German firms go cool on China expansion: survey

The poll found 57 percent of companies do not plan to expand next year, but are optimistic on their earnings outlook.

German companies in China are more optimistic about their earnings this year but are hesitant to increase investment on concerns over limited market potential, the German Chamber of Commerce in China said in a survey released on Friday.

Two thirds of respondents expect to exceed or achieve their business targets this year, up from 57 percent last year, according to the Business Confident Survey 2017/18, which received 423 responses.

It found 54.3 percent said China’s economy improved this year and a similar percentage expect the improvement to continue in 2018.

But 53 percent of respondents do not plan to increase investments year and 57 percent do not plan to expand next year.

Insufficient market growth expectations, parent company strategic business considerations, and regulatory concerns such as those over market access, investment protection and intellectual property rights were cited as top factors hindering investment expansion.

Companies said growing domestic consumption, improving rule of law and the increasing importance of markets are three most important economic reforms.

And one third of those surveyed see a positive impact from the ambitious Belt and Road Initiative on their future business.

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