The European Union Chamber of Commerce in China on Tuesday presented a major report examining the effects that the Asian country's China Manufacturing 2025 industrial policy initiative was having on international trading partners.

The CM2025 strategy includes achieving domestic and international market share targets in 10 crucial and future-oriented industries, attaining self-reliance for key components and turning the concept of "indigenous innovation" into reality.

The EU Chamber of Commerce acknowledges that China's current focus on upgrading the country's industrial base "is a necessary undertaking," both for the sake of the environment and long-term economic sustainability.

But the report also cautions against stoking increased tensions with international trade partners by limiting access for foreign businesses and state-backed acquisitions of companies in the EU and elsewhere.

Role of the state too big

"Instead of moving ahead with the progressive market-based reforms announced at the Third Plenum in 2013, state planners are unfortunately falling back on the old approach of top-down decision-making," the reports said.

EU Chamber of Commerce President Jörg Wuttke said frustration was growing among EU entrepreneurs active in China, leading to a considerable drop in investments there.

EU investments in China dipped by 23 percent in 2016 year on year to 8 billion euros ($8.5 billion). By contrast, Chinese investments in Europe soared by 77 percent over the same period.

Wuttke complained that European companies wanting fast access to the Chinese market more often than not had to agree to transfer vital technology. He also said there were too many restrictions in place concerning access to key industries.

"From the National People's Congress, we again hear that foreign companies are supposed to get equal treatment," Wuttke said, "but I'm not buying this anymore."

hg/mm (dpa, EU Chamber of Commerce)