Insiders and diplomats reveal that Brussels is putting pressure on their Chinese counterparts to lobby against a public procurement law favouring home-grown Chinese technology.
Sources say a registry for foreign companies closed yesterday afternoon (9 December) asking companies to fulfil a set of criteria for access to the Chinese market.
The law's provisions, according to sources, stipulate that at least some of a product's component parts or technology should be developed locally in order to be considered for government tenders.
Sources say the law will affect all ICT and clean-tech companies and is the extension of an earlier spat over leaks of confidential information from foreign companies to Chinese competitors. Government agencies that demanded detailed data on clean-tech products were caught leaking product information to home-grown firms (EurActiv 07/09/09).
Lack of transparency
The Chinese Mission to the European Union said the law was not a macro-economic policy and that it were in the process of seeking more information.
Chinese diplomats said there would be several different government ministries that would have a mandate to enact such laws and that they were trying to pinpoint which ministry was involved.
The concept of 'indigenous innovation' was first raised in 2005, but the new law codifies growing Chinese protectionism in the ICT sector, say sources.
Though assurances have been given by Chinese premier Hu Jintao that European companies will benefit from a favourable business climate, including equal corporation tax, this new law appears to demonstrate the opposite.
Sources also complain about a lack of transparency in public procurement, as Chinese authorities do not have to tell companies how they came to a decision on which tender they choose.
"Our companies are finding it difficult to qualify for this law," James Lovegrove from the European wing of an American trade federation, TechAmerica, told EurActiv.
China's doors closing
In a blunt assessment of the business climate for European companies operating in China, in September the European Chamber of Commerce in China warned of growing restrictions on foreign firms and a slowdown in China's economic reform process.
Joerg Wuttke, president of the European chamber, said government intervention was rising in some sectors while foreign-investment restrictions were on the increase.
In its position paper for 2010, the European chamber accuses the Chinese authorities of using technical regulations and certification procedures to limit market access, and in certain cases to push foreign-invested companies out of certain markets altogether.
