European firms doubt China has credible plan to turn economy around, lobby group warns

European firms in China doubt the government has a credible plan to boost demand in the ailing economy or will carry out long-promised reforms, diminishing their appetite to invest in the country, a European business lobby group said on Wednesday. The European Union Chamber of Commerce in China said in the latest edition of its Position Paper that many of its more than 1,700 member companies were now reconciling themselves to the fact that the problems they face may have become permanent features rather than "growing pains" of an emerging market. "A sentiment is emerging at company headquarters and among shareholders that the returns on China investments are no longer commensurate with the risks faced," the chamber said, noting that profit margins in China had sunk for around two thirds of its members to equal to or below the global average.

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By Joe Cash

BEIJING (Reuters) - European firms in China doubt the government has a credible plan to boost demand in the ailing economy or will carry out long-promised reforms, diminishing their appetite to invest in the country, a European business lobby group said on Wednesday.

The European Union Chamber of Commerce in China said in the latest edition of its Position Paper that many of its more than 1,700 member companies were now reconciling themselves to the fact that the problems they face may have become permanent features rather than "growing pains" of an emerging market.

"A sentiment is emerging at company headquarters and among shareholders that the returns on China investments are no longer commensurate with the risks faced," the chamber said, noting that profit margins in China had sunk for around two thirds of its members to equal to or below the global average.

In 2023, EU foreign direct investment flows to China dropped by 29% from the previous year to 6.4 billion euros ($7.06 billion), European Commission data shows.