China is currently considering a series of lucrative ‘five-year plans’ across a range of sectors, including a build-out of 'smart cities' estimated at €117 billion, of which 60% is expected to benefit telecom firms.
Western ICT companies such as Ericsson, IBM and Cisco have enjoyed early access to China’s markets but their future involvement has been questioned following Chinese demands for "reciprocity" in trade agreements and national security concerns over the country's information infrastructure.
US takes a hawkish line on foreign broadband provision
The US and Australia have taken notably hawkish lines on foreign provision of ICT services such as broadband internet, freezing out overseas companies from their markets on the basis that these may represent a threat to national security.
In March, the European Commission took a similar stance when it tabled a paper that proposed blocking non-EU companies from bidding for government contracts if their home countries do not grant the same access to their own public procurement markets.
European software companies in particular have complained that they are sidelined in bids for government contracts in China, while the European Commission also has concerns about US legislation that favours homegrown firms.
The issue was addressed at two key EU-China dialogues held in Brussels on Thursday (3 May), with both sides making conciliatory noises.
First, at a behind-closed-doors dialogue between Commission President José Manuel Barroso and Chinese Vice Premier Li Keqiang, Barroso staked out priorities “to achieve a better level playing field in our economic relations”. He emphasised that “European stakeholders should have better opportunities for business and investment in the Chinese market.”
Barroso and Li discussed trade level playing field
The meeting was closely watched by media – despite the absence of an official press conference – since Li is considered likely to succeed Wen Jiabao to the Chinese premiership at a communist party congress scheduled for the autumn.
The failure to hold a formal press briefing was formally condemned by the Association of International Journalists, which claimed that the Commission had relented to pressure from the Chinese on World Press Freedom Day.
In an intervention over lunch, revealed to EurActiv, Barroso said: “We should advance work towards a bilateral investment agreement, as agreed at the February (EU-China) summit. Chinese investment in Europe and European in China are ever more important. We must create the right conditions for future development, encourage and increase investment flows and create legal certainty for our investors.”
The conciliatory tone was reflected at a separate conference on EU-China urbanisation partnership, held in Brussels on 3 May, which was directly relevant to Beijing's five-year “smart cities” plan.
Challenged to evaluate the impact potential trade reciprocity measures would have on EU-China trade, the Mayor of Beijing, Guo Jinlong, said: “We welcome relevant EU businesses to come and to invest in our enterprises in Beijing, we also support our companies exporting their services.”
The phenomenon of trade protectionism has “risen a little bit”, Guo admitted, adding: “We think that this is not conducive to overcome the current financial crisis, we welcome a more open and transparent market environment.”