Foreign companies are shifting investment out of China as confidence wanes, business group says

Foreign companies are shifting investments and their Asian headquarters out of China as confidence plunges following the expansion of an anti-spying law and other challenges, a business group said Wednesday.

Foreign companies are shifting investments and their Asian headquarters out of China as confidence plunges following the expansion of an anti-spying law and other challenges, a business group said Wednesday.

The report by the European Union Chamber of Commerce in China adds is one of many signs of growing pessimism despite the ruling Communist Party's efforts to revive interest in the world's No. 2 economy following the end of anti-virus controls.

Companies are uneasy about security controls, government protection of their Chinese rivals and a lack of action on reform promises, according to the European Chamber. They also are being squeezed by slowing Chinese economic growth and rising costs.

Business confidence in China is "pretty much the lowest we have on record," the European Chamber president, Jens Eskelund, told reporters ahead of the report's release.

"There's no expectation that the regulatory environment is really going to improve over the next five years," Eskelund said.

President Xi Jinping's government, trying to shore up economic growth that sank to 3% last year, is trying to encourage foreign companies to invest and bring in technology. But they are uneasy about security rules and plans to create competitors to global suppliers of computer chips, commercial jetliners and other technology. That often involves subsidies and market barriers that Washington and the European Union say violate Beijing's free-trade commitments.

Two-thirds of the 570 companies that responded to the European Chamber's survey said doing business in China has become more difficult, up from less than half before the pandemic. Three out of five said the business environment is "more political," up from half the previous year.