05/06/2022, 12.53
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Covid crisis: a quarter of EU companies ready to leave the Chinese market

83% say they have been damaged by the lockdown imposed by Beijing. 60% expect profit losses between 6 and 15% at the end of the year. European managers struggle to enter China to assess the situation and make decisions on possible investments. Chinese authorities announce measures to restore the confidence of foreign investors.

Beijing (AsiaNews) - 23% of European companies active in the Chinese market is ready to move production to other countries: double the number compared to the beginning of the year and the highest level in 10 years. This is certified by a survey published yesterday by the European Union Chamber of Commerce in China, according to which risks related to the disruption of global trade chains and the "zero-covid" policy of Xi Jinping make it increasingly difficult to operate in the territory of the Asian giant.

There are currently active outbreaks in 14 provinces nationwide, including the capital, affecting 180 million people. 83% of companies surveyed by the EU Chamber of Commerce responded that draconian sanitary closures ordered by authorities in industrial hubs such as Shanghai, Shenzhen and Changchun have affected their production.

Sixty percent of respondents calculate profit losses of between 6 and 15 percent at year-end. 94% denounce the negative impact of the stringent anti-Covid measures on logistics; 92% say the restrictions have damaged supply chains, with 85% saying they are having difficulty sourcing raw materials and components for manufacturing.

Chinese authorities admit problems in transportation. According to official data, in two weeks since mid-March, the volume of goods leaving the port of Shanghai, the country's main port, has fallen by 25%, while domestic road freight has fallen by 40%.

Coupled with this is the issue of restrictions on business travel as part of emergency health measures. Joerg Wuttke, president of the EU Chamber of Commerce in Beijing, notes that managers of European companies struggle to get into China, so they can't assess the situation on the ground and make investment decisions accordingly.

In an effort to restore confidence in the Chinese market, European entrepreneurs are calling for more "predictability" from local authorities. Basically, they would like Beijing to abandon the zero-Covid line for an approach of coexistence with the virus, followed in most of the world.

At a meeting last April 29, the Chinese Communist Party Politburo said it would actively respond to requests from foreign companies to facilitate their business in China. The regime's top decision-making body made it clear that it will take growth-oriented initiatives to restore the confidence of foreign investors.

Among the stimuli announced are "more predictable" policies and support for technology and real estate companies. The two sectors are among the hardest hit by the government's anti-monopoly crackdown, considered a major cause of the economic slowdown seen since late 2021.

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