‘Demand slump, US trade turbulence vex EU firms in China’

BEIJING

Chinese President Xi Jinping (AA Photo)

China’s spending slump is creating significant challenges for European companies operating in the country, while firms are also closely watching this week’s meeting between the Chinese and U.S. presidents.

Beijing has struggled to revive domestic consumption since the end of the COVID-19 pandemic, even as a prolonged property sector crisis continues to weigh on sentiment. At the same time, China’s export boom has supported growth but generated large trade surpluses that are increasingly drawing criticism abroad.

“The current trajectory is unsustainable,” Jens Eskelund, president of the European Union Chamber of Commerce in China, said ahead of the release of the group’s annual position paper.

The chamber noted that China’s share of global container exports rose to 37 percent last year, while its overall trade surplus reached a record high.

According to the paper, a significant contributor to the surplus has been manufacturing capacity growing faster than domestic consumption. China’s trade surplus with the European Union reached $242 billion through the end of August, increasing pressure on Brussels to shield European manufacturers from Chinese imports.

European firms are also concerned about trade tensions following last year’s tariff dispute between Beijing and Washington. That standoff ended with a fragile truce in Busan, where China agreed to ease restrictions on exports of rare earths and related magnets.

The chamber also cited bureaucratic obstacles in China, including barriers to relocation within the country and difficulties obtaining construction permits. Eskelund said deeper challenges remain unresolved and that he sees no sign China’s export boom is likely to slow.