China’s zero-Covid rules, Ukraine war creating ‘severe challenges’ for European businesses

Some 23 per cent of European companies are considering shifting current or planned investments out of China due to Covid-19 controls, a new survey shows

The survey also found that 60 per cent of companies have cut their China revenue forecasts for 2022 and a third have reduced headcounts due to virus controls

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People line up for mass Covid-19 testing in Haidian district, Beijing. Photo: Reuters

Published: 3:00pm, 5 May 2022Updated: 1:54am, 7 May 2022

Beijing’s strict zero-Covid controls and Russia’s war in Ukraine have undermined China’s attraction for foreign firms, with more European companies considering cutting investment in the country, according to a survey by a major European business lobby released on Thursday.

China has imposed stringent controls to curb its worst Covid-19 outbreak in more than two years, putting full or partial lockdowns on cities across the nation, despite persistent warnings from businesses and experts about the impact on already fragile economic growth and employment.

A flash survey by the European Union Chamber of Commerce in China and management consulting firm Roland Berger said 23 per cent of companies polled are considering shifting current or planned investments out of the country due to the Covid-19 controls.

That was more than double the number of firms that were considering doing so at the beginning of the year, and marked the highest proportion in a decade, the survey said.

Some 75 per cent of respondents said China needs to shift away from the draconian Covid-19 containment measures it uses at the moment, with 91 per cent believing the country should focus on vaccinating the population.

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