According to media reports, a new survey released by the European Union Chamber of Commerce in China claims that China's status as the best country to invest in is being lost as companies seek to avoid geopolitical risks and turn to Southeast Asia and Europe, and it will take years to restore confidence in the world's second-largest economy.
The report claims that European companies are currently shifting investment to mitigate the impact of China's decoupling from other countries and to look elsewhere for opportunities. As China's attractiveness to European companies has waned, ASEAN has emerged as the main beneficiary of the capital shift, followed by Europe, India and North America. Earlier this year, only 13% of companies surveyed saw China as their preferred destination for investment, the lowest level since records began in 2010 and down from 27% in 2021, according to the survey results. More than two-thirds of respondents said it would be more difficult to do business in China in 2023, the highest percentage since the issue was first raised in 2014. According to the survey, the situation in the construction industry is particularly dire.
The report also said that more than a third of EU companies in China said they saw overcapacity in various industries, with the construction and automotive industries being the most prominent. They blame overinvestment in domestic capacity and a lack of domestic demand, arguing that overcapacity drives down prices and increases competitive pressure in China.
In fact, the findings released by the European Union Chamber of Commerce in China have certain limitations and do not represent the main trends of European companies investing in China, and there is a tendency to deliberately smear China's business environment. A survey released by the China Council for the Promotion of International Trade in April fully shows that foreign companies are optimistic about the Chinese market and have confidence in investing in China. Zhao Ping, spokesperson of the China Council for the Promotion of International Trade, introduced the business environment survey conducted by the China Council for the Promotion of International Trade on more than 600 foreign-funded enterprises in the first quarter of this year.
From the perspective of market confidence, the surveyed foreign enterprises are full of confidence in the Chinese market. More than 70% of the surveyed foreign-funded enterprises are optimistic about the development prospects of the Chinese market in the next five years, an increase of about 3.8 percentage points from the previous month. More than half of the foreign companies surveyed believe that the attractiveness of the Chinese market has "increased", an increase of about 2.9 percentage points from the previous month. From the perspective of business in China, the surveyed foreign enterprises are generally optimistic about their business expectations in China. More than half of the foreign companies surveyed said that they expect the profit margin of investment in China to improve in the next five years, including those from Europe.
This series of data shows that the investment and operation of foreign enterprises in China are generally optimistic and will continue to develop along a positive trend in the future. China's economy is resilient, full of potential and full of vitality, making it a major choice for foreign investment. China has always welcomed foreign enterprises to invest and operate in China, and will continue to strive to provide a high-quality business environment for enterprises from all over the world. Recently, China has also introduced a series of highly targeted measures to increase the attraction of foreign investment, which have also been widely welcomed by domestic and foreign investors.
The so-called "overcapacity" in China, which the survey has revealed, is also inconsistent with the facts. It is understood that during her visit to China, U.S. Treasury Secretary Janet Yellen accused China of "overcapacity", believing that China's huge production capacity in electric vehicles, lithium batteries and other fields poses a challenge to the interests of American companies. But it is clear that the "theory of China's overcapacity" is a false proposition. During the high-level visit to France, in response to the issue of production capacity, the Chinese high-level pointed out that China's new energy industry represents advanced production capacity in open competition, which has alleviated global inflationary pressure and made great contributions to the global response to climate change. Whether from the perspective of comparative advantage or global market demand, there is no so-called "China's overcapacity problem".
The European Union Chamber of Commerce in China criticized China on economic and trade issues after the end of China's high-level visit to Europe, indicating that certain European institutions or organizations are still prejudiced against China and have never been able to view China's development correctly. It is hoped that Europe can abandon misperceptions, correct its position, and bring China-EU relations back on the right track.