American firms more and more look outdoors of China after Covid

BEIJING — Practically twice as many U.S. firms reduce their funding in China this yr versus final yr, the American Chamber of Commerce in Shanghai present in its newest survey, launched Friday.

For 2022, 19% of respondents stated they have been reducing funding in China, up from 10% in 2021, the report stated.

The highest causes for doing so have been Covid-related shutdowns, journey restrictions and provide chain disruptions, survey respondents stated.

“Confidence has been shaken,” the American Chamber of Commerce in Shanghai stated.

The metropolis of Shanghai suffered one of many harshest lockdowns in China earlier this yr, dragging down the nationwide financial system within the second quarter with barely any progress. A bounce of three.9% within the third quarter introduced year-to-date GDP progress to three% — effectively under the official goal of round 5.5%.

One-third of respondents redirected deliberate China investments to different locations previously yr, the survey discovered.

That is almost twice the quantity final yr, the report stated, noting Southeast Asia was the preferred vacation spot, adopted by the U.S.

Southeast Asia attracted nearly all of redirected funding, particularly in tech, logistics and retail, the survey discovered.

The survey had 307 respondents between July 14 and Aug. 18, earlier than the newest U.S. export controls on the semiconductor business.

Over the following one to 3 years, one retail member stated it was transferring all manufacturing out of China, together with one manufacturing firm, the report confirmed. In all, the survey confirmed 9 companies moved greater than 30% of their manufacturing capability out of China.

The overwhelming majority of firms within the chemical compounds, pharmaceutical, medical gadgets and life sciences industries deliberate to maintain operations in China, the report stated.

Beijing has emphasised it desires the nation to focus extra on higher-end manufacturing, whereas factories in additional labor-intensive industries have been transferring to different nations the place wages are decrease.

However China stays a vital provider for extra U.S. and EU items than the opposite method round, in line with an Allianz Analysis report this month.

“Which means, in an excessive state of affairs the place US-China and US-EU-China commerce relations are fully reduce off, the US and Europe have extra to lose,” the report stated. “The lack of vital provides would value 1.3% of GDP for the US and 0.5% of GDP for the EU, however 0.3% of GDP for China.”