‘European firms souring on China’
The proportion of European firms that rank China as a top investment destination has hit a record low, said a European business lobby group yesterday, warning that it could take years to restore confidence in the world’s No. 2 economy.
The European Chamber of Commerce in China said in the latest edition of its Business Confidence Survey the outlook for doing business there was also at its lowest in the report’s 20-year history, with over a quarter of respondents pessimistic about their current growth potential and 44 per cent downbeat over future prospects.
With China’s economy facing headwinds and President Xi Jinping urging self-reliance and for officials to push on with a production-focused, debt driven development model despite pushback from the West, foreign firms are feeling less welcome.
EU Commission chief Ursula von der Leyen and French President Emmanuel Macron urged
Xi on Monday to ensure more balanced trade with Europe, but the Chinese leader showed little sign of being ready to offer major concessions while in Paris.
BASF, Maersk, Siemens and Volkswagen are among the members of the chamber.
Just 13 per cent of firms said they saw China as a top investment destination, the chamber said, down from 16 per cent in 2023.
“The lifting of pandemic-related control measures initially provided companies with a sense of optimism,” the chamber said. “But, it become evident there would be no rapid recovery.”
“China’s deeper structural issues — including sluggish demand, high levels of government debt and the continued chal
lenges in the real estate sector — were going to continue affecting the prospects of both domestic and foreign companies.”
The pandemic and a property crisis had laid bare the limits of China’s development model, analysts said.