EU Business Confidence in China Remains Low Despite Modest Improvement, Survey Shows

1. European companies operating in China are seeing tentative signs of improvement after several difficult years, but business confidence remains fragile and will require deeper reforms to meaningfully recover, according to the European Union Chamber of Commerce in China’s (EUCCC) latest survey. [para. 1]

2. Several key indicators, including profitability and growth outlook, rebounded from last year’s historic lows, the EUCCC said in a report published Wednesday. Still, most respondents said operating in China had become harder, and many are still grappling with the country’s economic slowdown, intense competition, regulatory uncertainty and barriers to market access. [para. 2]

3. In the survey conducted in January and February this year, 68% of the 549 respondents said doing business in China had grown more difficult over the past year, down 5 percentage points from 2025. While the figure marked the first year-on-year decline since 2021, it still represented the fifth consecutive year in which a majority reported diminishing confidence. [para. 3][para. 4]

4. A majority of respondents across industries except environment and retail reported a deterioration in the business environment over the past year for their sector. This included 76% of respondents in the automotive industry, which is currently still suffering from a price war. The civil engineering and construction industries have been hurt by high levels of local government debt and the ongoing real estate crisis. [para. 4]

5. The share of companies that said China’s business environment had become more politicized fell to 47%, the first time in five years the figure has dropped below half. [para. 5]

6. Optimism about profitability rose to 17%, and the share of respondents optimistic about growth over the next two years was up to 35%, though both figures came off all-time lows. In addition, the chamber noted that growth optimism remained well below the roughly 58% average for the 10 years before the Covid-19 pandemic. [para. 6]

7. “When we talk about improvement, it is very much relative to last year,” EUCCC President Jens Eskelund said at a media briefing ahead of the survey’s launch. “We are not talking about going back to pre-Covid sentiment.” The modest rebound could suggest that companies are finding ways to adapt, Eskelund said, such as by cutting costs, seeking markets outside China, or streamlining their operations. [para. 7][para. 8]

8. Denis Depoux, global managing director at consultancy Roland Berger, cautioned against reading too much into the modest rebound, saying business confidence remains “pretty low,” and that companies may simply have become accustomed to operating under persistent stress. This might be a case of “crisis fatigue,” Depoux said. European companies have adjusted in many ways, and headquarters’ expectations have also shifted. “There is a bit of fatigue of complaining.” [para. 9][para. 10]

9. European businesses have been operating in an increasingly complex geopolitical landscape, including U.S. trade tensions with both the EU and China, China’s expanded export controls on semiconductors and critical minerals, the Russia-Ukraine war and the ongoing Middle East conflict. Still, respondents were more positive about the outlook for EU-China relations than for U.S.-China ties, the survey found. The increasingly volatile global environment could give China a chance to show its strengths, provided that it can also demonstrate its market stability and predictability, the EUCCC said. [para. 11][para. 12][para. 13]

10. The EUCCC identified several pro-business measures that can deliver “quick wins” to boost confidence, including improving administrative procedures for permits and funding, streamlining cross-border money transfers and data flows, clarifying export-control licensing, strengthening intellectual-property enforcement and improving local-government communication. “Addressing them in the short-term would markedly improve the operational efficiency of European companies in China and have an immediate, positive impact on business confidence,” the EUCCC said. “By plucking some of these ‘low-hanging fruit,’ China would demonstrate its commitment to improving the market, which would help to build the momentum needed for a full rebound of business confidence.” [para. 14][para. 15][para. 16]

11. China’s strengths remain substantial. The survey showed that European companies still view the country as a critical manufacturing and sourcing base, with 75% of respondents saying their China production is more efficient than elsewhere and 94% describing China as important for sourcing. Nearly half said Chinese companies in their industry are more innovative than European competitors. [para. 17]