As tensions between the EU and China rise, European companies are turning to Southeast Asia for investment. This trend will likely continue, despite Beijing relaxing its strict Zero-COVID policy.

Following street protests in late November, Chinese authorities dismantled most lockdown and testing restrictions, and from this month visitors to China will no longer need to endure arduous quarantines.

It is perhaps good news that Beijing is moving away from its zero-COVID policies but “the die is already cast” on decoupling from China and diversifying supply chains, according to Chris Humphrey, executive director of the EU-ASEAN Business Council, which represents European businesses in Southeast Asia.

“Southeast Asia has been seeing the benefit of this with increased inflows of foreign direct investment, and I do not see the recent moves by China changing that trend,” he added. “For many businesses, China is now being run as a discreet market, whereas Southeast Asia is being seen as a part of a larger global or Asian operation.”

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