European Business Confidence in China Hits All-Time Low

12 Sep, 2024

European Business Confidence in China Hits All-Time Low

A European business group has urged China to reprioritize economic growth and reforms to boost investor confidence. The latest European Business in China Position Paper highlights that business confidence in China is at an all-time low due to sluggish domestic demand and overcapacity in various industries. The paper, released by the European Chamber of Commerce in China, calls for China to open its economy and let market forces determine resource allocation. It also suggests introducing policies to stimulate domestic demand.

Profit margins in China are reportedly at or below the global average for two-thirds of companies surveyed. Recent trade tensions, including China's complaint to the World Trade Organisation over EU tariffs on Chinese electric vehicles and investigations into European exports, have raised concerns about a potential trade war. Many European businesses are reevaluating their investments in China due to economic slowdowns and a politicized business environment.

The European Chamber's report offers over 1,000 recommendations for improving the business climate in China, including calls for consistent policy implementation and avoiding punitive measures against companies based on their home countries' actions. The report also advises the EU to engage proactively with China and respond proportionately to disagreements.