Foreign business group in China says ruling Communist Party’s campaign to tighten control over Chinese industries and reduce use of foreign technology is hurting its economic growth

BEIJING – The ruling Communist Party’s campaign to tighten control over Chinese industries and use less foreign technology is slowing economic growth, a group of foreign companies warned Thursday.

The European Union Chamber of Commerce in China called on Beijing to back down and open up state-dominated markets more widely.

Its report adds to the cost warnings of Beijing’s strategy at a time when economic growth is in long-term decline and the workforce is aging and shrinking. The party’s plans are straining relations with Washington and other governments complaining of violating its trade commitments.

“We see that in fact they are willing to sacrifice some growth potential for, frankly, economic control and political control,” House Speaker Joerg Wuttke told reporters.

The EU House estimates that with full-fledged market-style reforms, China’s economic output per capita could increase 3 1/2 times over the 25 years to 2046, according to Wuttke. But he said production could only double if Beijing implements its self-sufficiency plans.

“China is at risk of hitting below its weight,” Wuttke said.

The Chamber cited an IMF estimate that China is only 30% as productive as the United States, Japan or Germany.

In a report, the House called on Beijing to open up telecommunications, finance and other state-dominated sectors more widely to private and foreign competitors. It made 930 recommendations, including calling on regulators to clarify an avalanche of cybersecurity, personal data and other rules and ensure they only apply when needed.

China should “increase its integration into the world economy and move away from” self-sufficiency “,” according to the report.

According to forecasts from the International Monetary Fund and private sector economists, the Chinese economy is expected to grow by up to 8.5% this year as it rebounds from the coronavirus pandemic. But growth is expected to fall below 5% after 2025 at a time when its aging population will require more social spending.

The Chamber cited an IMF estimate that China is only 30% as productive as the United States, Japan or Germany.

The chamber, which represents some 1,700 companies, also called on Beijing to allow more foreign businessmen and other visitors. Some employees deemed economically essential and taken overseas when Beijing suspended travel in early 2020 due to the coronavirus were allowed to return, but others say they were denied visas.

Members of the American Chamber of Commerce in China made a similar call for Beijing to resume normal visa services in an inquiry released on September 10.

The latest Chinese census found only 845,697 foreign nationals in a country of 1.4 billion people, just 0.06% of the total, according to the chamber. Wuttke said this could be the smallest percentage for any country.

The number of foreign residents in Beijing and Shanghai, cities with a combined population of 45 million, fell 60% from 2019 to 127,000 last year, less than half the number in Luxembourg, the one of the smallest countries in Europe.

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