SHENZHEN, China (Reuters) – European businesses in China are awaiting the next wave of disruption from COVID-19 outbreaks and see little chance of improvement until the country increases vaccination rates, the European Chamber of Commerce in China said on Monday.

Shanghai has set out plans to end its COVID lockdown that has lasted more than six weeks, hitting China’s economy, where industrial output and retail sales fell in April at the fastest in more than two years, missing expectations.

But even if Shanghai’s lockdown is lifted next month, restrictions on the overseas travel of mainland citizens and the risk of further Omicron flare-ups are creating uncertainty, Chamber representatives from across China said during a roundtable.

“The outlook is quite gloomy,” said Bettina Schoen-Behanzin, the chamber’s vice president. “Business confidence has really taken a severe hit due to the ongoing erratic policies of the Shanghai lockdown.”

“Many companies and individuals are seriously considering their China presence.”

China says its zero-COVID approach is necessary to prevent the country’s health resources from being overwhelmed.

Jorg Wuttke, the chamber’s president, said it was highly unlikely that China’s COVID problems would be resolved in the second half of the year, given the high transmissibility of the Omicron variant.

“When is China going to have a massive vaccination campaign or even operate a vaccination mix in order to create an environment where you don’t have to lockdown because people have a certain amount of herd immunity?,” he said. “We don’t see any of that at this stage.”

Foreign businesses were also shocked by the National Immigration Administration’s announcement last week that it would “strictly limit” unnecessary overseas travels by Chinese citizens to minimize the risks of a resurgence in COVID-19 cases, he said.

“It’s very ironic that we’re striving to localise our management but then the management can’t travel to our headquarters,” Wuttke said.

(Reporting by David Kirton. Editing by Jane Merriman)