EU companies in China: Optimism at a record low!

EU companies in China: Optimism at a record low!

Peking, China - The mood among European companies in China reaches a new low. According to the EU Chamber of Commerce in China, only 29% of the companies surveyed show an optimistic view of the growth prospects for the next two years. This represents a decrease of 3 percentage points compared to the previous year. Almost three quarters of the companies report difficult business opportunities in China for 2024.

The main reasons for the falling confidence of the companies are diverse. In particular, the business climate burden the business climate. Above all, the weak demand related to the real estate crisis, as well as increasing competition and price struggles in various industries contribute to pessimism. The frequent and often opaque changes to regulations in China as well as the "politicization" of certain sectors make the business framework significant.

affected industries

Particularly affected by the negative situation are several central economic sectors. In the cosmetic industry, all companies surveyed report problems. The construction industry suffers from the real estate crisis and the high debts of local governments. The auto industry, the petrochemical industry, the IT and telecommunications industry as well as the food and beverage industry see dark views. In contrast, the aviation industry describes hardly any noteworthy changes.

The survey carried out from January to February 2025 fell in time before the commercial dispute between the USA and China was escalated in April. The previously imposed tariffs of 145% and 125% were temporarily reduced, but the challenges due to export controls on rare earths and magnets remain problematic.

cautious investment strategies

The deteriorating conditions mean that European companies significantly adapt their investment strategies. Less than 25% of companies plan investments in China for 2025, which corresponds to a record low. Around 50% of companies intend to reduce costs, which is often accompanied by job cuts. Investments are increasingly flowing back to Europe, while companies are forced to adapt their supply chains in order to protect themselves against geopolitical risks. This often happens through the localization of business activities in China or through partial relocation to Europe or Southeast Asia.

The negative assessment of the situation illustrates that the challenges for European companies in China are greater than ever. According to the latest business climate question, only 23 percent of the companies expressed that their confidence in the market conditions was weakened by contradictory messages from the Chinese government, with only 9 percent lending such an assessment in the previous year. This development suggests profound changes in the relationship between China and European companies that requires a re -evaluation of its strategic orientations.

For further information on the difficult framework for EU companies in China, knows on Vol.at, SPIEGEL and Deutschlandfunk.