Economic trade
China unsettles investors
The Chinese government wants to introduce the 'social credit rating system' for companies in 2020 in order to monitor and control market participants more closely. According to the VDMA, there is a lack of transparency for European companies. The result is uncertainty among investors.
The 'social credit rating system' is to comprise a large number of requirements that will serve as the basis for calculating ratings that are issued to all market participants. China wants to continuously monitor the behavior of companies and adjust the values accordingly. If companies do not comply with all the rules, they risk serious consequences such as sanctions or even being blacklisted. "However, there is a lack of transparency for European companies. The assessment criteria and the measures derived from them are unclear. In addition, we fear that not only hard criteria such as tax payments will be taken into account," warns Ulrich Ackermann, Head of VDMA Foreign Trade. "If this remains the case, investors will be massively unsettled. The German Chancellor must therefore speak plainly with her Chinese counterparts," demands Ackermann.
The European Union has been negotiating a bilateral investment agreement with China since 2013, which should set uniformly high protection standards and at the same time guarantee improved market access. "The VDMA supports the EU's goal of reaching an agreement in 2020. However, even after more than 20 rounds of negotiations, the Chinese side has still not made any significant progress," criticizes Oliver Wack, Area Manager East Asia at VDMA Foreign Trade. In fact, the list of trade barriers in the People's Republic is long: they range from recently tightened visa conditions to the Chinese cybersecurity law and market-distorting subsidies. "In Europe, criticism of China's delaying tactics is growing. European policy will have to adapt more to the challenges arising from competition between the economic systems," says Wack.
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