German Ambassador to China Michael Clauss.[Photo/Provided to english.gov.cn]

The National People’s Congress meets at a time of path breaking decisions for China, which are also of great relevance to Germany and Europe: It needs to maintain sufficiently high growth that is necessary to secure social stability. At the same time, this rate of growth needs to be made sustainable and self-supporting. Reforming the economy and reforming the legal system towards a greater degree of rule of law go hand in hand. The Third and Fourth Plenum have laid down important guidelines for reforms in the economy, the legal system and society as a whole, which need to be implemented vigorously. The NPC has an important role to play to turn these guidelines into reality.

For Germany, the following points are important:

- High-quality and sustainable growth will not be attainable without greater cooperation with foreign countries. Therefore, China should dismantle barriers to cooperation and open up further. However, in recent times, companies and associations have turned more frequently to the Embassy than previously with problems they encounter when doing business. This has occasionally given rise to the question whether foreign companies are actually as welcome to China as they used to be.

- A number of examples seem to raise doubts whether there is a real determination to further open up towards foreign companies: New rules on IT-products for the banking sector create security requirements unheard of in Germany and that can be fulfilled much more easily by Chinese companies than by foreign ones. This has raised concerns that the new cyber security policy – not just with regard to the banking sector – could make market access for foreign companies in China much more difficult. In the area of public procurement, Chinese companies continue to get preferential treatment. The central level seems to have recognized the problem but the provincial level seems to care less about non-discrimination. At the same time, Chinese companies profit from the openness of European and other public procurement markets and expand their participation in infrastructure projects on a massive scale. Within the WTO context, China has offered to open only 10% of its public procurement market; in the case of the EU this share is practically 85%. One and a half years after the Third Plenum, joint venture requirements and sectors closed to or restricting foreign investment have hardly been liberalized. Even today it is an open question whether China will take a qualitative step forward or continue to limit itself to marginal areas. Foreign pharmaceutical companies complain about a massive backlog of outstanding approvals. The process now takes longer than before and longer than in the case of Chinese companies.

- For these reasons it is crucial that the National People’s Congress send out a signal to accelerate further opening up. The reforms of the Third and Fourth Plenum should be made a priority where they aim at greater openness. The revision of the Foreign Investment Law would be good opportunity to do so. Confidence in a further opening would also be strengthened if first signs of a reform of State-owned enterprises were followed by clear steps towards creating a level playing field for all companies. We also set great store by a greater transparency and predictability of laws, as announced. The NPC plays an important role in all these endeavors.

-- Michael Clauss ,

German ambassador to China