US firms rethink China investment on COVID concerns-business group survey
WASHINGTON: Strict COVID-19 control measures in China have overtaken sour US-China relations as the top concern of US companies in the country, a business lobby said on Monday (Aug 29).
It said more than half of its firms reported the issue as a reason to cancel or delay investments in the world's second largest economy.
"The looming possibility that companies will again be forced to partially halt operations due to lockdowns and the impacts of local controls on consumer demand have undermined confidence in the business environment," the US-China Business Council (USCBC) said based on an annual survey of 117 member companies.
China's economy narrowly avoided contracting in the second quarter as widespread lockdowns and the slumping property sector badly damaged consumer and business confidence.
Risks still abound as many Chinese cities, including manufacturing hubs and popular tourist spots, imposed lockdown measures in July after fresh outbreaks of the more transmissible Omicron variant of the coronavirus were found.
Most of the companies surveyed said negative effects of Beijing's COVID-19 measures were reversible, but 44 per cent said it would "take years to restore business confidence", USCBC said.
Those policies, continuing US-China tensions, and "significant market access barriers" in China despite government assurances of equal treatment of foreign companies, have led to "record levels of pessimism", affecting companies' decisions about supply chains and future investments, the group said.
In the past year, 24 per cent of companies have moved parts of their supply chains out of China, compared to 14 per cent in the 2021 survey. Optimism in five-year business outlook for China has dropped from 88 per cent in 2013 to 51 per cent in 2022.
Still "companies overwhelmingly remain profitable in China", USCBC said, with 63 per cent of respondents saying profitability increased in the last year.
COVID-19 travel restrictions, cybersecurity rules, cost increases, and US-China technology decoupling were also major concerns.
