China News: EU Chamber of Commerce in China’s 2026 Business Sentiment Survey

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China News: EU Chamber of Commerce in China’s 2026 Business Sentiment Survey

The EU Chamber of Commerce in China’s 2026 Business Sentiment Survey highlights a “turning point” in sentiment among European companies operating in China. While challenges remain, the survey points to a slight increase in optimism and the first decline in the proportion of companies reporting a deteriorating business environment—for the first time in five years.

Key Findings

Improved Sentiment: For the first time since the end of China’s “Zero-COVID” policy, the decline in confidence has slowed. Although a majority (68 percent) still find business conditions more difficult than a year ago, the share of companies reporting a deteriorating environment has declined, while the share of those reporting an improvement has risen slightly.

Persistent Challenges: Despite the shift in sentiment, companies continue to grapple with the following issues:
Economic Slowdown: Although this remains the most frequently cited challenge, the share of companies identifying it as a negative factor fell by 14 percentage points to 57 percent.

Domestic Competition: Competition from private domestic companies is the second most frequently cited challenge, particularly in the machinery and medical technology sectors.

Market access and regulation: Although sentiment in this area has improved, 54 percent of companies continue to report missed business opportunities due to market access and regulatory barriers.

Geopolitical risks: Concerns remain, particularly among companies in the aerospace, aviation, and automotive industries.

Investment Outlook: China’s appeal as an investment destination remains subdued. Only 53 percent of companies—a record low—rank China among their top three locations for both current and future investments, and 14 percent—also a record high—have no plans for new investments.

Operational Dependency: Despite the cautious investment sentiment, China remains of critical importance to many European companies.

70 percent stated that they expect to achieve a positive pre-EBIT result in 2025.
94 percent describe China as an important sourcing location in terms of quality, cost, and reliability.
75 percent rate local production as more efficient than elsewhere.

Strategic Recommendations

The report highlights potential for improvement through China’s 15th Five-Year Plan, which prioritizes high-quality growth and national treatment for foreign-invested enterprises (FIEs). To strengthen confidence, the EU Chamber of Commerce proposes the following:

“Low-hanging fruit”: Administrative improvements at the local level, such as streamlining building permits, improving access to credit, and establishing better communication channels between the government and industry.

Structural progress: The elimination of specific bottlenecks, such as export control approval procedures, cross-border data transfer procedures, and the facilitation of cross-border financial transactions.

Ultimately, the survey paints a picture of a “paradox”: European companies are managing their operational and business dependencies on China, yet remain cautious when it comes to committing new capital.