China economy: companies ‘extremely cautious’ as uncertainty hangs over business environment
- Policy U-turns and a heavy-handed, unpredictable coronavirus control strategy are fraying the nerves of China’s business community
- Analysts say Beijing is unlikely to drop zero-Covid before the national congress later this year and economic growth is likely to suffer
Lockdowns, travel restrictions and inconsistent coronavirus controls between regions: uncertainty is haunting China’s economy, with no end in sight.
There are few signs that Beijing has an exit strategy from its zero-Covid policy – at least not before the all-important 20th national congress in the second half of the year, experts say.
So far, opening up measures have been piecemeal and made against a backdrop of heightened rhetoric on self-reliance and nationalism, which are fuelling concerns among foreign companies that China is turning inward.
Policy U-turns have been frequent over the past couple of years: the decarbonisation campaign, the crackdown on after-school tutoring, tightening then loosening rules on the property sector, and a clampdown on big tech.
The turmoil is fraying nerves in the business community.
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Shanghai residents flee city as Covid-19 measures ease ahead of city reopening
Joerg Wuttke, the president of the European Union Chamber of Commerce in China, recalled a meeting with Premier Li Keqiang in Beijing earlier this month in which he expressed growing frustration.
It is not just virus outbreaks, lockdowns and zero-Covid, “but in many other areas”, he said.
Over the past two decades, China has roughly accounted for more than 30 per cent of global gross domestic product (GDP) growth per year and been a magnet for international investors thanks to its 400 million-strong middle class consumer market.