(MENAFN - AFP) European firms in China on Thursday called on the government to let the market to play a bigger role as it carries out reforms aimed at ensuring the country's long-term growth.
"The government is too dominant and needs to step back in order to strengthen market forces" in some areas, the European Union Chamber of Commerce in China said in its annual business position paper.
Reforms are needed to enable Chinese lenders to become profit-sensitive "real banks" so that resources are efficiently allocated, it said.
State-owned companies' privileges needed to be curtailed and they should be realigned with public interests, while industrial policies and subsidies promoting "national champions" should be reduced, it added.
The paper also urged the government to cut its role as service provider and focus more on regulating to avoid conflicts of interest.
Government-affiliated service providers monopolise large sections of the quality and safety market, it pointed out.
"Not clearly separating the roles of regulator and fee-collecting service provider undermines China's quality and safety system and gives rise to opportunities for rent seeking in one of the most important sectors," the paper said.
China has been hit by a series of food and product safety scandals in recent years, most notoriously when when six children died and 300,000 fell ill in 2008 due to baby formula laced with the chemical melamine.
Davide Cucino, president of the European Union Chamber of Commerce in China, said there have been signs of change, including liberalisation of the financial sector and simplification of foreign investment rules.
"This time we think it looks like a serious approach, and we believe there is not a big choice (for Chinese authorities) in the current situation," he told reporters at a presentation on the paper Wednesday.
"There are few indications that even on government level there is a feeling that the state must step back in a number of sectors and domains," he said.
The business position paper, this year listing more than 800 recommendations from 1,700 member companies, is presented to Chinese and EU policy makers each year.