Lujiazui, a financial zone in Shanghai Photo: VCG

The European Union Chamber of Commerce in China on Tuesday published its Shanghai Position Paper 2023/2024, which called on China to restore foreign business confidence while stating that "As many aspects of the business environment disintegrated, business confidence among the international community in Shanghai dropped to an all-time low due to the continued complexity of the evolving COVID landscape and erratic implementation of local policies."

While we appreciate the 37 recommendations from the EU's business group on how Shanghai can transform itself into a regional economic focal point and world-leading innovation hub, it should be pointed out that at a time when global financial institutions and multinationals are scrambling to figure out how much China's economic recovery can affect their business and how they can benefit more from it, the report looks nothing but out-of-date. 

The report seems to have mostly focused on what had happened before China optimized its anti-COVID-19 response, and it lacks what the business community is currently interested in, that is, the outlook change of the Chinese economy over the past two months or the impact of such changes on foreign business confidence. 

Moreover, its citing of some facts suggest that the EU chamber doesn't seem to understand what is happening in China as well as one might think. For instance, it cited a figure from the Financial Times, claiming that "An increasing trend of Chinese companies making a strategic shift out of Shanghai can also be seen." But in 2022, a total of 60 multinationals set up regional headquarters and 25 foreign-invested research and developmet (R&D) centers were founded in Shanghai. By the end of 2022, Shanghai hosted regional headquarters for 891 multinational companies and 531 foreign-funded R&D centers.

At present, the US is trying to avoid slipping into a recession, the EU is looking for new impetus to improve its economic status, and only the Chinese economy is rebounding fast, offering certainty to the global economy. Under such circumstances, the attractiveness of the Chinese market to foreign investment is obvious. The fact that top executives from multinational companies like Volkswagen and Apple are returning to China is sufficient to indicate how business enthusiasm has returned to the Chinese market.

Moreover, the performance of the capital market also reflects business confidence in China. Data showed that in January, the amount that overseas investors pumped into A-shares via the Stock Connect program linking Shanghai, Shenzhen, and Hong Kong bourses totaled 141.3 billion yuan, marking the highest net inflow of northbound capital in history and surpassing the full-year net inflow for 2022. The figure represents global investors' positive outlook on China's economic growth and their confidence in the country's economic fundamentals.

Therefore, while the epidemic had certain impact on the Chinese economy, particularly when it comes to cross-border travel, it is important to note that the economic community has moved on and is looking forward to the dividends of China's economic recovery. This is because after the optimization of anti-COVID-19 response, China has committed to opening up the market wider and encouraging foreign investment by introducing new measures. 

For instance, last week, the Ministry of Commerce and the Ministry of Science and Technology rolled out a series of measures encouraging foreign investors to establish R&D centers in the country. Also, China's willingness to strengthen cooperation with Europe has not changed.

Perhaps the EU Chamber of Commerce should be looking more closely at how to take advantage of China's economic certainty to boost European companies' business in China, instead of whining about some out-of-date cliche.