In July, the Asian nation’s top leadership has emphasised its determination to reduce excess competition in the economy
[BEIJING] Europe’s top business lobby in China urged Beijing to address price wars and unsustainable competition as the country readies its next five-year plan – adding to pressure from the US over the matter.
While the nation’s consumption is growing, a key issue “is that manufacturing output has grown faster”, the European Union Chamber of Commerce in China wrote in an annual position paper published on Wednesday (Sep 17). “Involution, expanding inventories, pressure on profit margins, decreasing asset utilisation and pressure to export are all natural consequences of this mismatch.”
The business group with over 1,600 member companies urged Beijing to strike a balance between supply and demand by boosting consumption, a frequent recommendation from foreign companies. US Treasury Secretary Scott Bessent said in July that he urged Chinese officials to make rebalancing their economy a pillar of their blueprint for the next half-decade.
China’s ruling Communist Party will hold its next key conclave in October, when it will chart development plans for 2026 to 2031.
In July, the nation’s top leadership emphasised its determination to reduce excess competition in the economy. The campaign has the backing of President Xi Jinping, who has endorsed targeting a major cause of deflation and tensions with trade partners.
The EU chamber also urged Beijing to create more equitable trade relationships, let market forces play a more decisive role in allocating resources and reduce trade frictions caused by rare earth export controls.
Although the chamber touted a mechanism for fast tracking applications so companies could get the vital minerals that was agreed to during the EU-China summit in July, the effectiveness of the process is “still under evaluation”.
It added that many small and medium-sized enterprises are still experiencing “significant supply chain disruptions” because no long-term solution has been put forward to procure rare earths, which are key to the production of cars, smartphones and aircraft. BLOOMBERG
