Confidence among European businesses operating in China is showing "signs of an uptick", according to a report released on Wednesday by the European Union Chamber of Commerce in China and consultancy firm Roland Berger.

China remains "the heavyweight champion of efficient and cost-effective supply chains", with 75 percent of respondents saying their China-based production is more efficient than operations elsewhere, according to the European Business in China Business Confidence Survey 2026.

The report noted that China has a dynamic research and development ecosystem and is highly competitive, with 48 percent of respondents saying Chinese firms in their industry are now more innovative than their European counterparts, compared with just 24 percent who favor European firms.

Around 60 percent of respondents said their industry offers a fair competitive environment, up 4 percentage points from the previous year.

The proportion of companies reporting optimism over their profit outlook for the next two years rose to 17 percent, a 5-percentage-point increase from the historic low recorded in the 2025 survey. At the same time, the share of firms with pessimistic outlooks fell by 13 percentage points.

For the first time since China optimized its COVID-19 response measures, there are "signs of an uptick in business confidence", said Jens Eskelund, president of the European Chamber.

Denis Depoux, global managing director of Roland Berger said "business confidence among European companies in the Chinese market may be approaching a potential turning point".

"We are seeing EU companies actively adapting to China's dynamic business environment, as China is not only a market full of opportunities but has also become an indispensable source of innovation for their global operations," Depoux said.

"Improved international dialogue, particularly with the US, offers slightly more clarity and certainty for investment and business decisions," he said.

"European companies should therefore build resilience and agility into their strategies, while harnessing China's innovation, cost and speed, as this complex dynamic is not likely to change overnight."