Some members of China’s European Union Chamber of Commerce are shifting investments previously planned for the mainland to other markets due to “all-time low” business confidence, according to a report published by the chamber earlier this week.
“The challenges of doing business are beginning to outweigh the returns,” said the chamber’s president, Jens Eskelund, claiming that “a tipping point has been reached” for a growing number of European companies operating in China.
The report highlighted pledges reportedly made a year ago by Chinese officials to combat some of the challenges foreign companies said they were facing, but claimed that “limited progress” had been made since then. These issues included an alleged overcapacity in “several strategic sectors,” which Chinese officials have consistently refuted, as well as weak domestic demand, and what European companies see as “ambiguous” regulations.
The document also accused the central government of lacking interest in maintaining an open market, even as China announced that it would open sectors such as manufacturing and healthcare to more foreign investment.
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Issue was meanwhile taken with China’s priorities lying in national security and reducing reliance on its geopolitical rivals in the West, instead of in creating a favourable commercial environment for Western enterprises.
“Profit margins in China are equal to or below the global average for approximately two thirds of European Chamber members, and pessimism about future profitability is at an all-time high,” the report said.
It included hundreds of recommendations for the government on how it could go about rebuilding business confidence for Western investors, ranging from creating “a level playing field for all enterprises” to ensuring that cyber regulations help rather than hinder business operations. “While China still holds significant potential, this situation urgently requires more action from the Chinese government, not more action plans,” said Eskelund.
His remarks come amid strenuous efforts by Beijing to attract foreign investment. In March of this year, the country drew up 24 new measures to lure more foreign capital.
