China has an unfair advantage in the EU market. What can be done to level the playing field?

• This Op-ed looks into how the dominance of Chinese state-owned enterprises (SOEs) in China’s domestic market may be giving them unfair advantages in other markets, and in particular in the European Union’s single market.
• The reason for creating such distortion stems from the sheer size of Chinese companies, especially SOEs, their corporate governance and China’s state-driven economic model while remaining an open economy, very intertwined with the rest of the world.
• The good functioning of the EU’s single market requires a high degree of competition which will be increasingly harder to maintain if populated by companies which operate under oligopolistic rules in their domestic market (China). Their dominant positions are due to the lack of foreign companies’ access to the Chinese market and the generally unequal treatment of private companies versus SOEs. This means that the EU Commission’s push to penalize Chinese companies having obtained subsidies to operate in the single market might not really tackle the issue.  Having preferential access to the single market through cheaper funding and/or subsidies, etc. can have lock-in effects, damaging competition. Unless full reciprocity is established and European firms can compete on par in the Chinese market, the lack of competition in China can put European companies at a disadvantage in their own market.

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