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Does German firms’ hot take on China business show limits of Beijing’s charm offensive?

  • ‘Profound’ geopolitical implications from international tensions are also weighing on the confidence of German investors in China, survey suggests
  • German Chamber of Commerce findings are latest indicator that Beijing’s efforts aimed at boosting business are struggling to shore up confidence among foreigners

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A man works on a BMW in Shenyang, Liaoning province. Photo: Xinhua

German companies in China appear to be growing more wary of being caught in the crossfire between escalating geopolitical frictions and underwhelming market prospects, casting a pall on investor confidence and leading to a more diversified business landscape.

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Their sentiment towards doing business in a post-Covid China is also “not as optimistic as initially hoped”, according to a recent German Chamber of Commerce in China survey that suggests more than half of its members expect the environment to remain unchanged or perhaps even worsen this year.

The results, based on a flash survey of 288 German companies in mid-May, may be the latest red flag for Beijing, which has been trying to charm and appease foreign investors to help shore up the nation’s economy, while also striving to stay on good terms with Europe amid tensions with the US.

German carmakers Volkswagen, BMW and Daimler, and chemicals giant BASF, accounted for 34 per cent of all European direct investment in China by value from 2018-21, according to research by New York-based think tank Rhodium Group.

More than 40 per cent of survey respondents expressed optimism about their sector’s recovery by the end of the year owing to China’s reopening, a 5-percentage-point increase compared with last year.

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