China’s Covid Policies Have European Companies Wary of Investing

A business group warned on Thursday that China’s “dynamic zero Covid” policies have left European companies considerably less willing to continue investing in the country.

A survey by the European Union Chamber of Commerce in China found that the tone among European businesses in the country had soured since January, when a survey found broad optimism and plans for further investment.

“We had a double whammy in February and March with the Ukraine invasion and the Covid lockdowns, and it had an incredible impact,” said Joerg Wuttke, the chamber’s president.

The survey conducted from April 20 to 26, how the visible supply chain problems from China’s Covid-19 lockdowns, including interruptions in trucking services and factory shutdowns, are hurting the country’s competitiveness as a global manufacturing center and a magnet for Western investment and technology transfers.

Premier Li Keqiang has said that cities and provinces should try to minimize local economic disruption from their Covid measures. Mr. Wuttke, the most visible leader of China’s foreign business community, has been a critic in recent weeks of the economic disruption.

He contends that China is so proud of its previous success in controlling the virus that, unlike other countries in the region such as Singapore and South Korea, it refuses to accept a path toward living with the virus.

“They are prisoners of their own narrative,” he recently told a Swiss news outlet.

China’s Covid measures have interfered with supply chains at 92 percent of the businesses responding to the chamber’s survey, which had 372 respondents. Lockdowns in dozens of cities and other measures have made China a less attractive place to invest for more than three-quarters of the businesses, it found.

Surveys of foreign businesses are among the few indicators of broader business sentiment in China on political issues. The Chinese government severely limits independent surveys on sensitive political issues, like the country’s current “dynamic zero Covid” policy.

Two-fifths of the European businesses surveyed are in or near Shanghai. An additional quarter are in or near Beijing, which was beginning to lock down some neighborhoods in the final days of the survey.

The overwhelming majority — 91 percent — of businesses responding to the survey said that China should focus less on lockdowns than on vaccinating its entire population. Older residents, particularly those over 80, are the least likely adults to be vaccinated in China, even though they are the most vulnerable to the virus.

The survey also found that 82 percent of respondents wanted China to allow people with mild cases of Covid or with no symptoms to recuperate at home. China requires those who are infected to move into hospitals or makeshift isolation facilities in convention centers or other large buildings.