US companies in China no longer see China as a major investment destination

US companies no longer see China as a major investment destination in the past, and for the first time in 25 years China no longer sees it as a top three market revealed in an annual survey.

Most of the respondents surveyed by China’s American Chamber of Commerce (AmCham China) are pessimistic, given the overall outlook for revenues and profits in 2022, the Chinese economy, the investment and business environment, and the future of US-China relations. It is said that

According to the 2023 China Doing Business Survey released Wednesday by China’s American Chamber of Commerce (AmCham China), only 45% of US companies surveyed see China as a major investment destination or a top three investment destination. , which is the biggest drop. in his 25-year history of investigation.

“A year ago, 60% of people said China was either their top priority or their top three priorities, but this year that is changing,” Michael Hart, president of Amcham China, told a press conference on Wednesday. “It’s down to 45%,” he said.

The survey was conducted from October 16 to November 16 last year, before Beijing lifted its strict zero-coronavirus policy, but Amcham China conducted a flash survey in February, We monitored changes as China emerged from lockdowns and other restrictions.

VOA sent an email to the Chinese embassy in Washington seeking comment, but it was not published in time.

Factors affecting planning

Executives from 319 American multinational companies participated in the survey, accounting for approximately 47% of all AmCham China member companies. Fifty-five percent of respondents reported that they have no plans to increase or decrease their investments in China operations in 2023.

According to Hart, factors that color the findings include the impact of the three-year pandemic and severe lockdowns, the difficulty of Americans traveling for business, problems with supply chain disruptions, and an overall weak business environment.

Affected by the COVID-zero lockdowns, 68% of American businesses participating in the survey predicted that their 2022 revenues could be the same or lower than 2020. COVID was first reported in humans in late 2019 in Wuhan, China.

Hart said most member companies have started investing in other countries and establishing alternative production lines to spread the risk. Especially since last year’s 20th National Congress of the Communist Party of China, their overall trust in China has started to decline. At that time, the Chinese government debated setting up state-owned enterprises in various industries, with 65% of American businessmen questioning China’s commitment to continued foreign investment.

Of AmCham China members surveyed, 49% say they feel less welcome than they did a year ago. In the consumer sector he rises to 56%.

However, when asked if they were planning to exit China, 74% of US companies said they would not consider moving manufacturing or sourcing outside of China. % left on the fence.

warning sign

According to AmCham China’s research, the increase in companies considering or considering relocating is a notable warning sign.

Amcham China Chairman Colm Rafferty called on the US and Chinese governments to tackle the challenges facing the foreign business community. He addressed Wednesday’s press conference via pre-recorded video.

“The last year has been particularly challenging for our member companies as they deal with China’s economic slowdown, COVID-zero control measures, and continued efforts to ensure compliance with various new US and China-related regulations,” said Rafferty. It was a great year,” he said.

Research shows increasingly strained US-China relations are far ahead of COVID-19 precautions, inconsistent regulatory interpretations, unclear laws and enforcement, rising labor costs and regulatory compliance risks. for the third year in a row, surpassing the challenges faced by US businessmen in China. .

In addition, US business people are pessimistic about the future development of US-China relations. 46% of those surveyed believe that relations between the two countries will continue to deteriorate, and as many as 72% feel political pressure from both governments, violating commercial activities and sometimes making political statements. I am asking you to put it out.

For the first time, tensions between the US and China have affected the hiring progress of US companies. The survey found that 51% of his members reported that eligible employees did not want to be transferred to China. This could also be related to China’s strict anti-pandemic measures.

Wang Zhangcheng, a professor of human resource management at Guangzhou University of Science and Technology, said that the tensions in US-China relations may affect the employment choices of Chinese employees, but most workers consider US-China relations told VOA Mandarin that he would make the employment choice without

He said a minority of Chinese workers may refuse to work for foreign companies or use foreign products because they believe patriotism trumps livelihood.

Geopolitical impact

Chinese economist He Jiangbing, who lives in central China’s Hubei province, told VOA Mandarin that the findings reflect geopolitics, such as the war in Ukraine and tensions over Taiwan.

He said China’s tightening controls over foreign and private firms would not help attract investment. He predicts that the pace of economic decoupling between the US and China could accelerate in the future.

“Overall, the business environment will get worse and not get better,” he said. “Personally, I don’t expect this trend to reverse in the next five to 10 years.”

Adrianna Zhang contributed to this report.