Daily Management Review

European Business Group Issues A Caution Against Losing Faith In China


European Business Group Issues A Caution Against Losing Faith In China
The "inflexible and inconsistently implemented" COVID policy, according to a leading European industry group, is a major reason why businesses are losing faith in China and its appeal as a place to invest.
The warnings were released by the European Chamber of Commerce in a paper that also included 967 recommendations for China, the European Union, and European businesses interested in conducting business there. The paper, which contained input from 1,800 member companies, also contained warnings.
The report, which covered topics ranging from Taiwan to trade, stated that China should, among other things, avoid making "erratic policy shifts," strengthen its relationship with the European Union, and boost international travel.
It went on to say that the European Union should actively engage China and reject calls for disengagement.
According to the chamber's president, Joerg Wuttke, a "stark contrast" has developed over the past year between China and the rest of the world as other nations continue to be committed to globalization while China keeps turning inward.
He said, referring to China's strict zero-COVID policy, which has frequently resulted in lockdowns and kept borders largely closed to international travel, "The world lives with herd immunity, and China waits until the world gets rid of Omicron, which is of course unlikely."
China claims that its policy is necessary to avoid an unacceptably high death toll and an overburdened healthcare system.
In addition to COVID, the chamber claimed that stagnant reforms of China's state-owned businesses, an emigration of Europeans from China coupled with travel restrictions for Chinese employees to travel abroad, as well as an increase in business politicization were all hurting China's appeal.
According to the report, a record number of companies were looking to divert their current or upcoming investments to other markets.
A U.S. business lobby claimed last month that U.S. companies operating there were more worried about China's stringent COVID controls than they were about the tense relations between the two countries. View More
Wuttke stated that the chamber was still optimistic that restrictions might be loosened following the Communist Party's (CPP) five-yearly congress, which begins on October 16. China is one of the few countries that still requires travelers to undergo quarantine upon arrival.
Although it is anticipated that Xi Jinping will win an unprecedented third term as president, it is still unclear who will join him on the Politburo Standing Committee and take Premier Li Keqiang's place when he steps down in March from his position as the head of the second-largest economy in the world.
Vice Premier Liu He, who is anticipated to step down from his current position, has consistently supported reform and "would be difficult to replace," according to Wuttke.
"We have to see what the line-up is in the economic decision-making, and that might give us some indications of where this country is heading," he said.