The business relationship between China and Europe is showing several contradictory trends as Beijing seeks to protect its own state-owned enterprises (SOEs) and its leaders seek foreign investments promising further liberalization in rules.

Chinese Premier Li Keqiang was in Berlin on Wednesday calling for joint efforts to promote trade liberalization and investment facilitation. On the same day, a European industry body in China expressed concerns about discrimination against foreign investors and painted a bleak picture of investment growth by Europe-based companies.

Li’s itinerary, which includes a visit to the European Union headquarters in Brussels, comes in the midst of rising political demand for ensuring reciprocity in business dealings with China. Some European countries are asking the EU to make laws enabling them to closely scrutinize Chinese investments and weed out the dubious ones.

 “The discussion in itself shows that there is a lot of frustration in Europe on the lack of reciprocity,” said Mats Harborn, president of the European Chamber. “We have open bets for Chinese investments while for us to go to China is a whiling road, so this is causing now political discussions in Europe,” he said. 

Given such political conditions, Li’s agenda may seem very ambitious unless China is ready to offer major trade-offs. He is trying to persuade European leaders to accord the status of “market economy” to China, and relax their actions on the dumping of Chinese goods. He also wants the EU to grant a certificate of airworthiness for a China-developed large passenger plane, the C919.

Thomas Gatley, head of research at Beijing-based Gavekal Dragonomics, said the central government in Beijing does make some efforts to open up investment sectors by tweaking the negative list. But these actions are not implemented on the ground.

 “We have seen some measures in the form of revised negative list, slowly sub-sector by sub-sector, China opening up to foreign investment in the official capacity,” Gatley told VOA. “But the (foreign) firms continue to find that when they try to operate in these previously closed areas, there is a lot of de facto barriers to success. That continues to be the substance of complaints by foreign companies.”

European companies have reported much better performance in China in the past year. Harborn said this had to do with the government’s stimulus package in 2016, and there are questions if the high growth scenario will continue in the coming months.

Julian Evans-Pritchard, China economist for Capital Economics, said the Chinese economy showed signs of recovery in 2016 because of a generous flow of credit by financial institutions. But this may not continue as the government is cracking down on risky lending.

“We had quite a sharp slowdown in credit over the past half year, particularly since the start of the year, they have been cracking down quite hard on financial risks on bank and financial institutions,” Evans-Pritchard told VOA. 

A business confidence survey conducted by the European Chamber revealed over 60 percent of its member-companies regard China’s slowing economy as the number one cause for concern. This is a significant change from past years when the focus of complaints was discriminatory treatment of foreign companies and regulatory controls.

But several members of the Chamber continue to worry about discrimination, saying environmental enforcement agencies are still a lot tougher with foreign companies than they are with local ones.

Another new source of worry for foreign firms is the increasing competitiveness of Chinese companies, which is something that will increase with time as Beijing goes about implementing the China 2025 plan to push the local industry into using the next generation of technology.

“European companies in China acknowledge that Chinese companies are getting increasingly innovative. Rather than a challenge, this should be perceived as an opportunity,” said Denis Depoux, Roland Berger Co-Head for Asia. 
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Canada’s defense minister repeated a threat Wednesday to cancel the purchase of 18 fighter jets from Boeing Co. because of the company’s trade complaint against Canadian plane maker Bombardier.

 

Harjit Sajjan said Boeing’s action against Bombardier is “unfounded” and not the behavior of a “trusted partner.” He said buying the Super Hornet fighter jets “requires a trusted industry partner.”

Sajjan urged Boeing to withdraw the complaint. Canada’s foreign minister has also threatened to block the order.

 

“Our government — and I stress this — our government is disappointed in the action of one of our leading industry partners,” he said. 

Complaint could mean duties

 

Chicago-based Boeing’s trade complaint prompted a U.S. Commerce Department anti-dumping investigation that could result in duties being imposed on Bombardier’s new larger C Series passenger aircraft. Boeing insists the plane receives Canadian government subsidies that give it an advantage internationally.

 

Canada’s threat is coming amid increasing trade disputes with the U.S. 

 

Scott Day, a spokesman for Boeing, noted that Sajjan also recognized Boeing as a strong partner in the past and for the future. Day defended the company’s trade action. 

 

“This is a commercial matter that Boeing is seeking to address through the normal course for resolving such issues,” Day said in an email. 

 

Boeing petitioned the U.S. Commerce Department and the U.S. International Trade Commission to investigate subsidies of Montreal-based Bombardier’s C Series aircraft. Boeing says Bombardier has received more than US $3 billion in government subsidies that let it engage in “predatory pricing.”

 

Brazil has also launched a formal complaint to the World Trade Organization over Canadian subsidies to Bombardier. Sao Paolo-based Embraer is a fierce rival of Bombardier.

Government investment

 

The Quebec government invested US $1 billion in exchange for a 49.5 percent stake in the C Series last year. Canada’s federal government also recently provided a US $275 million loan to Bombardier, which struggled to win orders for its new medium-size plane. But Bombardier won a 75-plane order for the C Series from U.S.-based Delta Air Lines in 2016. Bombardier said its planes never competed with Boeing in the sale to Delta.

 

The Canadian government said late last year it would enter into discussions on buying 18 Super Hornet jet fighters from Boeing on an interim basis and hold an open competition to buy more planes over the next five years. Canada remains part of Lockheed Martin’s F-35 Joint Strike Fighter program. 

 
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Major investors put U.S. industry on notice Wednesday that climate change matters, even as reports emerged that President Donald Trump plans to withdraw the United States from an international pact to fight global warming.

A number of large institutional fund firms including BlackRock, the world’s largest asset manager, supported a shareholder resolution calling on ExxonMobil to share more information about how new technologies and climate change regulations could impact the business of the world’s largest publicly traded oil company. The proposal won the support of 62.3 percent of votes cast.

The victory, on such a wide margin, was hailed by climate activists as a turning point in their decades-long campaign to get oil and gas companies to communicate how they would adapt to a low-carbon economy.

Major investors see major risk

With major investors now seeing climate change as a major risk, activists said U.S. corporations will have to be more transparent about the impact of a warming planet even if the United States withdraws from the 2015 Paris climate accord, as Trump promised during his presidential campaign.

“Economic forces are outrunning any other considerations,” said Anne Simpson, investment director for sustainability at the California Public Employees’ Retirement System, one of the sponsors of the resolution.

She credited big investors in Exxon for the change, since at least some of them switched their votes after last year when a similar measure won just 38 percent support.

“We have seen a sea change in their viewpoint,” she said.

Many top investors now consider their votes on shareholder proposals “on merit, rather than considering it a test of loyalty to management,” she said.

Among Exxon’s top investors, Vanguard Group and BlackRock opposed last year’s call for climate change reporting. A spokeswoman for Vanguard, which has about 7 percent of Exxon’s shares, declined to comment on its voting this year.

A person familiar with the matter said funds run by BlackRock, which holds about 6 percent of Exxon shares, voted in favor of the climate resolution.

Filings showing their exact votes are not due for months.

But both fund firms and others have taken steps since last year to make it easier to support climate resolutions.

Doug Holt, a spokesman for Exxon’s ninth-largest investor Northern Trust Corp, said it voted in favor of the proposal, citing its own guidelines updated in 2016.

Vote from the street

The investment firms’ approach reflects a new interest in climate matters among their own investors, who have stuffed money into so-called green mutual funds and other vehicles that use environmental factors in their stock picking.

Wall Street’s priorities have shifted the terms of debate at a number of other energy and utility companies. A majority of shareholders voting at Occidental Petroleum Corp and PPL Corp called for similar reports on the risks of climate change. Votes on two more of the measures are scheduled for June 7 at Devon Energy and at Hess.

Michael Crosby, involved in corporate outreach for the Midwest Capuchin Franciscans, a religious order, said Wednesday’s vote was a rejection of Exxon’s arguments it already provides enough detail on its outlook.

“The Street is saying, you have to give better evidence,” Crosby said.

Exxon and the Paris deal

After the measure passed, Exxon Chief Executive Officer Darren Woods said its board would reconsider its climate communications.

The activists now face the task of maintaining alliances with leaders like Woods who opposed their resolutions but who in some cases support the 195-nation Paris agreement. Exxon said in a March 22 letter to the White House that the Paris deal is “an effective framework for addressing the risks of climate change.”

Trump had at least one ally at Exxon’s meeting in Dallas, Steven Milloy of Potomac, Maryland, who urged other investors to support his resolution that would make it harder to file proposals like the one on climate change.

Milloy said management should show less concern for climate issues, which he called misplaced, and cited Trump as a model.

“For the first time we have a president who actively opposes climate hysteria,” Milloy said.

According to Exxon, Milloy’s proposal received support from 1.6 percent of votes cast.
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The head of a New York-based advocacy group has called on President Donald Trump and his older daughter to help secure the release of three men who reported labor violations at a Chinese company that makes shoes bearing the Ivanka Trump brand.

“We appeal to President Trump, Ivanka Trump herself, and to her related brand company to advocate and press for the release of our activists,” Li Qiang, executive director of China Labor Watch, the men’s employer, said Wednesday.

The Ivanka Trump brand has declined to comment.  The White House and Ivanka Trump’s lawyer did not immediately respond to requests for comment.  Calls to provincial police in China were not answered. Chinese Foreign Ministry spokeswoman Hua Chunying said she was unaware of the situation and declined to make further comments.

Hua Haifeng and two other labor activists, Li Zhao and Su Heng, had been covertly investigating labor conditions at two Chinese factories that make shoes for Trump and other brands, in the cities of Ganzhou and Dongguan. They disclosed preliminary findings to China Labor Watch, indicating workers at the factories had been subject to extremely long hours.

Hua was arrested in Jiangxi province on suspicion of illegally using eavesdropping equipment; he and the other two men disappeared Saturday and were last seen in Ganzhou, in southern Jiangxi province, China Labor Watch reported Tuesday.

The arrest and disappearances came amid Chinese President Xi Jinping’s crackdown on the country’s advocacy groups and civil society. In the past year, dozens of human rights activists have been detained in China.

The global human rights group Amnesty International called for the release of the three men if they are being held only for investigating possible labor abuses at the factories, which are owned by Huajian International.

“Activists exposing potential human rights abuses deserve protection, not persecution,” said Amnesty International spokesman William Nee. “The trio appear to be the latest to fall foul of the Chinese authorities’ aggressive campaign against human rights activists who have any ties to overseas organizations, using the pretense of ‘national security.’ ”

The relationship between the Trump family and China has received widespread attention since last year’s presidential campaign.  While Trump has accused China of taking coveted manufacturing jobs from the U.S., the Trump family has sought to benefit financially from the Chinese market.

Trump recently obtained more than 75 trademarks in China. The family of Jared Kushner, Ivanka Trump’s husband, is attempting to raise money from Chinese investors for a real estate venture.
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