China demand slump hits EU firms, lobby group says

The European Union Chamber of Commerce in China said weak Chinese demand, trade imbalances and uncertainty over US-China trade talks are creating major challenges for European companies operating in China.

In an annual position paper released on September 22, the chamber said structural imbalances were holding back China's economy. Jens Eskelund, the chamber's president, told a news conference that the current trajectory was “unsustainable”.

The chamber, which represents more than 1,600 member companies, said China's share of global container exports rose to 37 percent last year, while its overall trade surplus reached a record high. Chinese customs data showed China's trade surplus with the European Union reached $242 billion through the end of August, larger than its surplus with the United States.

The chamber said the gap reflected rapid growth in manufacturing capacity compared with consumption growth. It said the trend had increased pressure on Brussels to protect European manufacturers from imports from China.

European firms are also watching whether Beijing and Washington extend a truce reached in Busan, South Korea, after a tariff dispute. Eskelund said companies were waiting to see whether the Busan agreement would be extended, adding that “nothing is a given”.

The chamber also said European companies in China face bureaucratic hurdles, including barriers to relocating within the country and difficulty obtaining construction permits. Eskelund said he saw no sign that China's export boom was slowing.