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EU: China stimulus should involve foreign firms

world Updated: Jul 08, 2009 15:47 IST

The European Union's top diplomat in Beijing appealed to the Chinese government Wednesday to avoid excluding foreign-owned companies from stimulus projects.

Beijing announced a provision last month requiring stimulus projects to use domestically made goods whenever possible. Chinese trade officials say that is not meant to exclude foreign-owned suppliers, but business groups say foreign companies with operations in China have been shut out of projects.

"I have to say very clearly that some of our companies have suffered not to have been chosen," said Serge Abou, the ambassador to Beijing for the 27-nation EU.

"This principle of nondiscrimination has to be respected," Abou said. "If not, there is this clear fear that some European investment will be diverted from China and go elsewhere where the climate is more favorable for European investment." Abou said he welcomed comments by Chinese officials that the policy is not meant to be protectionist.

"We hope that this very clear declaration on nondiscrimination will be translated into facts," he said.

China's 4 trillion yuan ($586 billion) stimulus is meant to pump money into the economy through higher spending on public works construction and other projects.

China has criticized Washington's "Buy American" measure favoring US-made iron, steel and manufactured goods in its own stimulus projects.

The European Union Chamber of Commerce says the bidding process for some of China's stimulus projects is structured to exclude foreign-owned suppliers.

The group says European suppliers of wind turbines, even those with Chinese factories, have been shut out of bidding for a $5 billion stimulus-financed wind project.

"If there is no exchange of technology, exchange of investment, exchange of research, China will suffer," Abou said.