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VDMA: China must no longer isolate itself


31 May 2017


Innovation & Enterprise

Frankfurt/Brussels, 31 May 2017 – In an age of growing protectionism, China as an exporting country has the opportunity to take a clear stand in favour of free trade by breaking down trade barriers. But this will urgently necessitate better access to the Chinese market for European investors. To coincide with the visit by Chinese Premier Li Keqiang to Brussels on 1 and 2 June, VDMA is calling for the investment agreement between the EU and China to be concluded soon. Working together as partners means both parties must enjoy equal opportunities.

“China must follow up its statements on free trade and a closer partnership with Europe with action,” says VDMA Chief Executive Thilo Brodtmann. “Chinese investors currently benefit from open access to Europe, but European companies are not granted the same opportunities in China. The planned investment agreement between the EU and China is therefore long overdue. Otherwise, the European states should reserve the right to examine foreign investments in general more critically. Fair competition also means matching conditions for Chinese and European investors. Specifically, European companies are calling for broader market access rights and an end to the ‘negative list’ of sectors in China in which access for foreign investors is restricted.”

As a matter of course, VDMA is against isolating Europe from Chinese investors. Foreign investments are good for Europe, and that includes investments from China. But because of its politically influenced economic and investment policy, China is not the same as any other investor. If it wants to be a credible partner for free trade in the WTO, it needs to put a swift end to measures that distort the market.

German mechanical engineering firms already enjoy very close trading relations with China. Last year, China was the second-largest foreign market for the mechanical engineering industry, with an export volume of EUR 14.6 billion, after the USA (EUR 16.3 billion). In the other direction, in 2016 China was also no. 2 for Germany’s machine imports, with an import volume of EUR 5.6 billion, after Italy (EUR 5.8 billion). China is also the second-most important investment location world-wide for the German mechanical engineering industry, with direct investments in China reaching EUR 5.7 billion by 2015.

VDMA (Verband Deutscher Maschinen- und Anlagenbau, Mechanical Engineering Industry Association) represents more than 3,200 mostly medium-sized companies in the capital goods industry, making it the largest industry association in Europe. With more than 1 million employees in Germany and a turnover of 219 bn. Euro (2016), the mechanical engineering industry is the largest industrial employer in Germany and one of the leading industries overall.