European business confidence in China is at an all-time low, report says

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A European business group says China must reprioritize economic growth and reforms and boost investor confidence by leveling the playing field for all companies in the country

HONG KONG — China must reprioritize economic growth and reforms and boost investor confidence by leveling the playing field for all companies in the country, a European business group said Wednesday.

With “business confidence now at an all-time low” over lagging domestic demand and overcapacity in certain industries, the annual European Business in China Position Paper called on China to open its economy and allow a more free market to determine resource allocation. It also recommended introducing policies to boost domestic demand.

Profit margins in China are at or below the global average for two-thirds of the companies surveyed earlier in the year, according to the paper published Wednesday by the European Chamber of Commerce in China.

In August, China filed a complaint with the World Trade Organization over European Union tariffs on electric vehicles made in China. It also launched anti-dumping and subsidies investigations of European dairy products, brandy and pork exports. The tit-for-tat actions have raised fears that a trade war may break out.

Many European businesses are deciding that the returns on investments in the world's second-largest economy are not worth the risks, due to issues including China's economic slowdown and a politicized business environment.

“For some European headquarters and shareholders, the risks of investing in China are beginning to outright the returns, a trend that will only intensify if key business concerns are left unaddressed,” Jens Eskelund, president of China’s European Union Chamber of Commerce, said in