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China's COVID curbs rattle EU business confidence

May 5, 2022

More European businesses in China are looking to shift their investments due to the country's strict coronavirus lockdowns, according to the European Chamber of Commerce.

Workers in protective suits stand next to people lining up at a mass testing site in the Chaoyang district of Beijing, China
European businesses say they've been hit hard by disruptions caused by lockdowns in Beijing and ShanghaiImage: Alessandro Diviggiano/REUTERS

European firms operating in China are feeling the negative impacts of Beijing's "zero-COVID" policy, according to a business survey published Thursday.

The European Chamber of Commerce in China said companies reported less business confidence over China's strict lockdowns and supply chain disruptions.

Why is business confidence rattled?

The survey carried out by the chamber found that 23% of its members are considering moving their current or planned investments out of China and into other markets.

That figure is more than double the number of businesses that said they were considering such a move at the beginning of 2022. It's also the highest proportion "in a decade," the chamber said.

Some 78% of European businesses surveyed said they felt China is "a less attractive investment destination" as a result of the country's strict COVID-19 curbs.

Three-quarters of the respondents said lockdowns in China have negatively affected their operations — particularly for logistics and business travel.

Beijing steps up curbs to halt virus

A staggering 92% of the firms said their supply chains have been impacted by port closures in China as well as a drop in road freight and a rise in sea freight costs.

"Our members are willing to weather the current storm, but if the current situation continues, they will, of course, increasingly evaluate alternatives to China," said the chamber's president Jörg Wuttke.

What is the COVID situation in China?

Currently, dozens of cities in China are under full or partial lockdowns or are under district-based controls as authorities seek to curb the spread of COVID-19 cases.

China has remained steadfast in its "zero-COVID" strategy of using strict, targeted lockdowns and mass testing. The highly transmissible omicron variant, however, is making this strategy increasingly difficult to implement.

Entire neighborhoods have been sealed off in the capital city of Beijing, with the city reporting 50 local cases on Thursday. Several highly populated districts have told people to work from home, while dozens of subway stations remain closed.

An extended lockdown in the country's largest city, Shanghai, has led to food shortages and stoked public anger. The financial hub reported over 4,600 new infections on Thursday and 13 more deaths.

rs/sms (Reuters, AFP, dpa)

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