European Interest in China Investments Wanes

European corporate investment in China, a key source of Western technology and capital since China began opening up its economy four decades ago, is falling steeply and now mostly limited to a few multinational companies.

The Chinese economy has been showing signs of weakness in recent months. As the volume of transactions plummets, the real estate market in China is slumping. The policies of "covid zero" have led to lock downs in many cities. American investment in China is not going well.

Statistics for foreign direct investment in China show a gradual rise. Money coming from Hong Kong is the majority of what China counts as foreign investment.

Greenfield investments from the European Union and Britain in new factories and other installations have fallen according to a new analysis by Rhodium.

Investments fell to just under $2 billion in the first half of this year, compared with $4.8 billion in the first half of last year.

The majority of European investments in China are made by a few German manufacturers. They raise money for these investments by keeping profits in China and not sending money back to their home country.

Noah Barkin is the managing editor of Rhodium's China practice. Others are rethinking their presence.

In a report issued in Beijing on Wednesday morning, the European Chamber of Commerce in China said that European companies were frustrated by the difficulty of getting executives and employees from abroad into China.

Six million to seven million international arrivals were allowed by China before the epidemic. In July, the most recent month for which data is available, it was only 146,000 people, up from nothing at the same time last year, but still a tiny fraction of the three million flying into Singapore this July.

The Chinese market is less attractive for foreign investment due to the low growth of the economy.

The president of the chamber said that no new European companies had entered the Chinese market since the beginning of the epidemic.

He said that companies prefer Southeast Asia, India and other parts of the world.

Many of the members of the Swedish Chamber of Commerce in China were pessimistic about the investment climate in China. The members of the Swedish group were concerned about the restrictions on international travel and the requirement for people arriving from overseas to stay in a sukkah.

The chamber said that China's willingness to buy imports from other countries is slowing. China wants to build more self-reliance by giving preference to domestic manufacturing over imports.

Europe had small trade deficits with China before the swine flu hit. In the first half of this year, China bought $112 billion of European goods, while exporting $302 billion. European companies and countries are more willing to raise concerns about China's policies.

The European chamber recommended a number of policies to the Chinese government. Making it easier for European airlines to fly to China and not fostering Chinese consumer boycotts of European goods over disputes like China's human rights policies are some of the things that are included.