German industry urges EU to toughen response to unfair Chinese trade practices

BERLIN (Reuters) - The European Union should take a tougher approach to protecting companies from unfair Chinese trade practices as Beijing is not keeping its promise to further open up its economy, Germany’s BDI industry association said on Thursday.

China has become Germany’s most important trading partner and exports of “Made in Germany” goods to the country have helped Europe’s largest economy cushion the domestic impact of the COVID-19 pandemic.

China on Thursday concluded its annual, week-long session of the National People’s Congress in which it set a modest growth target for 2021, unveiled changes to Hong Kong’s electoral system and laid out medium-term policy goals as part of its latest five-year plan.

BDI Managing Director Joachim Lang said German industry was missing clear signals in the five-year plan for a real change of course towards market openness and free business economy.

“A successful partnership will only work on the principles of reciprocity and establishing a level playing field in competition,” Lang said, adding that Beijing had to do more to live up to its promises of opening up its economy.

While the EU has made some progress with its Investment Agreement towards a more balanced economic relationship with China, the deal also showed the limits of cooperation, he said.

“The EU must continue on its multi-pronged path that treats China as a partner, competitor and systemic rival,” Lang said.

German industry wants the EU to shore up its defences against unfair trade practices by China by implementing a powerful anti-subsidy instrument and concluding work on an international procurement instrument, Lang said.

The EU should work closely together on this with the United States and Japan, he added.

The BDI also warned the Chinese government that its human rights record could damage future business ties.

“The human rights situation in Xinjiang and the political situation in Hong Kong put a strain on political and economic relations,” Lang said.

China’s hard line in Hong Kong and the situation in Xinjiang are already dampening prospects for a successful ratification of the EU Investment Agreement, Lang said.

Reporting by Michael Nienaber,; editing by Alexandra Hudson