Economy
Corona measures are a heavy burden for European companies in China
The strict corona lockdowns – like here in Shanghai – are a heavy burden on the business of European companies in the People’s Republic of China. Photo: Chen Si/AP/dpa
© dpa-infocom GmbH
Millions of people are stuck in lockdowns, supply chains are disrupted and business trips are almost impossible. European companies are despairing of the Chinese government’s zero-corona policy.
The strict corona lockdowns in China are weighing heavily on the business of European companies in the People’s Republic.
In a survey by the European Chamber of Commerce in Beijing published on Thursday, 75 percent of the companies surveyed said that the strict containment measures had a negative impact on their operations. Almost 60 percent of the companies also stated that they had reduced their sales forecast in China for the current year.
The companies mainly complained about problems in the areas of logistics, warehousing and supply chains. It is also difficult to plan business trips or to hold personal meetings at all. It is also not always easy to access raw materials or components. In addition, the delivery of finished products within China is proving to be difficult.
“The Chinese market has lost a significant amount of its appeal for many respondents,” the chamber wrote. For 78 percent of the companies, the corona measures have made China a less attractive investment destination.
mRNA vaccines still not approved
The Chamber of Commerce urged the Chinese government to make changes to restore confidence in the Chinese market. Instead of continuing to adhere to a strict zero-corona policy, more must be done to vaccinate the older part of the population. The chamber also recommended that authorities approve mRNA vaccines that are not yet used in large quantities in China. In addition, people who test positive with no or only mild symptoms should be able to be quarantined at home and no longer in central facilities.
The downward trend in the Chinese economy was underpinned by new economic data on Thursday. Activity in China’s service sector plummeted again. The Purchasing Managers’ Index (PMI) for the service sector published by the business magazine “Caixin” fell from 42.0 points in March to 36.2 points in April. If the index falls below 50 points, a decline in economic activity is assumed.
Index at lowest level since February 2020
The purchasing managers’ index for the service sector had already fallen by 8.2 points in March, the sharpest drop since the start of the corona pandemic two years ago. The index is now at its lowest level since February 2020.
The recent Covid outbreaks in China are said to continue to weigh on consumer spending and threaten economic growth. The April data also captured the effects of the lockdown in Shanghai, where millions were confined to their homes for weeks to try to prevent the spread of the coronavirus.
The war in Ukraine also had a negative impact on some European companies in China. A third of those surveyed said that China had become a less attractive investment destination because of the war. Here, too, logistics was mentioned as a problem. Businesses have to adapt to new conditions as rail freight between China and Europe is no longer an option. Planes have to bypass Russian and Ukrainian airspace, which has also resulted in higher costs.