The sentiment of European companies in China has significantly deteriorated. According to the latest business climate survey by the EU Chamber of Commerce in Beijing, 23 percent of the companies surveyed express pessimism about their growth prospects for the coming two years – a record high that is far above the previous year's 9 percent. At the same time, the number of companies feeling optimistic has fallen from 55 to 32 percent, the lowest level since the survey began.

These negative outlooks can be attributed to various factors. In addition to China's economic slowdown and the weak global economy, geopolitical tensions, especially the conflict between the USA and China, weigh on business activity. Additionally, stiff competition with local companies and high regulatory barriers complicate the business environment. The uncertainty is further intensified by conflicting signals from the Chinese government.

The results of this survey come at an inopportune time for China's President Xi Jinping, who is currently traveling through Europe to campaign for better economic relations. Despite China's initial opening after the pandemic, which briefly sparked optimism, structural problems such as weak domestic demand and ongoing challenges in the real estate sector quickly clouded the mood again.

The High Proportion of Excess Capacity in Various Economic Sectors, Especially in Construction and the Automotive Industry, Highlights Further Challenges. The Survey Indicates That a Majority of Businesses Do Not Expect an Improvement in Regulatory Conditions and Many Are Rethinking Their Investment Decisions. Only 15 Percent of Respondents Still View China as a Top Destination for Current and Future Investments.

The results of this survey cast a spotlight on the growing challenges that European companies face in China and could overshadow China's diplomatic efforts in Europe.