China’s EU chamber warns ‘ideology is trumping the economy’ as zero-Covid sets up worst-case scenario
- Annual position paper raises a number of red flags for foreign firms as ‘China is losing the allure that it used to have’
- EU Chamber of Commerce in China does not anticipate a full reopening of the Chinese border until the second half of 2023
European businesses are being warned to brace for a worst-case scenario in their China investments, as Covid disruptions and geopolitical entanglements this year have rapidly eroded the county’s decades-old reputation for predictability.
The mounting challenges of operating in the world’s second-largest economy are driving many European multinationals to reduce, localise and isolate their China operations, the European Union (EU) Chamber of Commerce in China said in its annual position paper released on Wednesday.
With China and the European Union seemingly “drifting further and further apart”, more and more European firms are taking the expensive and inefficient route of creating separate systems – one for China, and one for the rest of the world, the paper said.
The lobby group called for deeper engagement between Beijing and Brussels, as well as joint efforts to de-escalate tensions over Taiwan – an issue that has forced many European firms to draft plans in China for a scenario similar to what they and other multinationals have faced since Russia invaded Ukraine in February.
Meanwhile, the group urged China’s leadership to be more pragmatic than ideological in its decision-making, to avoid erratic policy shifts, and to focus on rebuilding investor confidence via comprehensive reforms and opening up.
