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      EU businesses optimistic about Chinese economy

      2012-09-06 16:56 Xinhua     Web Editor: Mo Hong'e comment

      European companies remain optimistic about growth in China, but want to see faster reforms as the country faces a leadership transition, a European business group said Thursday.

      Investment from Europe to China has been steady despite slight declines in the past several months, Davide Cucino, president of the European Union Chamber of Commerce in China (EUCCC), told Xinhua in an interview.

      "Even in moments (of economic weakness) like this, we have indications from our members that they believe there is still room for growth and room for profits in China," he said.

      Increased consumption, a stronger service sector, accelerating urbanization and innovation will drive China's mid- and long-term growth, although the country has to face a slowdown in the short term, Cucino said.

      However, EU firms would like to see more reforms implemented, which is urgently needed for a transition into the new growth model, he said.

      In an annual position paper released Thursday, the EUCCC pushed China for reforms to substantively reduce state involvement in the business environment and give full play to market principles.

      "As the next five years will be critical, China's leadership transition provides an ideal opportunity for these bold steps to be taken," the paper said.

      To rebalance the growth model, the government must give all companies equal access not only to markets, but also to procurement, technology innovation, lawful treatment and financing and subsidies, according to the paper.

      Cucino said all necessary reforms are included in the government's 12th Five-year Plan (2011-2015) but have not yet been well implemented, urging the government to take quick action.

      "While foreign companies see a lot of reform policies on hold, they keep their own plans on hold," he said. "So, one of the reasons for less foreign investment now is the lack of a clear indication on how long it will take to put these reforms in place."

      A global economic downshift and faltering demand dragged down foreign direct investment in China by 3.64 percent year on year in the first seven months of the year, with that from the EU slipping 2.73 percent.

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