European companies cut costs and scale back investments in China

Published on 28/05/2025 - 9:47 GMT+2

The challenges bespeak broader ones faced by a Chinese system hobbled by a prolonged existent property situation that has wounded user spending. Beijing besides faces increasing pushback from Europe and nan United States complete surging exports.

“The image has deteriorated crossed galore cardinal metrics,” nan European Union Chamber of Commerce successful China said successful nan preamble to its Business Confidence Survey 2025.

The aforesaid forces that are driving up Chinese exports are depressing nan business outlook successful nan Chinese market. Chinese companies, often enticed by authorities subsidies, person invested truthful overmuch successful targeted industries specified arsenic electrical vehicles that mill capacity acold outpaces demand.

The overcapacity has resulted successful fierce value wars that trim into profits and a parallel push by companies into overseas markets.

In Europe, that has created fears that increasing imports from China could undermine its ain factories and nan workers they employ. The EU slapped tariffs connected Chinese EVs past year, saying China had unfairly subsidised electrical conveyance production.

“I deliberation there’s a clear cognition that nan benefits of nan bilateral waste and acquisition and finance narration are not being distributed successful an equitable manner,” Jens Eskelund, nan president of nan EU Chamber successful China, told reporters earlier this week.

He applauded efforts by China to boost user spending but said nan authorities must besides return steps to guarantee that proviso maturation doesn’t outpace that successful demand.

The study results show that nan downward unit connected profits accrued complete nan past twelvemonth and that a autumn successful business assurance has yet to bottommost out, Eskelund said. About 500 personnel companies responded to nan study betwixt mid-January to mid-February.

“It is conscionable very difficult for everyone correct now successful an situation of declining margins,” he said.