China and the European Union:

Creating balanced, free trade in the Chinese ICT market

Chinese protectionism straining relations with Europe

Protectionist measures in China’s information and communication technology (ICT) market are straining relations with Europe. Leading European companies invest heavily in Chinese labour because of their highly skilled and innovative labour force. Yet, the Chinese government is creating barriers for foreign companies to compete in the ICT sector, inhibiting free trade and jeopardising EU-China trade relations.

Unfair conditions for trade

China has implemented numerous policies to create trade walls against foreign competition. Procedural challenges, burdensome regulatory requirements, and uncertainty about application timeframes and the scope of new regulations all foreclose foreign ICT companies from the Chinese market. The adoption of Chinese technical standards that ignore internationally recognised standards is yet another impediment to trade.

Foreclosing opportunities for growth

ICT is one of the most dynamic market sectors in China's economic boom. Multinational companies are expanding their operations in China at a dramatic pace while emerging Chinese companies are accelerating their growth in foreign markets. Of all the emerging markets, China has the most developed ICT sector with the largest number of telephone users and the second largest number of Internet users in the world.

Perversely, China’s trade walls foreclose opportunities for future growth and advancement. While preferences for Chinese manufacturers may create jobs in the short term, China ultimately loses in the end. Competition brings prices down for consumers while stimulating innovation and increasing quality. This is especially true in the ICT industry because of the global nature of technology markets.

Recommendations for reform

As the voice of the European digital industry, improving ICT trade relations between Europe and China is an important priority for DIGITALEUROPE. We have eight recommendations to improve the trade of ICT between China and Europe. We call on China to:

  1. avoid discrimination of foreign companies in policies including: Indigenous Innovation, 12th Five-Year Plan on Information Security, Encryption policy, and the Multi-Level Protection Scheme
  2. adopt appropriate policies protecting intellectual property
  3. create further openings for foreign investments
  4. develop transparent policies in partnership with the international private sector
  5. adopt international standards to enable trade
  6. phase out Chinese specific standards specifications
  7. avoid forced transfer or review of intellectual property
  8. adhere to the OECD export credit rules and guidelines for multinational enterprises.

Advocacy in action

We use all available channels to improve the EU-China trade relationship. Our team works every day to influence decision-makers in the EU and China at high-level events and in one-on-one talks with government leaders. We advise EU policy makers, participate in EU-China summits, and lead dialogues and working groups.

Committed to reform

DIGITALEUROPE is committed to improving the EU-China relationship because of the important consequences for Europe’s economy. By 2015, 90% of economic growth will be generated outside Europe, with one third in China alone. If Europe wants to compete in the ICT market, the digital industry needs the EU to create the level playing field it needs in China.