A growing number of European companies in China feel their business has suffered after the nation's entry into the World Trade Organisation, according to a survey released Thursday.
The survey conducted by the European Chamber of Commerce showed 34 percent said WTO membership had a negative impact on their business, up by a steep margin from just four percent in a similar survey last year.
Only 16 percent felt the WTO pact had impacted their business positively, down nearly two thirds from 43 percent in 2006, said the survey, which polled around 200 EU companies in China.
The Chinese government's decision this year to abandon tax incentives for foreign companies -- a prerequisite for WTO accession -- is seen by the majority of the EU companies polled as having no positive impact on business.
The unification of corporate tax rates, decided this year, will raise the tax bill for most foreign invested companies and joint ventures to 25 percent from 17 percent of taxable profits.
It is viewed negatively by one third of the respondents, while 38 percent said the tax increase had little or no impact on their business.
Most European companies continued to view China's lack of protection of intellectual property rights as a "significant obstacle" for doing business in the country, ranking second only to lack of transparency.
An overwhelming 69 percent of the respondents said intellectual property right protection is an important issue to them.
"Despite increased efforts from the central government not only to put an end to the production and supply of fake products but also to deal with blatant copyright infringements, these occurrences remain rampant," the report said.
On the government's introduction of stricter environmental protection regulations and emission standards, 46 percent of the respondents rate implementation efforts as weak although most believed the situation will improve in the future.
EU URGED TO REMOVE
HIGH-TECH EXPORT CURBS
Another report adds: China on Thursday called for the European Union to remove restrictions on high-tech exports into the Chinese market as a way of addressing the trade imbalance between the two sides.
Speaking ahead of next week's annual Sino-EU summit, a government spokesman also said the Chinese trade surplus was not unusually large when compared against the overall size of its economy.
"We hope through bilateral coordination, especially by removing unreasonable barriers on the exports of high-tech products, China's imports can be expanded," commerce ministry spokesman Wang Xinpei said at a regular briefing.
Products that currently cannot be exported freely from the EU to China include some super-speed computers and ultra-precision machinery, a commerce ministry researcher told AFP.
According to its figures, the European Union ran a trade deficit of 128 billion euros (175 billion dollars) with China last year. The shortfall is likely to balloon to 170 billion euros this year on current trends.
The trade imbalance is likely to be a top agenda item next week as a high-powered EU delegation including European Commission chief Jose Manuel Barroso travel to Beijing for this year's summit.
The delegates are expected to focus on the value of the yuan, which has declined against the euro in the past two years, making Chinese products cheaper in countries using the European currency.
"The proportion of China's overall trade surplus in the country's gross domestic product is still relatively low -- much lower than some developed countries," said Wang.
Germany is an example of an economy where the proportion is higher than in China, according to the Chinese commerce ministry.