NEW YORK-(MaraviPost)-American Chamber of Commerce in China survey shows 45 per cent of firms ranked China as a top-three investment priority in their near-term investment plans.
The American Chamber of Commerce (AmCham) in China said in its latest business survey on Wednesday that China is no longer considered by US companies as the primary investment destination. Photo: Xinhua
Restoring positive business sentiment towards China cannot be done overnight despite an end to zero-Covid, according to the American Chamber of Commerce (AmCham) in China, as a survey showed for the first time US businesses are less willing to invest in the world’s No 2 economy.
AmCham in China said on Wednesday that for the first time in the 25-year history of its Business Climate Survey, China was no longer considered by most of its member companies as a top-three market, amid growing concerns about the country’s policy uncertainties and bleak bilateral ties.
AmCham president Michael Hart said there is “a lot of work to be done” to restore American business confidence in China, especially as a strong sense of corporate hesitancy persists.
“When headquarters think about investment, China is no longer at the top of the deck. That means investments are going to other places,” Hart said.
“We’ve been telling the Chinese government that ending Covid zero was very important, but bringing back sentiment is not as easy as swooping a switch.”
Most members report that they are revising their investment plans for China, opting to make no additional investment or even to decrease investment overallAmCham China
Some 45 per cent of the 319 firms that responded to the survey, which was conducted between mid-October and mid-November last year, ranked China as a top-three investment priority in their near-term global investment plan, marking a significant shift from 60 per cent last year.
The proportion listing China as “one among many destinations” rose to 38 per cent from 29 in the previous survey.
Meanwhile, 45 per cent said China’s investment environment is deteriorating, rising sharply from 14 per cent in the previous survey to the highest level in the last five years.
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“Most members report that they are revising their investment plans for China, opting to make no additional investment or even to decrease investment overall,” the report added.
“Uncertainty around China’s policy environment, the expectation of slower economic growth in China, and overall uncertainty in the US-China economic relationship were cited by members as the top reasons for decreasing investment.”
Rising tensions between the US and China remained the top business challenge across all sectors, with optimism about bilateral ties at the lowest point since before the coronavirus pandemic.
But American companies are also facing human resource challenges, with more than half of the respondents saying that qualified expatriate candidates were unwilling to move to China – a sharp increase from 30 per cent in the previous year.
Although the survey did not assess how particular events like the prolonged citywide lockdown in Shanghai changed expatriate employees’ willingness to move to China, Hart said that the “lockdown in Shanghai was just a PR disaster”.
Although 74 per cent of respondents said they have no plan to relocate their supply chains, there was a 10 per cent increase in those who said they are considering or have already started to relocate manufacturing and sourcing outside China. This represents the first significant increase since the start of the coronavirus pandemic.
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Among the 24 per cent of members considering moving capacity out of China, one-third plan to move operations back to the United States, up 6 percentage points from 2021. This may be related to rising tensions in US-China relations, AmCham in China said.
“Senior level executives in China have found it challenging to … help [headquarters] understand that although China has slowed, and although US – China relations are not great, that there continue to be opportunities to invest here,” Hart said.
“China’s going to have to work on a campaign to allow folks to come back to look around to understand how important the China market is, and that there is a positive business environment for companies to operate.”
The report said that while the survey was conducted before Beijing abandoned its zero-COVID-19 policy, subsequent membership surveys conducted earlier this year substantiated the key findings of the report.