EU busi­ness con­fi­dence in China at new low: sur­vey

The China Post - - INTERNATIONAL -

Euro­pean com­pa­nies are los­ing con­fi­dence in China’s econ­omy, a lobby group sur­vey said on Wed­nes­day, with many firms plan­ning to lay off staff as Bei­jing strug­gles to boost growth and em­barks in an anti-mo­nop­oly drive.

From car mak­ers to wine grow­ers to tech firms, Euro­peans have for years looked to China to bol­ster sales as growth prospects back home have flagged.

But only 28 per­cent of firms polled by the Euro­pean Cham­ber of Com­merce in China said they were “op­ti­mistic” about their prof­itabil­ity in the coun­try, which the group said was an “all time low.”

The num­ber of re­spon­dents who see China as a “top three” in­vest­ment des­ti­na­tion fell to 58 per­cent this year, the low­est since 2011, it added.

The pro­por­tion of the 541 firms sur­veyed who plan to ex­pand their Chi­nese op­er­a­tions fell to 56 per­cent from nearly 90 per­cent two years ago, with nearly two thirds plan­ning to sack staff to cut costs.

“Euro­pean com­pa­nies for­tu­nately know how to deal with dif­fi­cul­ties,” Jo­erg Wut­tke, Cham­ber pres­i­dent, told AFP. “But the longer the com­pa­nies are here in China, the less op­ti­mistic they are.”

China’s econ­omy grew 7.4 per­cent last year, its slow­est pace in 24 years and the slow­down has con­tin­ued into this year.

The Com­mu­nist Party has vowed to shift the econ­omy away from big-ticket in­vest­ment projects and to­wards per­sonal con­sump­tion, while also fight­ing graft and clamp­ing down on anti-mo­nop­oly be­hav­ior.

But nearly two thirds of com­pa­nies sur­veyed this year said an “un­pre­dictable legal en­vi­ron­ment,” was an ob­sta­cle to busi­ness, ac­cord­ing to the sur­vey.

China has in the past year launched anti-mo­nop­oly probes against a num­ber of high-pro­file for­eign firms, drawing ac­cu­sa­tions of dou­ble-stan­dards as do­mes­tic play­ers are al­lowed to dom­i­nate some mar­kets.

A third of re­spon­dents be­lieve that China’s am­bi­tious re­form agenda has not “helped cre­ate an even play­ing field for for­eign in­vestors,” the re­port says.

It added: “The pace of the im­ple­men­ta­tion of the re­form agenda still lags be­hind the ex­pec­ta­tions of Euro­pean com­pa­nies.”

Re­spon­dents also cited slow In­ter­net speeds and on­line cen­sor­ship as bar­ri­ers to busi­ness.

China’s sys­tem of web­site blocks “means that it’s not just that the In­ter­net is slow, but also that the In­ter­net doesn’t give our com­pa­nies a way to le­git­i­mate re­search,” Wut­tke said.

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