The European Chamber of Commerce in China, an influential business lobby, is calling on Beijing to provide a clear message on its economic revival strategy and to address uncertainties arising from a national security crackdown that has raised concerns among the foreign business community. China’s economic growth in the second quarter was sluggish, prompting the need for additional policy support. Jens Eskelund, President of the European Chamber of Commerce in China, emphasized the urgency for China to dispel doubts about its future direction and rebuild confidence in its trajectory.
China’s economic challenges in 2023 include weakening domestic and global demand, a property crisis, and rising unemployment. The government’s increased intervention in the private sector, particularly in tech, education, health, and foreign business links, has caused uncertainty. Despite Beijing’s pledges to support private entrepreneurs and encourage overseas investment, foreign business confidence remains low.
Eskelund, who is also the Chief Representative for Danish shipping company Maersk in Greater China and Northeast Asia, acknowledged that China’s growth trajectory is evolving and might not continue at an unrestrained pace indefinitely. While he does not foresee a recession, he suggested that China prioritize boosting consumption and provide clarity on ambiguous legislation, such as a sweeping anti-espionage law that has affected foreign business confidence.
The European business lobby does not report a mass exodus of European firms among its members due to these concerns. However, weak demand and geopolitical uncertainty have prompted companies to reevaluate their supply chains. As European leaders emphasize derisking economic ties with China, European Union Trade Commissioner Valdis Dombrovskis is expected to visit Beijing next month to advocate for greater market access for EU firms and address the widening trade deficit with China.
Eskelund emphasized that the goal is to establish a level playing field for both private and state-owned enterprises, allowing private businesses to compete and engage on equal terms with state-owned counterparts. The lobby’s stance underscores the importance of clarity, consistency, and fair competition in China’s evolving economic landscape.
Opinion:
The European Chamber of Commerce’s call for clarity and confidence-building measures in China’s economic policies and national security crackdown highlights the significant challenges faced by foreign businesses operating in the country. While China’s economic growth has been remarkable over the past few decades, recent slowdowns, coupled with regulatory uncertainties, have created a need for Beijing to address the concerns of international business stakeholders.
China’s evolving economic landscape, including the government’s interventions in various sectors, presents both opportunities and challenges for foreign businesses. Achieving a balance between state-led initiatives and market-driven forces is essential to maintain the confidence of international investors and businesses.
The call for clarity and a level playing field underscores the importance of transparency and fair competition for a healthy business environment. As China continues to navigate its economic trajectory and strengthen its regulatory framework, fostering a collaborative relationship with foreign business communities and addressing their concerns will be pivotal in maintaining its appeal as an investment destination.