Wed, Feb 15, 2023 page10

• Business confidence low in China: group

  LOSING INTEREST: Net FDI into China fell in the second half of last year, while foreign investors pulled money out of Chinese bonds and equities all year, official data showed

  • Bloomberg
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  European businesses in Shanghai are calling on the Chinese government to restore foreign business confidence and take steps toward repairing fraught international ties now that Beijing has ended “zero COVID-19.”

  China should eliminate barriers to investment faced by foreign firms, as well as promote the yuan’s internationalization and strengthen financial support for smaller companies, the Shanghai chapter of the EU Chamber of Commerce in China wrote in its annual report published yesterday.

  “Much more remains to be done to restore Shanghai’s reputation as a great place to live and conduct business” following last year’s spring COVID-19 lockdown, chapter chairwoman Bettina Schoen-Behanzin wrote in the report.

  

  People walk on a bridge in Shanghai on Tuesday last week.

  Photo: AFP

  The citywide restrictions brought business to a standstill and confined residents to their homes for months.

  Foreign businesses slowed down their investments in or even pulled money out of China last year as a housing slump and the government’s stringent virus controls pushed economic growth to its second-slowest pace since the 1970s.

  Rising geopolitical tensions added to the uncertainty, and the amount of new utilized foreign direct investment in November and December last year fell more than 20 percent below the same months in 2021, Chinese Ministry of Commerce data showed.

  There have been other indications of a broad drop-off in investment as well, with net foreign direct investment (FDI) into China falling in the second half of last year, central bank data showed.

  Portfolio investment into financial markets fell in the first nine months of the year too.

  Meanwhile, foreign investors pulled money out of Chinese bonds and equities all year, separate central bank data showed, with the stock of investment down 17 percent from the high point at the end of 2021.

  Some EU firms actually ran contrary to those trends, with actually utilized FDI from the EU rising about 92 percent last year, the commerce ministry said.

  However, much of that was likely due to a few big investments by German automakers and chemical manufacturers early in the year.

  In the report, European firms said that companies found it difficult to get staff to work in China, or even to visit to see operations in the country due to the quarantine rules on inbound travelers that existed through December last year.

  The uncertainty over the resumption of cross-border travel that existed at that time — the borders have since reopened and quarantine was eliminated — combined with “negative media coverage, heightened geopolitical tensions and a lack of transparency of what is happening on the ground have left European HQs frustrated and placed an increasing strain on their relationship with their China operations,” the report said.

  The decline in the number of foreign residents living in China was also listed as a concern in the report, which said that 25 percent of Germans living in Shanghai left the city after last year’s lockdown. The number of French and Italian citizens in Shanghai who were registered with their governments each fell by 20 percent.

  The European chamber has more than 620 member companies in Shanghai, which is almost one-third of its total membership in China.
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