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China pledges equal treatment for foreign firms

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German VDMA: announcement part of 'friendly signs'

offensive

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Move aimed at keeping foreign firms engaged in China

By Christoph Steitz and Rene Wagner

FRANKFURT/BERLIN, March 25 (Reuters) - A fresh pledge by

Beijing to treat foreign companies like domestic rivals drew a

cool response from one of its biggest trading partners, Germany,

where industries called for concrete actions rather than words

to create a true level-playing field.

Germany's engagement in the world's No.2 economy has been in

focus, partly because China remains its biggest trading partner

but also because Berlin has asked companies to diversify away

from what it calls "partner, competitor and systemic rival".

Beijing's efforts to make sure international companies stay

engaged come as inbound foreign direct investment shrank by 8%

in 2023, partly a result of broader anti-espionage laws, exit

bans and raids on consultancies and due diligence firms.

German direct investment in China, however, rose to a record

high of 11.9 billion euros ($12.9 billion) last year,

underscoring how relevant the market remains despite efforts to

reduce exposure.

In a bid to attract more foreign money, Chinese Vice

Commerce Minister Guo Tingting told the China Development Forum

in Beijing that the country would "fully guarantee national

treatment for foreign companies", without elaborating further.

"We are seeing more and more of what I'll call it friendly

signals," said Oliver Wack, Asia expert at German engineering

association VDMA, which represents heavyweights including

Siemens and Thyssenkrupp.

"But in terms of content, this is not exactly

earth-shattering."

MORE THAN WORDS?

Wack said efforts by Beijing included a Dec. 12 meeting with

the head of economics at China's consulate general in Frankfurt

who asked what had to be done to encourage more of the VDMA's

members to invest in China.

As part of a series of events this week in the Chinese

capital with foreign companies, the Ministry of Commerce will

hold the Invest in China Summit 2024 on Tuesday, where Pfizer ( PFE )

CEO Albert Bourla and AstraZeneca ( AZN ) CEO Pascal

Soriot are due to speak, according to a schedule.

AstraZeneca ( AZN ) declined to comment and Pfizer ( PFE ) confirmed Bourla

attending China Development Forum and speaking on a panel at the

Invest in China Summit, but declined to comment further.

The Wall Street Journal separately reported that Chinese

leader Xi Jinping plans to meet a group of U.S. business leaders

this week after the forum as Beijing steps up efforts to woo

American firms amid an exodus of foreign capital.

VDMA's Wack said in order to make effective changes China

should join the World Trade Organisation's Government

Procurement Agreement and the OECD. Both would be tangible steps

to create equality among companies.

Dirk Jandura, president of the Federation of German

Wholesale, Foreign Trade and Services, also poured cold water on

hopes that the latest Chinese push would really change things.

"We are familiar with these kind of promises. Unfortunately,

in the past, it has often remained just words, or changes have

been made in small steps ... The extent to which foreign

entrepreneurs can make a contribution here remains unclear."

($1 = 0.9236 euros)

(Reporting by Christoph Steitz and Rene Wagner; Additional

reporting by Maggie Fick in London; Editing by Ros Russell)