Protectionism on rise in China, says EU business group

(BEIJING) - Chinese protectionism is on the rise, the European Chamber of Commerce in China warned Tuesday, as Beijing moves to fend of criticism that it is favouring its own firms over foreigners.

The chamber said a survey covering 313 European enterprises showed that 43 percent expected local governments to favour businesses in their own areas in hopes of boosting the economy, it said.

"Our question is, 'is protectionism on the rise?' Yes, we see that on the rise," Joerg Wuttke, president of the chamber, told reporters in Beijing.

Many foreign firms are placed at a disadvantage when bidding for projects in China, even though they are based in the country and have invested large sums of money there, the chamber said.

"They don't have the same possibility even though they are... 'built in China, made in China and employing Chinese employees'," Wuttke said.

He said the survey showed European companies "identify the promotion of free competition and the breaking down of existing monopolies as the key actions needed to drive growth."

"They continue to caution against protectionist reactions that would hamper China's development," he said.

The survey found that 34 percent of the respondents felt disadvantaged to their Chinese competitors by a 585-billion-dollar stimulus package unveiled late last year by Beijing to help the country through the global meltdown.

Earlier this month, the National Development and Reform Commission (NDRC), China's top economic planning agency, ordered local governments to favour domestic firms when carrying out projects that are part of the stimulus.

The move triggered criticism from western countries and prompted a pledge by Chinese Premier Wen Jiabao in a phone call with German Chancellor Angela Merkel that foreign firms would not be discriminated.

Authorities including the NDRC later issued a statement reaffirming that "the government will, as always, adhere to the opening-up policy and never resort to any discriminatory practice against foreign businesses or products".

"The European community is listening to this and we are very appreciated of this statement," said Wuttke.