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European companies cut costs, scale back
investments in China as its economy slows
[May 28, 2025]
By KEN MORITSUGU
BEIJING
(AP) — European companies are cutting costs and scaling back investment
plans in China as its economy slows and fierce competition drives down
prices, according to an annual survey released Wednesday.
Their
challenges reflect broader ones faced by a Chinese economy hobbled by a
prolonged real estate crisis that has hurt consumer spending. Beijing
also faces growing pushback from Europe and the United States over
surging exports. |
Visitors tour the ZEROG booth showcasing it ZG-ONE, a two-seated eVTOL
multicopter aircraft with its autonomous piloting at the 3rd Exhibition
of Technology and Education in Civil Aviation as China promoting the
low-altitude economy, in Beijing, Tuesday, May 27, 2025. (AP Photo/Andy
Wong) |
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“The picture has deteriorated across many key metrics,” the
European Union Chamber of Commerce in China said in the
introduction to its Business Confidence Survey 2025.
The same forces that are driving up Chinese exports are
depressing the business outlook in the Chinese market. Chinese
companies, often enticed by government subsidies, have invested
so much in targeted industries such as electric vehicles that
factory capacity far outpaces demand.
The overcapacity has resulted in fierce price wars that cut into
profits and a parallel push by companies into overseas markets.
In Europe, that has created fears that growing imports from
China could undermine its own factories and the workers they
employ. The EU slapped tariffs on Chinese EVs last year, saying
China had unfairly subsidized electric vehicle production.
“I think there’s a clear perception that the benefits of the
bilateral trade and investment relationship are not being
distributed in an equitable manner,” Jens Eskelund, the
president of the EU Chamber in China, told reporters earlier
this week.
He applauded efforts by China to boost consumer spending but
said the government must also take steps to ensure that supply
growth doesn’t outpace that in demand.
The survey results show that the downward pressure on profits
increased over the past year and that a fall in business
confidence has yet to bottom out, Eskelund said. About 500
member companies responded to the survey between mid-January to
mid-February.
“It is just very difficult for everyone right now in an
environment of declining margins,” he said.
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