The EU remains a vital market for Chinese companies, but navigating its complexities is becoming increasingly challenging. The China Chamber of Commerce to the EU (CCCEU)’s annual business environment score, tracked since 2019, reflects this struggle, declining from 73 in its inaugural year to 62 in 2024. Heightened regulatory scrutiny, political discord, and protectionist tendencies in EU policymaking are driving this downward trend.
at the heart of these challenges lies the EU’s sharpened focus on "economic security" and "de-risking." Policies such as the Foreign Subsidies Regulation (FSR) have unsettled Chinese businesses, with 93% of respondents in the CCCEU’s flagship report, Facing challenges, Forging Ahead, expressing concern. The FSR aims to monitor and regulate subsidies provided to foreign companies,leading to higher compliance costs and widespread uncertainty; 73% of respondents reported negative impacts on their operations.
This situation is further strained by the EU’s anti-subsidy investigations into Chinese electric vehicles (BEVs). These investigations have caused 83% of Chinese BEV manufacturers in Europe to reconsider their investment strategies. While ostensibly designed to protect European industry, many view these moves as politically motivated, fueling tensions in the already contentious trade relationship.
Despite these headwinds, Chinese companies remain committed to Europe. Two-thirds of respondents still perceive the EU as central to their global strategy. many continue to invest heavily in areas aligned with Europe’s green and digital transformations,notably renewable energy and electric vehicles. Greenfield investments in Germany, Hungary, and France have enabled Chinese firms to contribute meaningfully to the EU’s climate goals while creating local jobs and promoting economic integration.
Tho, these contributions have not insulated Chinese firms from rising distrust. A vast majority (64%) have reported experiencing discriminatory treatment due to their Chinese identity, including delays in business approvals, exclusion from public tenders, and increased caution from European partners navigating escalating anti-China sentiment.
Compounding these difficulties is the EU’s Corporate Sustainability Due Diligence Directive (CSDDD), which has considerably increased operational costs. The directive’s complex requirements, coupled with unclear implementation guidelines, have created uncertainty for 68% of surveyed businesses. Many call for greater regulatory clarity to facilitate adaptation and planning.
Even amid these challenges,glimmers of hope for deeper collaboration between China and Europe persist. The green economy is a prime example. Chinese firms are leading contributors to Europe’s energy transition, investing in photovoltaic technologies, battery storage solutions, and electric vehicles. This directly supports Europe’s climate ambitions while fostering technological innovation and cross-border economic cooperation.
High-tech trade is another area of continued synergy. in 2023, China accounted for 32% of the EU’s total high-tech imports, solidifying its position as Europe’s largest supplier of advanced goods.simultaneously, China remains the EU’s largest importer of high-tech products, underscoring the complementary nature of their economic relationship.
As the 50th anniversary of China-EU diplomatic relations approaches in 2025, both sides stand at a critical juncture. Shared interests in sustainability, technological innovation, and addressing global challenges abound. Though, the current climate of protectionism and political suspicion risks overshadowing these priorities.
The CCCEU firmly believes that open dialog and constructive engagement are essential to reverse this downward trend. While challenges like the FSR, BEV investigations, and discriminatory practices weigh heavily on Chinese companies, notable opportunities exist for China and the EU to find common ground. By prioritizing areas of mutual benefit, both sides can build a more resilient and cooperative partnership.
Europe’s pursuit of economic security has fostered a degree of uncertainty for Chinese businesses, raising concerns about the long-term viability of their investments. Yet, Chinese enterprises remain optimistic about the potential for a balanced and constructive relationship with Europe.
as the global economic landscape evolves,fostering mutual understanding and rebuilding trust is crucial for both regions. The 2025 milestone presents an prospect to reaffirm the value of collaboration. By addressing shared challenges with a spirit of partnership, China and the EU can navigate the complexities of their relationship and chart a sustainable path forward.
interview with Dr. Li Wei, Economic Policy Expert, on the EU-China Business Climate
Editor (Time.news): Thank you for joining us today, Dr. Li. The recent decline in the China Chamber of Commerce to the EU’s annual business habitat score from 73 to 62 is quite alarming.What do you see as the primary reasons for this trend?
Dr. li Wei: Thank you for having me. The decline in the score reflects a convergence of several factors. Primarily, the EU is shifting its focus towards economic security and “de-risking,” which introduces a layer of regulatory scrutiny that is unfamiliar to many chinese firms. This has led to heightened anxiety in the business environment as companies grapple with changing compliance requirements.
Editor: You mentioned “de-risking.” Can you elaborate on how policies like the Foreign Subsidies Regulation (FSR) specifically impact Chinese companies operating in the EU?
Dr. Li Wei: Absolutely. The FSR has raised significant concerns among Chinese businesses, with 93% of respondents in the CCCEU’s report expressing unease. The regulation aims to monitor and regulate the subsidies that foreign companies receive, which inherently raises compliance costs. As a result,many companies are finding it challenging to operate efficiently,with 73% reporting negative impacts on their operations.
Editor: That’s quite substantial. In addition to regulatory changes,we also see ongoing anti-subsidy investigations into chinese electric vehicles. How are these investigations affecting the strategic decisions of Chinese manufacturers?
Dr. Li Wei: The investigations have led 83% of Chinese BEV manufacturers operating in Europe to rethink their investment strategies. While the EU argues these investigations are necessary to protect local industry, many perceive them as politically motivated. this perception contributes to a fragile business environment where companies feel they can’t operate without the fear of arbitrary regulatory actions.
Editor: It truly seems like the EU’s approach is creating a significant sense of uncertainty. Do you think there are ways for Chinese companies to adapt or respond to these challenges?
Dr. Li Wei: Certainly. Adaptation will be key. Chinese companies can consider enhancing their compliance frameworks and building strong relationships with EU policymakers to better navigate this complex regulatory landscape.Additionally, diversifying their markets could mitigate the risks associated with reliance on the EU. This means looking beyond traditional markets and exploring regions that may be more receptive to foreign investment.
Editor: On that note, how do you foresee the future of EU-China relations given these increasing tensions and regulatory hurdles?
Dr. Li Wei: the future will depend on how both sides approach dialog and compromise. If the EU remains committed to its regulatory strategies without considering the concerns of Chinese businesses, it could lead to a deteriorating relationship. Conversely, if both parties find common ground in discussions on trade policies, we might see a more balanced relationship that fosters a healthier business environment.
Editor: Thank you for yoru insights, Dr. Li. It’s clear that the landscape is rapidly shifting, and the interaction between regulation and business strategy will be crucial for the survival of many companies operating in the EU. We appreciate your perspective on this critically important issue.
Dr. Li Wei: Thank you for having me. It’s a critical conversation, and I hope to see proactive steps from both sides to foster a more constructive business environment.