European Chamber of Commerce in China survey: Nearly 70% of European companies believe that China’s business environment has deteriorated

The latest annual survey by the European Union Chamber of Commerce in China (EUCCC) shows that nearly 70% of enterprises in China and Europe said that China’s business environment has become more difficult in the past year, marking the fifth consecutive year of decline in business confidence. (Reuters)

[Compiled by Lu Yongshan/Comprehensive Report] The latest annual survey by the European Union Chamber of Commerce in China (EUCCC) shows that nearly 70% of enterprises in China and Europe said that China’s business environment has become more difficult in the past year, marking the fifth consecutive year of declining business confidence. An annual survey by the American Chamber of Commerce in China (AmCham) shows that more than 60% of US companies in China are more concerned about China's economic slowdown than bilateral tensions between the United States and China.

The EUCCC stated that the Beijing authorities have been committed to reviving the economy after the COVID-19 epidemic, but even though China's exports have hit a record high, sluggish consumption has dragged down economic growth; the specific difficulties faced by European companies in China include fierce price wars in the automotive industry, regulatory obstacles, local government debts, and the real estate crisis that has long plagued the market.

The EUCCC's annual business confidence survey shows that 68% of the 549 European companies surveyed said that the situation has become "more difficult" in the past year. When asked about factors that may affect their business in China in the future, the most frequently cited factor cited by the European companies surveyed was the slowdown in China's economy. EUCCC President Jens Eskelund said: "European companies' business confidence in China has declined for five consecutive years."

AmCham's annual survey shows that 64% of the U.S. companies surveyed are worried about the slowdown in China's economic growth. This concern has replaced tensions in U.S.-China relations (58%) as the biggest challenge they face when operating in China. Other concerns include competitive pressure from Chinese companies (31%), industrial overcapacity (30%), and inconsistent interpretation and enforcement of regulatory measures (26%).

The report points out that China's current economy faces many structural challenges, including years of sluggish inflation, weak consumer confidence and a long-term downturn in the real estate market. These factors have put pressure on the overall economic environment, and China's overall economy is facing the risk of shifting from inflation to deflation.

The report states: "To break this vicious cycle, not only traditional stimulus measures may be needed, but the more fundamental need is to effectively improve household income and social security coverage, thereby building more lasting consumer confidence."