German firms plan to increase China investment in next 2 years despite ‘reality check’ in 2023

Business Confidence Survey released on Wednesday by the German Chamber of Commerce in China highlighted a range of challenges

Beijing is seeking to restore trust among China’s foreign business community as a lack of transparency and a weak economic recovery has led to an exodus of capital

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A CT scanner from German firm Siemens is displayed at the medical equipment and health care products exhibition area of the fifth China International Import Expo in Shanghai. Photo: Xinhua

Published: 6:00pm, 24 Jan 2024Updated: 6:52pm, 24 Jan 2024

Despite multiple headwinds and uncertainties dimming China’s appeal as an investment destination, most German businesses plan to stick around as intensifying competition raises the bar and the allure of the Chinese market is too big to walk away from, according to a new survey.

The 2023/24 Business Confidence Survey released on Wednesday by the German Chamber of Commerce in China showed 54 per cent of surveyed firms believe China’s investment appeal is declining in comparison to other markets.

But the survey also revealed an equal percentage are planning to increase their investments over the next two years despite de-risking calls, although the size of the investment was not surveyed.

And the report, which surveyed 566 member companies in October from industries including machinery and industrial equipment, automotive and business services, showed 91 per cent of companies plan to continue doing business in China.

Confidence among China’s foreign business community has been eroded by an increasingly tightened and volatile regulatory environment, and Beijing is seeking to restore trust as a lack of transparency and a weak economic recovery has led to an exodus of foreign capital.