Confidence of EU Companies in China Drops to Historic Low: Survey

The results indicate a silent decoupling is underway, according to an analyst.

The confidence of European companies operating in China has dropped to a record low, according to an annual survey, with respondents citing Chinaโ€™s economic downturn and rising geopolitical tensions.

In the European Union Chamber of Commerce in Chinaโ€™s 2025 Business Confidence Survey published on May 28, a record 73 percent of the 503 respondents said that itโ€™s more difficult to do business in China. The survey of 503 chamber members was conducted in January and February, which was before the tariff war escalated in April.

Only 5 percent of EU companies believed that the situation had improved, which is the lowest since the survey was first conducted in 2011.

Twenty-nine percent of respondents reported optimism about their growth prospects in China over the coming two years. Only 12 percent of respondents are optimistic about future profitability in China over the next two years, falling by 3 percentage points from last year. Both numbers are historical lows.

Meanwhile, a record-high 49 percent of respondents expressed pessimism about future profitability in China in the coming two years.

In addition, 60 percent of the surveyed companies expressed pessimism about future competitive pressure, indicating that the Chinese marketโ€™s attractiveness to foreign-funded enterprises is declining.

โ€œUncertainty resulting from escalating trade and geopolitical tensions, concerns about Chinaโ€™s domestic economy and persistent producer price deflation weigh on the minds of both European and Chinese companies,โ€ Jens Eskelund, president of the European Union Chamber of Commerce in China, said about the survey results.

A record 63 percent of respondents said they missed business opportunities in China last year due to market access restrictions and regulatory barriers.

Among the surveyed companies, 44 percent believed that it was difficult to achieve fair competition between foreign and local companies, indicating that institutional inequality is still serious in China.

The report describes the Chinese market as โ€œone economy, two systems.โ€ In particular, in sectors such as information technology, medical devices, and law, foreign companies have long been constrained by localization requirements and compliance uncertainties. In addition, EU Chamber of Commerce members generally have concerns that Chinaโ€™s public procurement policies have a buy-domestic-products orientation that is unfavorable to foreign companies, further compressing the operating space of foreign companies, according to the survey report.

โ€œOur key message to policymakers is: the disparity between supply growth and demand is eroding both profits and business confidence. Achieving a better balance will not only benefit companies and make China a more attractive investment destination but may also lead to a reduction in trade tensions,โ€ said Eskelund.

U.S.-based economist Davy J. Wong told The Epoch Times that the EU Chamber of Commerce survey reveals โ€œa profound decline in business confidence among European firms operating in China, which reveals it is fundamentally a breakdown in systemic trust.โ€

Byย Alex Wu

Read Full Article on TheEpochTimes.com

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