Why western companies are souring on doing business in China

Synopsis

Germany needs to reduce its gas usage to fill reserves by winter, according to economy minister Robert Habeck. In response to limited natural gas supply, Germany ramps up electricity production at coal power plants, which will increase carbon emissions. The country plans to introduce compensation for companies that lower gas usage. This situation arises after Russia announced a reduction in gas deliveries to Germany, which the German government claims is politically motivated. Meanwhile, China experiences a different energy scenario, with oil imports from Russia reaching a record high in May, increasing by 55 percent year-on-year. Chinese refineries benefit from discounted Russian oil amid Western sanctions related to the war in Ukraine. Despite good business conditions for EU firms in China last year, the mood shifts in April as many companies lower sales expectations due to geopolitical tensions and rising shipping costs, compounded by the closure of Chinese ports due to Beijing's zero-COVID strategy. By April, nearly a quarter of European firms express intentions to relocate investments from China.