China needs to find its way back to the path of opening up

While the rest of the world has largely resumed pre-pandemic levels of ‘normality’, China remains reluctant to open its doors. The country’s ‘splendid isolation’ not only makes travelling in and out tedious, but also holds China back from showcasing its potential to foreign investors.

European Chamber President Jörg Wuttke

Inbound investment flows from the European Union (EU) are declining:[1] the bulk is contributed by a handful of large companies, and prevalent access barriers deter potential newcomers to the market.[2] The present mix of multinational companies and ‘hidden champions’ is stable, but there is increasing discrepancy between market potential and the actual market share of European companies.

Widespread regulatory barriers—both visible and invisible—continue to constrain the ambitions of European companies operating in the Chinese market. Challenges will only intensify as firms face increasing scrutiny from EU stakeholders, governments, non-governmental organisations and media over a range of issues. One major topic that came under the spotlight recently was Russia’s invasion of Ukraine, which subsequently raised questions over whether China could take similar actions against Taiwan and what the impact might be on companies’ global operations.[3]

A diversification debate is also intensifying. With China staying largely closed, European companies are increasingly weighing up the possibility of shifting planned or future investments to places that are perceived to provide greater reliability and predictability.[4] This presents opportunities to other emerging markets that are ready to welcome new investment and jobs.[5] Meanwhile, China’s push both for increased ‘self-reliance’[6] and ‘buy China’[7] are only easing the country into deeper isolation.

The European Chamber needs China to fulfil its huge economic potential. To that end, we have just launched our Position Paper 2022/2023, containing 967 constructive recommendations based on the expertise of our member companies in our 35 working groups and sub-working groups. It remains our primary tool to help us advocate for a level playing field for all companies operating in China, and to illustrate to Chinese decisionmakers how much the country would benefit from getting back on the path towards opening up.

On a separate note, as you may already know, our Vice President Guido Giacconi sadly passed away in September. page has been created on our website for him, where messages of condolences are displayed. We have also dedicated our Carbon Neutrality report posthumously to him. Guido is dearly missed and his passing is a good reminder of the importance of family, health and friends.


[1] Garcia Herrero, Alicia, Dieu Nguyen, Trinh and Xu, Jianwei, Natixis Asia M&A Monitor: Inbound Declined and Reshuffled, with Covid-19 and Geopolitics Boosting Bids to Southeast Asia, Natixis, 18th August 2022, viewed 5th September 2022, <https://www.research.natixis.com/Site/en/economics/latest-publications/publication/I7Dl9AWcu6cVogD9F2tquw%3D%3D>

[2] Between 2006 and 2015, the concentration of European foreign direct investment (FDI) in China was more or less evenly distributed between the top 10 investors and the rest. However, in the last four years, the top 10 investors contributed more than 70 per cent of European FDI in China: Kratz, Agatha, Barkin, Noah & Dudley, Lauren, The Chosen Few: A Fresh Look at European FDI in China, Rhodium Group, 14th September 2022, viewed 14th September 2022, <https://rhg.com/research/the-chosen-few/>

[3] Sevastopulo, Demetri & Edgecliffe-Johnson, Andrew, Executives seek briefings on Taiwan war risk, Financial Times, 12th July 2022, viewed 5th September 2022, <https://www.ft.com/content/8c753573-b2d7-42a9-810f-25ab37eb0099?utm_source=substack&utm_medium=email>

[4] European Business in China Business Confidence Survey 2022, European Union Chamber of Commerce in China, p. 12, 20th June 2022, viewed 5th September 2022, <https://www.europeanchamber.com.cn/en/publications-business-confidence-survey>

[5] Garcia Herrero, Alicia, Dieu Nguyen, Trinh and Xu, Jianwei, Natixis Asia M&A Monitor: Inbound Declined and Reshuffled, with Covid-19 and Geopolitics Boosting Bids to Southeast Asia, Natixis, 18th August 2022, viewed 5th September 2022, <https://www.research.natixis.com/Site/en/economics/latest-publications/publication/I7Dl9AWcu6cVogD9F2tquw%3D%3D>

[6] Wu, Wendy, Wang, Orange & Cai, Jane, ‘Two sessions’ 2022: self-reliance highlighted as China’s top economic priority amid turbulent geopolitical times, SCMP, 6th March 2022, viewed 5th September 2022, <https://www.scmp.com/economy/china-economy/article/3169405/self-reliance-chinas-top-economic-priority-turbulent>

[7] Zipser, Daniel, Seong, Jeongming & Woetzel, Jonathan, Five consumer trends shaping the next decade of growth in China, McKinsey, 11th November 2021, viewed 5th September 2022, <https://www.mckinsey.com/cn/our-insights/our-insights/five-consumer-trends-shaping-the-next-decade-of-growth-in-china>