Deutsche Welle Chinese Edition recently reported on the 2024 Business Confidence Survey just released by the European Chamber of Commerce. The survey showed that uncertainty for European companies in China has increased due to China’s economic slowdown as well as the Chinese government’s prioritization of domestic companies over foreign companies and its unclear regulations.
Jens Eskelund, president of the European Union Chamber of Commerce in China, said that companies are beginning to realize that low demand [within China] may persist for a long time. He also said that companies saw other countries emerging and becoming competitors that China must take seriously.
More than one-third of survey respondents observed overcapacity within their respective sectors of the Chinese economy. Although China reopened its economy [by lifting COVID controls] in early 2023, the survey results indicate a continued decline in market confidence.
The development of European companies in China is hindered by structural problems in China’s economy. These include weak domestic demand, increasing overcapacity, ongoing real estate difficulties, market access issues, regulatory barriers, and other obstacles. More than half of surveyed companies reported China’s economic slowdown as a top challenge, a significant increase over previous years’ survey results. Around 52 percent of companies surveyed plan to cut costs; about a quarter of such cost cutting will be achieved through layoffs.
The Chinese government has been sending mixed signals to foreign companies as it pursues economic development while simultaneously tightening regulations related to national security and safety.
Source: DW Chinese, May 10, 2024
https://p.dw.com/p/4fhW1