A poll by the EU Chamber of Commerce in China on Monday showed that 23% of European firms are considering moving existing or planned investments out of China. Beijing’s strict epidemic Zero-Covid is to blame as it is the biggest challenge for European companies doing business in China today. 

This is the highest percentage in 10 years and more than double the 11% recorded in a February poll.

The survey was conducted at the end of April, when Shanghai was still under lockdown and restrictions in places like Jilin province disrupted business activity.   

More than 75% of companies said China’s Covid measures have reduced the investment attractiveness of the Chinese market. About 30% of companies believe that the biggest factor is geopolitical tension.

Besides, about 69% of companies see the epidemic as the biggest challenge to business activities in China, up 5% from the survey a year ago. Factors such as rising labor costs, slowing economic growth, barriers to market access, and decoupling of business activities are other concerns raised by European companies.

The European Union Chamber of Commerce in China pointed out that the current situation has made many companies hesitant to invest in China.

Among the firms considering a shift in investment outside China, 16% said they could move to Southeast Asia, while 18% said they could relocate elsewhere in the Asia-Pacific region. Some 19% said Europe, 12% said North America and 11% said South Asia. 

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