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European Businesses Sound Alarm on Chinese ‘Hostility’

People take pictures of a high-efficiency petrol-burning concept car as it is unveiled by Royal Dutch Shell during a ceremony in BeijingPeople take pictures of a high-efficiency petrol-burning concept car as it is unveiled by Royal Dutch Shell during a ceremony in Beijing
People take pictures of a high-efficiency petrol-burning concept car as it is unveiled by Royal Dutch Shell during a ceremony in Beijing on April 22, 2016.Photograph by Damir Sagolj — Reuters

Europeans businesses aren’t happy with the “increasingly hostile” environment in China, where a “fresh wave of pessimism” is cresting over European companies operating inside the country. Just 47% of European businesses report that they are planning to expand their operations in China, down from 86% of respondents in 2013, according to an annual European Union Chamber of Commerce survey released today in Beijing.

The survey results reflect the fewer opportunities afforded by China’s slowing economic growth as much as China’s more assertive politics, which recently have ensnared foreign companies recently thought to be beyond reproach like Apple (AAPL) and Disney (DIS).

The percentage of the survey’s 500 respondents who say that doing business in China had become more difficult rose by 10% between 2015 and 2016. Meanwhile, those companies reporting a bearish outlook for profits rose to an all-time high of 31%. Pointedly, 58% reported that China’s constricting Internet controls negatively impacted their operations, a 17-point rise from 2015.

 

Taken together with a similarly pessimistic survey from the American Chamber of Commerce in China earlier this year, companies are doing their best crabby Larry David impression to describe working in what is still the world’s fastest growing major economy. More than 85% of the companies said their Chinese operations were making money, or at least breaking even on the piles of capital they’ve invested here.

Their pessimism is warranted, however. New Chinese laws and regulations for NGOs, media, and Internet security have disproportionately targeted foreign companies and content—all in the name of Chinese sovereignty and security, the government says.

For a country that appeared to giving foreign companies ever-greater access—at least until around the time of the Beijing Summer Olympics in 2008—the European survey reflects the new reality in China. Markets are not opening further, and promised reforms have stalled. “A business environment that is increasingly hostile combined with a playing field that is perpetually tilted in favour of domestic enterprises means the effects of the [economic] slowdown are intensified for European business,” the survey report said.