BEIJING (Reuters) – The proportion of European companies considering China for investments has fallen to a historic low, the European Chamber of Commerce in China (EUCCC) said on Friday, as it estimates it will take years to restore confidence in the world’s second largest economy.

The latest edition of the EUCCC Business Confidence Survey shows that China’s business outlook is also at its lowest level in the report’s 20-year history. More than a quarter of respondents say they are pessimistic about their current growth potential and 44% of them about future prospects.

Foreign companies feel less welcome in China than before, as the Asian giant’s economic growth faces difficulties.

European Commission President Ursula von der Leyen and French President Emmanuel Macron on Monday urged Xi Jinping, on a state visit to Paris, to ensure more balanced trade with Europe, but the Chinese leader did not made no major concessions during his visit.

“There are worrying signs that some European companies are compartmentalizing their operations or reducing their ambitions in China, as the challenges they face begin to outweigh the benefits of being here,” said EUCCC President Jens Eskelund.

According to the report, only 13% of companies currently view China as a preferred investment destination, compared to 16% in 2023 and 21% in 2022, the year when COVID-19 health restrictions were finally lifted.

The BASF, Maersk, Siemens and Volkswagen groups are among the members of the European Chamber of Commerce in China (EUCCC).

According to analysts, the pandemic and the real estate crisis have highlighted the limits of the Chinese development model.

“Companies continue to shift investments initially planned in China to other markets perceived as more predictable, more reliable and more transparent,” explains the EUCCC.

(Reporting Joe Cash; Diana Mandiá, editing by Kate Entringer)

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