European businesses are rethinking their plans for a 'closed' China

cnbc.com:

BEIJING — European businesses in China are revaluating their market plans after this year's Covid controls further isolated the country from the rest of the world, said Joerg Wuttke, president of the European Union Chamber of Commerce in China.

China's stringent Covid policy has restricted international travel, and business activity — especially after a two-month lockdown this year in Shanghai.

The tough measures of the last two years initially helped China recover more quickly from the pandemic's shock compared to other countries.

But the policy increasingly contrasts with a world that's increasingly relaxing many Covid restrictions.

For European businesses, «we talk about a complete readjustment of our view on China over the last six months,» Wuttke told reporters at a briefing for the chamber's annual China position paper, released Wednesday.

He said the lockdowns and uncertainty for businesses have turned China into a «closed» and «distinctively different» country that might prompt companies to leave.

So far, most companies haven't left — only some very small ones, Wuttke said. But he pointed out the chamber isn't able to survey businesses that decided not to enter China at all.

Foreign direct investment from the EU into China dropped by 11.8% in 2020 from a year earlier, according to the chamber's position paper. More recent figures weren't available.

«While there are still 'a select group of high-profile multinational companies ready to make billion dollar splashes,' the trend of declining FDI is unlikely to reverse while European executives are heavily restricted from travelling to and from China to develop potential greenfield projects,» the paper said.

China's economy grew by 2.5% in the first half of the year,