Senior diplomat warns of serious consequences for bilateral relations

BRUSSELS - A senior Chinese diplomat has complained that some Europeans still view China through a "colored lens" and propose unreasonable background checks on Chinese companies, which could seriously obstruct the flow of investment.

Song Zhe, China's Ambassador to the European Union (EU), revealed that a number of Chinese investment proposals have been blocked recently and warned of serious consequences, although he declined to elaborate further.

"The recent cases of Chinese investment being blocked have left many Chinese businesspeople with the impression that the European investment environment is deteriorating, causing them to postpone or even cancel their plans to invest here," Song told a seminar on Sept 19.

He said many European countries propose background investigations into Chinese investment simply because of groundless suspicions. "Actions like this could seriously obstruct the investment flow from China," Song said. "In Europe, the sovereign debt crisis is providing a breeding ground for protectionism."

Song's remarks came after Premier Wen Jiabao last week repeated China's commitment to helping European countries out of the current sovereign debt crisis. Meanwhile, other countries in the BRICS (Brazil, Russia, India, China and South Africa) trading bloc are also considering becoming involved in the action.

Despite this, a senior European diplomat said that Brussels has been generally "conservative" toward Beijing because European officials' views on China are divided.

"The mood is complicated here and Brussels is conservative in general," said the official, who spoke on condition of anonymity. "This is my recent observation and we need to work hard to strengthen trust."

The official said that the coming months will see a series of high-level encounters between China and the EU. European heads of state are scheduled to visit China for an annual summit with their Chinese counterparts. An economic and trade dialogue will also take place in November.

In addition to these high-level meetings, Chinese President Hu Jintao will attend a summit of G20 leaders in France on Nov 4 and 5, a meeting that will also serve as a platform for the discussion of China-EU issues from a global perspective.

Song didn't go into details about alleged EU protectionism, but said inconsistencies in laws and policies among some member states have added to legal complexities for Chinese investors.

"We always believe that problems can be better resolved when faced squarely," Song said.

"We hope that European policymakers will bear in mind the wider interests of China-EU relations, uphold an open, transparent, and friendly policy environment and constantly upgrade investment facilitation to attract more Chinese business," Song said.

"We also hope that the European business community will join with the efforts to bring more Chinese companies here in pursuit of common development."

And while increasing investment in Europe generates revenue for Chinese companies, Europe also benefits in a number of ways, Song said.

Many European companies have been reinvigorated through mergers, acquisitions, and restructuring. By the end of 2010, Chinese companies in Europe had hired 37,700 local employees.