He added: “In government procurement, China gives equal treatment to products from foreign-invested enterprises and Chinese-invested enterprises alike.” The premier also stressed that “China gives high priority to intellectual property protection and has made this a national strategy,” an apparent reference to long-standing complaints by foreign companies about patent and copyright piracy.

 

The comments make sense if you remember what has been happening in the past few months. China has felt pressure from some multinationals over what they see as Beijing’s growing hostility towards non-Chinese companies. In May, Microsoft CEO Steven Ballmer expressed his frustration. “India is not perfect but the intellectual property protection in India is far, far better than it would be in China,” he told Bloomberg. “China is a less interesting market to us than India, than Indonesia.”

 

In July, according to the Financial Times, General Electric CEO Jeffrey Immelt joined the fray. “I really worry about China,” he reportedly told a group of businessmen at a private dinner in Rome. “I am not sure that in the end they want any of us to win, or any of us to be successful.” The company later said that the remarks were taken out of context and that China remains an attractive market for GE, but Beijing was put on the defensive.

 

Also in July, the CEOs of two of Europe’s companies complained directly to Wen. “This is not our idea of partnership,” BASF chief Jürgen Hambrecht told the premier, referring to regulations that threaten to cut BASF’s access to China if it does not transfer technology. At the same meeting, Siemens chief executive Peter Loescher griped that domestic companies enjoy unfair advantages in public procurement projects compared with foreign-invested firms.  

 

The irritation with China has not yet resulted in any major MNC pulling up stakes in a big way, although GE is transferring production of hybrid water heaters to Kentucky because it says rising labour costs in China and shipping rates are making it more competitive to make the items in the U.S. British mobile phone company Vodafone has announced the sale of its 3.2% stake in China Mobile, but the motive appears to be profit realisation – the shares will raise £4.3 billion (US$6.7 billion), nearly twice what Vodafone paid in 2002.

 

Vodafone has emphasised that it is not leaving China. “Both companies have enjoyed a strong relationship and cooperated closely in many areas of business and in the development of the mobile industry,” it said in a statement. “Following today’s announcement, both companies will continue this cooperation in areas such as roaming, network roadmap development, multinational customers and green technology.”   

 

There is no evidence yet that the recent slowdown in foreign direct investment is a direct result of the griping -- FDI in August was US$7.6 billion, up just 1.38% from a year earlier, compared with FDI of $6.92 billion in July, which is 29.2% higher than a year ago. According to the Wall Street Journal, the slowdown may be due to a statistal base effect.

 

However, despite Wen’s soothing words, the level of frustration remains high. “What we are telling [the Chinese government] is that our companies are willing to invest, and for that they need to be sure that they will be treated equally,” Jacques de Boisséson, president of the European Union Chamber of Commerce in China, told TIME magazine. “Today they are concerned that this wouldn’t be the case.”

 

The American Chamber of Commerce in China is also speaking up. Christian Murck, the group’s president, says that IT and other companies dependent on intellectual property are greatly concerned for the future “because of the regulatory-policy changes and narrowing of market access.” Chamber members still see China as a top priority, he adds, “but of course that future investment will depend on the degree to which there is scope in the market for foreign companies to operate.”