BEIJING – European firms’ operations in China are confronting another year of increased challenges, a lobby survey said on May 27, with a majority of respondents saying since 2022 the business environment had worsened. Beijing has struggled to guide the world’s second-largest economy through a robust post-Covid-19 rebound, with sluggish consumption weighing on growth even as exports reach historic highs. Specific woes for European companies in China include a fierce price war in the automotive sector, regulatory snags, towering local government debt and a years-long
crisis in the country’s vast property sector. Of the 549 respondents in an annual business confidence survey by the European Union Chamber of Commerce in China, 68 per cent reported that conditions had become “more difficult” over the past year. “China’s economic slowdown was the most frequently selected challenge that respondents expect to negatively impact their future business” in the country, the Chamber said. The more subdued activity has coincided with increased trade politicisation and geopolitical events including wars in Ukraine and Iran, raising worries
for international firms. In a potential silver lining though, the gloom might be bottoming out, the Chamber said. The “intensity of the deterioration of confidence in China’s business environment has eased for several key metrics” year-on-year for the first time since the end of the pandemic, the report said. “We are not really ready yet to call it a turning point,” Chamber President Jens Eskelund said at a news conference ahead of the survey’s publication. “You had five consecutive years where business confidence had deteriorated”,
he said. Now, certain data “suggests to us that maybe something has shifted,” he added. For one, fewer than half of respondents said that conditions had become more politicised over the past 12 months – the first time in five years. Furthermore, 17 per cent of respondents said they were “optimistic” in their profitability outlook for the next two years. While that was a clear minority, it was up from just 12 per cent in 2025’s survey and the first year-on-year increase since 2021. Mr
Eskelund said that the apparent floor could be attributed to firms simply getting used to “black swan events” – a reference to the global economy being hit in recent years by the pandemic, multiple wars and turbulence in the US-China trade relationship. “There’s an element of crisis fatigue,” said Mr Eskelund – “so much volatility that companies are simply beginning to accept this”. “We have seen over past 12 months that the world has become an even more volatile place than it was earlier, and
that China perhaps. (represents) a place of relative calm and predictability.” AFP
EU firms, China business confidence, European Union Chamber of Commerce in China, Jens Eskelund, May 27 survey, automotive price war, regulatory snags, local government debt, property sector crisis, trade politicisation, Ukraine war, Iran war