China’s coronavirus controls top concern for European firms, who may ‘vote with their feet’ if uncertainty persists

Name: Beijing’s tentative reopening disrupted by new Covid outbreak linked to nightclub in Chinese capital
Uploaded: 2022-06-20T07:00:10.000Z
Duration: 2 min 8 s
Description: Beijing’s tentative reopening disrupted by new Covid outbreak linked to nightclub in Chinese capital

Beijing’s stringent approach to containing Omicron outbreaks is the biggest challenge for European businesses in China, a new survey shows

Some 23 per cent of European firms are considering shifting current or planned investments out of the country, the highest proportion in a decade

3-MIN READ3-MIN

Uncertainty generated by recent lockdowns is forcing many European firms to rethink future investment in the world’s No 2 economy. Photo: AFP

Frank Tang

Published: 3:00pm, 20 Jun 2022

Strict coronavirus controls have surpassed rising labour costs, slowing economic growth and tensions with the United States to become the top concern for European businesses in China for a second year running, according to a report released on Monday.

The uncertainty generated by recent lockdowns in cities across China has also forced many to rethink future investment in the world’s No 2 economy, the European Union Chamber of Commerce in China said.

Beijing’s stringent approach to containing Omicron outbreaks and geopolitical fallout of the Ukraine war have put European businesses in “ever-choppier waters”, according to its business confidence survey.

“The current situation has given many pause for thought, and some may vote with their feet should the current wave of uncertainty continue, especially when other markets offer more predictability,” the chamber said.

02:08

Beijing’s tentative reopening disrupted by new Covid outbreak linked to nightclub in Chinese capital

The flash survey, which was completed by 372 firms between April 21-27, when the commercial hub Shanghai was just part way through a two-month lockdown, showed 23 per cent of respondents are considering shifting current or planned investments out of China, which is more than double the number recorded in the annual business confidence survey conducted in February and the highest proportion in a decade.

More than three quarters of respondents said that virus control measures have reduced China’s attractiveness as an investment destination, while a third viewed the market as less desirable due to geopolitical tensions.

Around 69 per cent of the respondents ranked the coronavirus as the biggest challenge for businesses in China, an increase of 5 percentage points from a year earlier.