54% of EU Company Executives Say Relations with China Will Worsen Further

More than half of European corporate executives expect relations with China to worsen in the future due to trade wars, geopolitical risks, and other factors. Only 7% anticipated an improvement.

The European Round Table of Industrialists (ERT) released the results of this survey on the 29th (local time). According to the survey of corporate executives, 54% said relations with China would deteriorate within the next three years. 39% expected no change, and 7% anticipated improvement.

When limited to CEOs of Western multinational companies based in China, a relatively more optimistic outlook was observed. Among respondents, 35% expected relations to worsen, 45% expected no change, and 19% anticipated improvement.

In particular, European corporate executives viewed the relationship between the US and China as having a significant impact on relations between Europe and China. In this survey, 54% of respondents identified the five major friction points in the US-China relationship. China's industrial overcapacity and de-risking were also pointed out as areas causing friction between the two sides.

Jakob Wallenberg, Chair of the ERT Trade and Market Access Committee, stated, "As US-China tensions escalate, new complexities are increasing in global trade," adding, "One of the challenges facing the next European Union (EU) leaders is to successfully adjust trade policies to navigate geopolitical tensions."

European corporate executives diagnosed that the overall business environment is improving as economic sentiment improves. Business confidence reached its highest level since May 2022.

There were also many calls for urgent regulatory improvements. In this survey, as many as 91% of respondents said that improving the regulatory environment was the most effective strategy for restoring competitiveness. In a survey conducted last fall, complex and inconsistent regulations were also identified as the biggest factor undermining Europe's competitiveness.

Additionally, 73% of executives evaluated that measures to advance the integration of the EU single market positively impact strengthening Europe's competitiveness. 71% of respondents expected that further measures to encourage innovation and technological leadership would further enhance Europe's competitiveness. Furthermore, industry support for progress on climate goals and preparations for digital transformation were identified as necessary.