EU firms aim claws at China

“Incremental and piecemeal reforms must give way to urgent and comprehensive reform," claimed the European Union Chamber of Commerce in China.

The World Bank and other capitalist pressure groups say that China needs to rein in state companies and promote free-market competition to keep the world's second-largest economy growing.

But state companies that benefit from monopolies and access to low-cost loans and resources still dominate industries including energy, banking and telecommunications, much to the displeasure of EU businesses.

The self-proclaimed "voice of European business in China" said rebalancing the economy would require giving foreign and Chinese private companies equal treatment with state enterprises in market access, financing and technology policies.

"Reforms to substantively reduce state involvement in the business environment and to give full play to market principles are needed to unleash the entrepreneurial potential of China's private industry," the chamber asserted.

The slowing of China's growth to 7.6 per cent in the second quarter of 2012 indicated faster change to the private sector, the chamber claimed.

But the OECD today forecast economic contraction of 1 per cent and 0.7 per cent in the third and fourth quarters of 2012 for the private-sector dominated eurozone's top three economies - Germany, France and Italy.