European companies cut costs, scale back investments in China as its economy slows
BEIJING: European companies are cutting costs and scaling back investment plans in China as its economy slows and fierce competition drives down prices, according to an annual survey released on Wednesday.
Their challenges reflect broader difficulties faced by a Chinese economy hampered by a prolonged property crisis that has hurt consumer spending. Beijing also faces growing pushback from Europe and the United States over surging exports.
“The picture has deteriorated across many key metrics,” the European Union Chamber of Commerce in China said in the introduction to its Business Confidence Survey 2025.
The same forces that are driving up Chinese exports are depressing the business outlook in the Chinese market. Chinese companies, often enticed by government subsidies, have invested heavily in targeted industries such as electric vehicles, resulting in factory capacity that far outstrips demand.
The overcapacity has led to fierce price wars that erode profits and has spurred a parallel push by companies into overseas markets.
In Europe, this situation has raised fears that growing imports from China could undermine its own factories and the jobs they support. The EU imposed tariffs on Chinese EVs last year, arguing that China had unfairly subsidised electric vehicle production.
“I think there’s a clear perception that the benefits of the bilateral trade and investment relationship are not being distributed in an equitable manner,” Jens Eskelund, president of the EU Chamber in China, told reporters earlier this week.
He applauded China’s efforts to boost consumer spending but said the government must also take steps to ensure that supply growth does not outstrip demand.
The survey results show that the downward pressure on profits has increased over the past year and that a decline in business confidence has yet to bottom out. Approximately 500 member companies responded to the survey between mid-January and mid-February.
“It is just very difficult for everyone right now in an environment of declining margins,” he added.
By RSS/AP
