A woman is tested against covid in Beijing (China) on Tuesday. THOMAS PETER (REUTERS)
In 2020, with the outbreak of the pandemic, China and the EU took two different paths.
The result has caused the coexistence of two alternative presents: while in one coexists with covid, in the other the communist government of the People's Republic tries to keep the infections of the known virus with the fastest spread in history to zero.
That gap, coupled with the geopolitical turmoil in Ukraine and Taiwan, in addition to the growing control of the business environment by the all-powerful Chinese state, is causing a "loss of business confidence" and opening the door for "other emerging markets" to fill that "void", according to a study by the EU Chamber of Commerce in China presented this Wednesday in Beijing.
This institution, which represents more than 1,800 community companies in the Asian giant, is concerned about the drift after more than two and a half years of almost total closure of the country.
Its directors, many of them personally and professionally affected by the isolation, immediately talk about the adventures and misadventures caused by the zero covid policy.
To any newcomer to China they extend their hand with: "Welcome, how brave!".
The normal thing, these days, is not to arrive, but to flee from China.
And from this organization they warn that it is very likely that nothing will change until the end of 2023, which will generate an even more “challenging” ecosystem for business.
"How is it possible that China, architect of the greatest episode of growth in history, loses its attractiveness as an investment destination so quickly?" asks the study.
“We do not see an exit strategy”, lamented Jörg Wuttke, president of the Chamber of Commerce, during the presentation of the document.
"China's estrangement from the rest of the world - embodied by the restrictions imposed by its covid-19 policy - indicates that, for the time being, ideology prevails over the economy," the report asserts.
“While China once shaped globalization, the country is now seen as less predictable, less reliable and less efficient.”
The consequences could be severe economically.
In the “worst case scenario” imagined by this body, “China's predictability, reliability and efficiency will continue to erode;
European companies would have to continue evaluating their future investments and operations in China;
divergent [trade] systems would be created—one to serve China and one for the rest of the world—slowing innovation and causing costs to rise.”
The trend would in turn generate a greater number of countries seeking self-sufficiency, "undermining globalization."
The report projects the cost for the Asian giant of not following the path of "opening and reform" undertaken in the late seventies by Deng Xiaoping, under whose premise a poor country connected to the world, generated unprecedented development and achieved access in 2001 to the World Trade Organization.
In this scenario of reforms, says the study (which borrows from the World Bank), China would reach a per
capita
GDP of 55,000 dollars in 2050 (an amount almost equivalent in euros);
to go the other way, it would stay at just over $33,000.
"Is China willing to sacrifice $22,000 on the altar of self-sufficiency?" asks the EU Chamber of Commerce.
Part of the doubts could be cleared soon.
The holding of the 20th Communist Party Congress, the major five-year political event in which President Xi Jinping is expected to be re-elected for an unprecedented third term, will be a key moment for decades to come.
"China is at a critical juncture," according to the report.
"The decision on how to act to reach your full economic potential is in your own hands."
Relaxation of measures
Many analysts estimate that the relaxation of the anticovid measures will begin after the congress, which starts on October 16, which would alleviate problems such as the flight of foreigners.
The exodus is of enormous proportions and the study reflects the loss of talent, the growing abyss in business relations, the increasingly insurmountable distance between the Chinese teams and the headquarters of the companies that it entails.
The leak also feeds the growing human distrust and also sneaks into politics, and generates "risks for business": there is the recognition of China as a "systemic rival" by the European Commission or the growing global concern about violations of human rights in Xinjiang.
The Chamber believes that further exchange would help ease tensions.
The number of Europeans living in China today is half what it was before the pandemic.
"The current population," he adds, "would not fill Beijing's Bird's Nest [the 80,000-capacity venue for the 2008 Olympics] and this figure could be halved again by the end of the summer of 2022." ″.
And this has effects in terms of investment, according to Wuttke: “People want to see where they put their money.
It's like buying a second hand car.
You don't do it
online
."
Or in the words of a multinational executive quoted anonymously in the study: “Company headquarters are increasingly reluctant to contribute or invest in China, as they have less and less understanding of the country.”
But it also has a perverse and potentially dangerous derivative: the lack of exchange at all levels (students, businessmen, workers) generates a lack of understanding and this explains why the growing anti-Chinese sentiment has reached all-time highs in 2022, says the study, which takes as reference data from Pew Research Center.
The reverse is also true, according to Wuttke, citing official Chinese media studies in which young Chinese show a less favorable view of Europe.
"A real distancing is taking place," according to Wuttke, who concluded the presentation with a recent highly publicized episode in the Asian country, "nonsense," she said, with overtones of "xenophobia."
In this context, last Saturday, after the first case of monkeypox was detected in China, the chief epidemiologist of the Chinese Center for Disease Control and Prevention asked the population to avoid "direct skin-to-skin contact". with foreigners and newcomers from abroad (he later corrected his words).
"Doing this does not help", has closed the president of the Chamber of Commerce.
“This type of slip has a great impact on the way foreign countries look at China and the way China projects itself”, and has urged the Chinese authorities to “watch the language” with the aim that “science prevails”.