Confidence among Chinese companies operating in the European Union has fallen to a six-year low amid political headwinds and rising costs, said a report on Wednesday.

Chinese firms rated the EU business environment at 61 out of 100 in 2025, down from 73 in 2019, according to a report released by the China Chamber of Commerce to the EU and Roland Berger, a consultancy.

Some 81 percent of respondents cited greater uncertainty, pointing to the politicization of commercial issues and a dense rollout of new rules that was described as a "compliance maze," it said.

Rising labour costs and political headwinds are creating "dual pressures" for Chinese enterprises in the EU, with labour costs now seen as the top challenge, followed by geopolitical complexity and shifting EU and member-state policies toward China, according to the report.

Over 40 percent of respondents said they had faced differential treatment linked to their Chinese identity, including longer approvals, fewer subsidy opportunities and limited dialogue with authorities, the report said.

The data also showed that nearly 90 percent of companies said the EU's "de-risking" and broader economic security agenda had negatively affected operations through tighter investment screening, higher market-entry barriers, and greater policy uncertainty, it said.

Despite the weaker sentiment, the performance of Chinese companies showed resilience. In 2024, 53 percent of surveyed companies reported higher revenues, and 40 percent said profits rose.

Looking to 2025, 62 percent expect revenue growth, and half plan to expand investment in the bloc, and none reported plans for a "significant reduction."

Nearly 3,000 Chinese-invested companies operated across all 27 member states by end-2024, employing more than 260,000 local staff, the report said.

"As the EU's Economic Security Strategy advances, Chinese companies face multiple hurdles, such as rising market access barriers, escalating compliance costs and increasingly complex review procedures," said Commerce Chairman Liu Jiandong in the report.

China-EU economic relations are evolving from "complementary interdependence" to "strategic co-shaping," calling for "rules-based dialogue" and practical cooperation in the green transition and advanced manufacturing, Liu said.

The report, drawing on four months of surveys and interviews with 205 Chinese companies and organizations, sets out 336 recommendations to foster a more open and predictable market and strengthen China-EU cooperation.