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Chinese strategy against covid affects 75% of European firms, says business group

A health worker takes a sample for a covid test in Shanghai, China on August 17, 2022. afp_tickers

This content was published on September 21, 2022 – 05:27

(AFP)

China’s “inflexible” and “inconsistent” zero-COVID policy is paralyzing the operation of European companies in that country, a business organization warned on Wednesday.

The report by the European Union Chamber of Commerce in China is the latest statement by the foreign business community on the negative impact of Beijing’s harsh restrictions, which are isolating the country on the international stage.

China is the last major economy to maintain a strategy of eradicating virus outbreaks through a combination of lockdowns, mass testing and extensive quarantines.

Despite causing business closures and disrupting the global supply chain, Chinese President Xi Jinping has declared the Chinese approach to be the most “cheap and effective” path, and there are no signs that it will be relaxed.

The European chamber, which brings together more than 1,800 European companies in China, said in a document that the zero covid strategy and its “massive uncertainty” have had a “negative impact” on 75% of its members’ operations.

“The business environment in China will continue to be unpredictable as long as the threat of confinement persists,” warned the entity, which described the anti-Covid policy as “inflexible and inconsistently applied.”

He added that the situation led a quarter of the group’s firms to consider moving their current or planned investments out of China, the highest level in the last decade.

Despite China’s great growth potential, “the commitment of European companies (to remain in China) can no longer be taken for granted,” according to the report.

China in June reduced the mandatory quarantine for travelers arriving from abroad from 21 to 10 days, but the lack of flights and the high cost of tickets are an obstacle to travel.

The almost total closure of borders since 2020 has accelerated the exodus of Europeans, and those who remain are more isolated than before, according to the report.

In a preamble to the document, European chamber president Joerg Wuttke wrote that “the rest of the world has generally resumed pre-pandemic levels of ‘normal’, while China remains reluctant to open its doors.”

He added that European companies “need China to reach its enormous economic potential.”