the study’s lead authors. “But now comes the hard part. Most of the remaining reforms that are required are really tough, and they get right to the heart of the issue of political control over the economy. “
According to the study, even stubborn optimists were “shocked” by anti-market tendencies in 2021. As an example, the authors cite the resurgence of state ownership, extra legal influence, less freedom for companies to use the capital markets at home and abroad, the overnight shutdown of entire sectors such as for-profit education, and regulations that restrict the data collected by technology companies nationalize.
More: Electricity shortage, turbulence on the real estate market, Corona: The mood in China’s industry is clouding over.