European CEOs Predict Deteriorating Relations with China

A recent survey conducted among CEOs of European companies indicates a prevailing expectation of deteriorating relations between Europe and China within the next three years. The survey, conducted by the European Industry Roundtable (ERT), which includes leaders from major companies like ASML and Unilever, highlights concerns over several contentious issues, including the EU's risk reduction strategy and China's close ties with Moscow.

According to the survey findings, a majority of CEOs (54%) anticipate a worsening of EU-China relations, while only a small percentage (7%) foresee improvement. Notably, while China-based CEOs of Western multinationals expressed more optimism, both groups identified de-risking, aimed at reducing EU dependency on China, as a significant point of friction.

China's evolving partnership with Moscow is also viewed as a key risk factor by CEOs, particularly those based in China. Moreover, concerns persist over China's relations with the United States and its industrial overcapacity, which are expected to contribute to future tensions in EU-China relations.

Despite these apprehensions, the survey indicates a generally positive outlook among European CEOs, with optimism levels reaching their highest since May 2022. However, this optimism is primarily driven by economic prospects outside of Europe, rather than within the continent.

Looking ahead, CEOs anticipate that the new EU leadership, expected to emerge following the European Parliament elections in June, will have a significant positive impact on Europe's economic prospects. They hope for simplified regulations and the completion of the EU single market as key drivers of economic growth within the region.