Mainland China’s biggest city and economic capital must offer a predictable business environment while taking action to ease small companies’ financial burdens as it pursues a sound post-Covid-19 economic recovery, according to the latest Shanghai Position Paper compiled by EUCham.
“It is a fragile ecosystem that needs to be maintained and nurtured,” Joerg Wuttke, EUCham’s president, said during a media briefing. “We don’t really see these [efforts being made].”
The EUCham comments are significant because Shanghai, which has for long been recognised as the “dragon head” of China’s economy, is highly dependent on multinational businesses for jobs and taxes. Foreign businesses account for 25 per cent of the city’s gross domestic product (GDP), and whose tax payments represent a third of Shanghai’s total. About one in every five jobs in the city is provided by a foreign employer.
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The number of foreign employees with European companies operating in China has been in decline since last year, Wuttke said. The authorities must simplify visa processes for professionals such as teachers and medical doctors, so that they can offer services needed by expats in China, he added.
It is still “super difficult” to get visas for people expecting to work in or travel to China, even after Beijing reopened borders on January 8, said Bettina Schoen-Behanzin, EUCham’s vice-president and chair of its Shanghai chapter.
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“The image of China in the West over the past three years has been extremely negative,” she said. “I think it will take some time to rebuild the trust.”
The lockdown in Shanghai in April and May last year severely dented its reputation. Nearly all of the city’s manufacturers and service providers had to suspend operations amid a flare-up in coronavirus cases, which led to an exodus of talent. Moreover, 92 per cent of EUCham’s members in Shanghai reported severe supply-chain disruptions.The stringent pandemic curbs shrank Shanghai’s economy by 13.7 per cent in the second quarter of last year, its worst slowdown in more than four decades.
Some foreign professionals now view Shanghai and China as a high-risk scenario and are unwilling to work in the city, Schoen-Behanzin said.
In its position paper, EUCham makes 37 proposals to help Shanghai transform itself into a regional headquarters economy and world-leading innovation hub, which include promoting government-industry dialogue, fully leveraging innovation resources and strengthening regional integration.
The lobby group’s harsh tone throws a wet blanket over local companies’ heightened expectations of business growth this year after China’s government exited its zero-Covid strategy.
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Shanghai is targeting a GDP growth rate of 5.5 per cent for 2023, while China is likely to set a goal of 5 per cent expansion in the national economy during the annual session of its National People’s Congress in March.
“Shanghai has to be more international to maintain its status as a national economic locomotive,” said Wang Feng, chairman of Shanghai-based financial services group Ye Lang Capital.
“The city needs more foreign talent and investment to spur economic growth and support innovation in technology.”
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