European Firms Report Record Low Confidence Operating in China

European companies operating in China have become increasingly pessimistic about their growth and profitability prospects, reaching record lows in confidence according to a series of surveys by the European Union Chamber of Commerce in China. Only 29% of surveyed firms expressed optimism about growth over the next two years, while nearly half reported pessimism about profitability amid sluggish demand and a prolonged property sector crisis. Companies are facing intensified competition from domestic Chinese firms and challenges due to unpredictable regulations and rising political interference. Many European firms are shifting operations to other regions like Europe and Southeast Asia as difficulties grow, exacerbated by economic downturns and geopolitical tensions, including the impact of US tariffs and evolving EU-China dynamics. Despite China's repeated commitments to an open market, barriers to market access and regulatory transparency remain significant concerns with limited expectation of improvement. The overall business environment is described as unpredictable and less profitable, prompting calls for the full implementation of measures to improve conditions for foreign businesses.