RTL Today – Crippling business operations: Zero-Covid harms 75% of European businesses in China: business group

China’s ‘inflexible’ and ‘incoherent’ zero Covid policy is crippling European business operations in the country, a leading business lobby said on Wednesday, warning that companies’ presence ‘can no longer be taken for granted’.

The report by the European Union Chamber of Commerce in China marks the latest statement from the foreign business community that Beijing’s hardline virus-fighting measures are hurting the world’s second-largest economy and isolating it on the international scene.

China is the latest major economy married to a strategy to stamp out emerging virus outbreaks as they arise, through a combination of instant lockdowns, mass testing and lengthy quarantines.

Despite business shutdowns and disrupted global supply chains, President Xi Jinping said the approach was China’s most “economical and efficient” path, and officials did not say when the rules could be relaxed.

The European Chamber – a group of more than 1,800 European companies in China – said in a position paper that zero-Covid and its “massive uncertainty” had had a “negative impact” on 75% of its members’ operations.

“The business environment in China will remain unpredictable as long as the threat of lockdown exists,” the organization said, calling Xi’s flagship policy “inflexible and inconsistently implemented” and warning that the ideology seemed “trump the economy”.

He added that the situation had prompted nearly a quarter of companies to consider shifting their current or planned investments out of China, the highest percentage in the past decade.

Despite China’s significant growth potential, “the scale of European business engagement can no longer be taken for granted,” the report says.

In June, China reduced the length of the mandatory quarantine for inbound travelers from 21 to 10 days, but a lack of flights and exorbitant ticket prices remain a major barrier to travel.

The near total closure of the country’s borders since 2020 has accelerated an “exodus” of European nationals and left those who remain more isolated than before, according to the report.

If Beijing persists with this policy, “the business environment will continue to become more difficult,” he said.

In a foreword to the report, European Chamber President Joerg Wuttke wrote that “the rest of the world has largely returned to pre-pandemic ‘normalcy’ levels, but China remains reluctant to open its doors. “.

European companies “need China to realize its enormous economic potential”, he added.

China’s economy grew just 0.4% in the second quarter as virus restrictions across large parts of the country prompted business shutdowns and disrupted supply chains.

Analysts say the country is on course to miss its annual growth target of around 5.5% by a wide margin.