EU Chamber Says Firms Losing Confidence in China

The European Chamber of Commerce in Shanghai warned on Wednesday that companies were losing confidence in investing in China due to its strict and unpredictable Covid policy.

China must lessen its “erratic policy shifts,” restore international flights, and deepen trade connections with the European Union, it said in a new paper, which had input from 1,800 member companies.

A “stark contrast” has emerged between China and the rest of the world over the past year, as other countries remain committed to globalisation while China continues to turn inward, the chamber’s president, Joerg Wuttke, told a media briefing.

“The world lives with herd immunity, and China waits until the world gets rid of Omicron, which is of course unlikely,” he said, referring to China’s rigid zero-Covid stance, which has led to frequent lockdowns and kept borders mostly shut to international travel.

China says its policy is needed to prevent its health system from being overwhelmed as well as an unacceptable loss of life.

Besides Covid, the chamber said stalled reforms of China’s state-owned enterprises, an exodus of European nationals from China, restrictions on Chinese staff travelling abroad, as well as increased politicisation of business were also harming China’s attractiveness.

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Changing Investment Plans

The report said record numbers of businesses looked to shift current or planned investments to other markets.

Last month, a US business lobby said China’s strict Covid control measures had overtaken sour US-China relations as the top concern of US companies in the country.

China is one of the few countries still requiring travellers to quarantine on arrival, but Wuttke said the chamber remained hopeful that restrictions could loosen after the ruling Communist Party’s five-yearly congress, which starts on October 16.

While Xi Jinping is expected to secure a historic third leadership term, it is not yet clear who will join him on the Politburo Standing Committee and who will replace Premier Li Keqiang, who is set to retire in March from his role as manager of the world’s second-largest economy.

“We have to see what the line-up is in the economic decision-making, and that might give us some indications of where this country is heading,” Wuttke said.