Northern European investment in China remained unchanged despite a dip in investor sentiment during the six months leading up to September 2014, according to Scandinavian bank SEB. The institution’s bi-annual China Financial Index, which surveys economic expectations of Nordic companies in China, fell to 58.7 from 61.4 in March. A level of more than 50 signals a general positive sentiment.
“While overall FDI into China fell in the past couple of months, companies in this survey say they will continue to invest in line with earlier plans,” SEB country manager Fredrik Hähnel said.
The findings were not all positive, however, as the proportion of survey respondents who believe business conditions to be 'not so favourable' increased to 20% from 6%. Such tempered optimism is consistent with market expectations of a GDP growth slowdown alongside monetary easing as China’s industrial production figures fell to 6.3% in August 2014, the lowest level in six years, and inflation continued to decline.
The report identified the falling demand for products, customers' ability to pay, and foreign exchange rate risks as the central concerns of the 50 German and Scandinavian firms surveyed. Nonetheless, the SEB report concluded that northern European companies remain committed to their long-term investment in China, adjusting to less positive conditions by cutting back on salary increases and recruitment plans.