Sentiment Among European Companies in China Shows Signs of Improvement
European Business Sentiment and Challenges in China
By Ju-min Park
Recent Trends in Business Sentiment
BEIJING, May 27 (Reuters) - Sentiment among European companies in China may be nearing an inflection point after several years of decline, although significant challenges remain, the European Union Chamber of Commerce in China said on Wednesday.
Survey Results and Shifts in Outlook
For the first time in five years, the chamber's annual survey for 2026 showed fewer respondents said doing business in China had become more difficult over the previous year. The share fell to 68%, down 5 percentage points year-on-year.
Context from Chamber Leadership
"We should keep in mind that last year was the worst year we had on our record in terms of business confidence and that we are coming out of a period where we had five consecutive years of deteriorating business sentiment," said Jens Eskelund, President of the European Union Chamber of Commerce in China.
Comparative Performance and Profitability
Still, Eskelund said China had performed "comparatively" well compared with other markets hit by volatility, with some European companies managing to restore profitability. Many European firms also see China as an important location for innovation.
Profitability Outlook
The survey found that 17% of respondents said they were optimistic about their two-year profitability outlook, up 5 percentage points year-on-year.
Ongoing Challenges and Policy Recommendations
However, the survey makes clear that the rebound in confidence remains fragile. European companies operating in the country continue to face significant headwinds from China's economic slowdown, weak domestic demand and intense price competition in some sectors, often described in China as "involution".
Calls for Regulatory Reforms
The Chamber called on China to make processes for securing licenses under its export-control regime more transparent, describing this as one of several practical, near-term reforms — or "low-hanging fruit" — that could help build momentum for a recovery in business confidence among European companies in the country.
Impact of Export Controls
According to the survey, 32% of respondents said they or partners in their supply chain had been affected by Chinese export controls.
(Reporting by Ju-min Park; Editing by Ronojoy Mazumdar)
