- European firms scale back in China due to overcapacity, low margins, and economic headwinds.
- Singapore business sentiment hits new low, with 40% expecting worsening conditions.
- Germany and France economic data suggest weak domestic demand and slow recovery.
European companies operating in China are increasingly cautious as the local economy slows, and intense price competition erodes profitability. The European Union Chamber of Commerce’s latest survey shows a marked decline in business confidence, driven by oversupply in sectors like electric vehicles and waning domestic demand.
In parallel, Europe is showing signs of stagnation. With German import prices expected to fall further and French consumer spending barely rebounding, there’s a clear signal of weak demand in key economies.
Pessimism Grows in Global Markets as Firms Brace for Economic Headwinds
Singapore’s latest National Business Survey reflects growing anxiety among companies, with 40% expecting worsening economic conditions over the next year. This marks a sharp increase from just 22% in the previous quarter, with both SMEs and large enterprises expressing concern. The hospitality and retail sectors, in particular, are bracing for tough times ahead.
Meanwhile, the Chinese economy continues to underperform due to a lingering real estate crisis and sluggish consumer activity. Overcapacity in industries such as EVs—fueled by aggressive government subsidies—has triggered price wars, squeezing margins and prompting firms to seek opportunities abroad instead of locally.
This strategy of outward expansion has strained China’s trade relations, especially with the European Union. Accusations of unfair trade practices have led to tariffs, notably on Chinese EVs, adding pressure on diplomatic and business ties. European firms now see China more as a competitor than a growth partner.
Economic data from Germany and France reflect a broader malaise in Europe. Falling import prices in Germany and weak GDP growth in France point to subdued economic activity. Businesses are cautious, not only due to external risks from China but also due to internal issues like labor costs, inflation uncertainty, and energy prices.
As global demand cools and competitive pressures rise, businesses across Asia and Europe are adjusting their outlooks downward, signaling a more defensive stance for 2025.
“The benefits of the bilateral trade and investment relationship are not being distributed in an equitable manner.”
— Jens Eskelund, President, EU Chamber in China
