European companies have urged the Chinese government under Xi Jinping to facilitate foreign investment in the country’s automotive industry in order to end the current price war in the electric vehicle (EV) segment, which “has made the market increasingly difficult for manufacturers” from the old continent.
The European Union Chamber of Commerce in China called on the Asian giant’s government on Wednesday in its 2024/2025 position paper to reconsider its trade attitude towards the EU bloc, as over 62% of automotive sector companies report that the excess capacity imposed by China on the global car market is a “problem.”
“Despite the challenges, the Chinese automobile manufacturing sector has continued to grow at a dizzying pace,” the Chamber of Commerce noted in its report while assessing the sector’s situation in light of the European Union and United States’ imposition of tariffs on Chinese EV imports.
Additionally, European companies express doubts about whether Xi Jinping has a credible plan to boost domestic demand in his economy or whether he will implement the financial reforms promised in recent years, which they believe reduces investment appetite in the country.
“We have reached a turning point, as investors are now examining their operations in China more closely as the challenges of doing business begin to outweigh the benefits,” said the organisation’s president, Jens Eskelund, adding that it is “much harder to make money in the Chinese market right now.”
In 2023, foreign direct investment flows from the EU to China fell by 29% compared to figures from the previous year, reaching 6.4 billion euros, according to data provided by the European Commission, in a context where profit margins have plummeted by more than two-thirds to match or fall below the average of other regions.
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