European Council President Donald Tusk, Chines Premier Li Keqiang, and European Commission President Jean-Claude Junker at EU-China Summit in Brussels on Tuesday (04/9). Photo by European Commission.

JAKARTA (TheInsiderStories) – Chinese government made a new breakthrough with no longer force European companies (EU) companies operating in China and said was ready to address industrial subsidies. This was conveyed by Chinese Premier Li Keqiang while attending the annual EU – China leaders meeting in Brussels, Belgium, on Tuesday (04/09).

“European companies will enjoy equal treatment,” said the premier following the summit by adding China will offering to set up a dispute mechanism to handle complaints by foreign companies .

Marking a significant shift, Li’ pledge follows similar offers to the United States (US) and potentially signals an opening that European companies have long lobbied for. Summit chair Donald Tusk called it a breakthrough.

Reportedly, Western governments have long complained that their companies are pressured into handing over technological know-how to Chinese joint-venture partners, officials or regulators as a condition for doing business in China.

That technology is often subsequently used by Chinese competitors, undercutting Western companies, says the EU which fears Chinese dominance in strategic industries. Tusk said it was the first time China had agreed to engage in discussions on reform of World Trade Organization rules, the key priority for Europe.

China also agreed to address EU concerns over state subsidies to industrial firms. “Both sides will intensify the discussions with the aim of strengthening international rules on industrial subsidies,” the two global trading powers said in a joint statement.

Premier Li stated that China was ready to foster a better business environment for foreign firms. China points to a new foreign investment law due to take effect at the start of 2020.

It includes provisions to ban forced technology transfers and ensure foreign companies have access to public tenders. But EU officials reportedly rates the law lacks detail and question how effective it will be in reality in protecting foreign firms.

Previously, the European Commission (EC) set out a 10-point action plan last month, seeing scope for greater cooperation in fields such as climate change, but demanding greater reciprocity, such as access for EU firms to Chinese public tenders.

Previously, in last March, the EC set out a 10-point for more balanced economic relations with China, urging EU leaders to back its ideas to curb Chinese state-owned enterprises and increase their guard against cyber security threats.

The Commission said the EU should cooperate more with China in areas such as climate change and peace, but should also push for a more reciprocal economic relationship and take steps to protect its industry.

The EU shares many of the US concerns over Chinese market distortions, overcapacity and technology transfer. But it has avoided taking sides in a multi-billion dollar trade war between Washington and Beijing.

Europe has also been increasingly frustrated by what it sees as the slowness of China’ opening of its economy, a surge of Chinese takeovers in critical EU sectors and US pressure to shun China, and notably telecoms equipment maker Huawei Technologies Co. Ltd. is a Chinese multinational telecommunications equipment and consumer electronics manufacturer over espionage concerns.

Commission Vice President Jyrki Katainen told that Chinese state financing and state-owned enterprises distorted EU markets. For example, EU rules limited subsidies EU governments could give to European companies, but did not apply to foreign companies, he said.

A German EU diplomat described the paper as a “comprehensive and courageous” stocktaking of relations with Beijing, highlighting a lack of reciprocity and growing protectionism and also broaching difficult issues, such as human rights.

The commission also urges China to agree to reforms of World Trade Organization rules, notably regarding subsidies and forced technology transfer, and conclude a deal with the EU on investment rules by 2020.

The Commission urged EU nations to revive a stalled proposal known as the International Procurement Instrument that would require foreign countries to open up their public tenders in return for access to Europe.

The EU executive believes Chinese bidders for EU public contracts should meet high labor and environmental standards and wants to adopt EU law to limit the state-owned enterprises and state subsidies in the EU market. It also believes EU countries should find a common line on the security of planned high-speed 5G telecoms networks.

Reportedly, China is the EU’ biggest source of imports and its second-biggest export market after the US, with trade between the two worth more than US$1 billion per day. China’s trade surplus in goods with the EU was $200.4 billion in 2017.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com