A recent survey among businesses in the European Union shows that the slowing down of China’s economy as well as those of other nations is their primary concern rather than any ongoing geopolitical issues.
The survey, conducted between February and March of this year, also showed that many European companies lost business in China, mostly because of stricter market access and evolving regulatory issues.
In the results released by the European Chamber of Commerce in China (EUCCC) on Wednesday, June 21st, the number of EU companies that saw China as one of its top three destinations for investment is currently at its lowest since 2010. But, surprisingly, China’s ongoing conflict with the United States and potential decoupling were not the main issues regarding the drop.
Many European companies trading with the Asian giant saw a significant decrease in their China-sourced revenues last year. Also, China’s importance in these companies’ global profits dropped for the second year in a row.
The post-survey report remarked that investor confidence in China has eroded over the past three years. This significant development, however, cannot be remedied immediately under current circumstances.
What’s Wrong With China?
Many foreign businesses operating within the Chinese Mainland have expressed concerns about President Xi Jinping’s escalating drive for national security which has led to crackdowns on both foreign consultancies and due diligence companies. This, in turn, has left foreign nationals bewildered as regulations in the country keep changing and are often presented in a vague manner.
Also, the inflow of foreign direct investments into China has slowed down since the country relaxed its overly strict pandemic restrictions in late 2022. To date, dollar-denominated FDIs from the first half of this year are 5.7% lower than where they were at the same time last year.