European companies in China are overly focused on risk management amid a less predictable and more politicised business environment in the world’s second largest economy, a business lobby group has warned.
The European Union Chamber of Commerce in China said on Wednesday that about three-quarters of respondents to a survey of its 1,700 members had reviewed their supply chains and exposure in China over the past two years amid a “general sentiment of uncertainty”.
Some 21 percent of respondents said they planned to expand their production in China, while another 12 percent planned to reduce it, the chamber said.
Only 1 percent said they planned to move production out of China entirely, according to the survey.
The findings come “at a time when the global business environment is becoming increasingly politicised, and companies are having to make some very tough decisions about how, or in some cases if, they can continue to engage with the Chinese market,” the lobby group said in a report accompanying the survey.
China’s market has become “less predictable, reliable and efficient”, while companies’ focus has become “skewed disproportionately towards risk management and building resilience”, the report said.
Foreign companies in China have faced a series of challenges in recent years, including slowing economic growth, ultra-strict COVID restrictions, US-China geopolitical tensions, and national security crackdowns.
While Beijing has sought to assure businesses that the country is open for business after the pandemic, authorities have carried out high-profile raids on foreign consulting firms, strengthened anti-espionage and state secrets laws, and restricted cross-border data sharing.
Tensions with Europe have also spiked since the EU Commission in September opened a probe into whether Chinese state-subsidised electric vehicle imports are undercutting European competitors.
In the EU Chamber of Commerce survey, some 55 percent of respondents said that the business climate in China was “more political over the past year”, leading firms to increase their focus on “de-risking” their operations there.
“At the corporate level, the volume, complexity and severity of the risks companies face have grown exponentially in recent years, as politics has seeped into the business environment,” the report said.
Despite these concerns, Jens Eskelund, president of the chamber, urged European companies to reevaluate overly cautious behaviour to avoid stifling future growth and innovation.
“While it is natural that all global actors will seek to ensure the security of their respective economies, it should be done in a way that is minimally disruptive to business,” Eskelund said.
“Actions taken in the name of risk management and strengthening economic security should be proportionate, targeted and precise and should never become a cover for protectionism.”
Foreign direct investment into China sank to a 30-year low in 2023, with new investment falling to $33bn, 82 percent less than the previous year, according to government data.
China’s State Council this week announced a new action plan to promote foreign investment, focusing on key industries such as advanced chips and biopharmaceuticals.
The State Council also promised to address practices that discriminated against foreign companies, a longstanding complaint in the foreign business community.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
