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EU business confidence in China at new low: survey

10 June 2015, 17:32 CET
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EU business confidence in China at new low: survey

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(BEIJING) - European companies are losing confidence in China's economy, a lobby group survey said on Wednesday, with many firms planning to lay off staff as Beijing struggles to boost growth and embarks in an anti-monopoly drive.

From car makers to wine growers to tech firms, Europeans have for years looked to China to bolster sales as growth prospects back home have flagged.

But only 28 percent of firms polled by the European Chamber of Commerce in China said they were "optimistic" about their profitability in the country, which the group said was an "all time low".

The number of respondents who see China as a "top three" investment destination fell to 58 percent this year, the lowest since 2011, it added.

The proportion of the 541 firms surveyed who plan to expand their Chinese operations fell to 56 percent from nearly 90 percent two years ago, with nearly two thirds planning to sack staff to cut costs.

"European companies fortunately know how to deal with difficulties," Joerg Wuttke, Chamber president, told AFP. "But the longer the companies are here in China, the less optimistic they are."

China's economy grew 7.4 percent last year, its slowest pace in 24 years and the slowdown has continued into this year.

The Communist Party has vowed to shift the economy away from big-ticket investment projects and towards personal consumption, while also fighting graft and clamping down on anti-monopoly behaviour.

But nearly two thirds of companies surveyed this year said an "unpredictable legal environment", was an obstacle to business, according to the survey.

China has in the past year launched anti-monopoly probes against a number of high-profile foreign firms, drawing accusations of double-standards as domestic players are allowed to dominate some markets.

A third of respondents believe that China's ambitious reform agenda has not "helped create an even playing field for foreign investors," the report says.

It added: "The pace of the implementation of the reform agenda still lags behind the expectations of European companies."

Respondents also cited slow Internet speeds and online censorship as barriers to business.

China's system of website blocks "means that it's not just that the Internet is slow, but also that the Internet doesn't give our companies a way to legitimate research," Wuttke said.

He added that while some companies were looking to other emerging markets as a source of growth, so far they were staying put.

"The optimism is shrinking but the optimism is still there," he said. "We don't see European companies leaving China."

For many years, he added, it was just China that drove their growth, but "now basically, they have options and other choices".


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