On Wednesday, a European business group stated, the COVID-19 pandemic has exacerbated already worrisome trends in doing business in China midst slowing revenue growth, regulatory hurdles and the clout of state-backed businesses.
According to the results of the survey, 50% of respondents said, revenues from mainland China, have risen by only 5% since last year. This is the lowest rise in a decade, said the European Union Chamber of Commerce in China.
The business group had conducted the survey in China in February and involved 626 respondents.
Following draconian lockdowns to control the coronavirus which emerged in Wuhan, China’s economy shrank by 6.8% during the first quarter. Beijing has avoided to set a growth target for the full year.
“The full extent of the negative impact from COVID-19 on revenue growth remains unclear, but the trend is undeniably bleak,” said the report. Small and medium sized companies, including those in the petroleum, chemicals, construction, automotive, and logistics industries, are most likely to have seen falls in the growth of revenue and earnings before interest and tax in 2019, said the report while adding, these companies are among those which have been hit hardest by the coronavirus.
The report states, small “incremental” improvements to China’s regulatory environment were seen in 2019 while 44% of those surveyed expected obstacles to increase over the next five years.
Further, nearly 50% of respondents expected China’s powerful state-owned companies, which are the primary source of complaints by foreign businesses, to gain opportunities at the expense of the private sector in 2020.
“The COVID-19 outbreak looks likely to further exacerbate this problem, with the government now turning to SOEs as a source of stability in uncertain times, which can only be achieved by draining yet more resources from the private sector,” said the report in reference to China’s state-owned enterprises.