BEIJING - China's rapid growth has fallen off, and doing business has become more difficult. Foreign companies complain of restricted access to markets as economic reforms are delayed, pessimism is on the rise.
German Chancellor Angela Merkel is travelling to China for a three-day visit on Saturday at the head of a business delegation. Economic growth in the Asian giant has slowed, and doing business there is becoming more difficult. Joerg Wuttke, the German president of the European Chamber of Commerce in China, outlines the problems in a dpa interview conducted in Beijing.
dpa: "The golden era is over," the chamber said recently with respect to business in China. How has this come about?
Wuttke: Double-digit growth in China is a thing of the past. From now on we should get used to annual growth rates of 6 or 7 per cent. And the unusual demographic constellation resulting from the one-child policy is also over for good. China is today turning into one of the most rapidly ageing societies in the world.
dpa: Where could new growth come from?
Wuttke: China was able to join the World Trade Organisation (WTO) just once. The globalization gains starting from 2-per-cent market share in 2000 to 15 per cent today cannot be replicated. The same goes for the measures in infrastructure that have generated rapid growth for China thus far. At some point sufficient airports, railway stations and opera houses have been built. China now has to grow in the service sector and consumption. President Xi Jinping has himself described this as the "new normal." Nevertheless, China will continue to grow for decades ahead, although at a much slower rate.
dpa: What do German and European companies find problematic in China?
Wuttke: The biggest problem is the continued presence of obstacles to market access. The members of the European Chamber of Commerce estimated the business lost as a result at around 20 billion euros in 2013. That is equivalent to Estonia's gross domestic product. The restrictions affect the service sector in particular. Here one often has the sense that a step forward has been made, only to realize that it is actually a step sideways. That means that there is movement, but often not movement forward.
dpa: What are the main concerns?
Wuttke: European as well as Chinese firms are extremely worried about a looming financial crisis - unleashed by enormous company debts, a bursting property bubble in parts of China and severe excess capacity in many industrial segments.
dpa: Why is China's new leadership not making progress with the major reforms they have announced?
Wuttke: Following 10 years of reform fatigue, one has to concede that the new administration is at least thinking seriously about reform and also making proposals. Good regulations have begun to be introduced in the financial sector that have opened up this closed sector a bit. But after such a long time, the interest groups that profited from the monopolies and blocked reform are difficult to pry away from the honey pot. Nevertheless, the new leadership knows that their success depends on how quickly and thoroughly they improve the lives of the people. And that can only happen with greater competition and transparency.