Here is Why More and More American Firms Are Leaving China
According to a study issued Monday by the American Chamber of Commerce in China, the number of respondents reporting an impact from Covid restrictions increased by 4 percentage points to 58 percent between late March and late April.
Foreign investment in China is projected to reduce dramatically in the next years, according to AmCham China President Michael Hart, because people are unable to simply access the country and develop projects. According to a recent study, 53% of respondents stated they would limit investment in China if Covid regulations continue for the next year. As Covid restrictions drag on, more US firms in China are lowering revenue projections and plans for future investment.
While this isn’t a substantial rise, Michael Hart, AmCham president, said that 4 or 5 percentage points each month could be “quite significant” if Covid limits are maintained for another five months.
Investment Leaving China
When asked what impact Covid limitations would have if they lasted another year, more than 70% of respondents claimed they would lose income or profit. The most recent research, which took place between April 29 and May 5, looked at 121 firms with operations in China. The newest Covid limitations in Beijing were imposed within that time. I foresee a significant drop in investment in China in two, three, or four years since no new projects are being planned and people can’t come in and look at space. The last study was done in late March with AmCham Shanghai, just as Shanghai’s original plan for a two-part lockdown was getting underway. These restrictions have persisted significantly longer than the first week.
Beijing has ordered all non-essential enterprises in a key commercial center to close temporarily or have their employees work from home in the previous several days, postponing school reopening until further notice. “Only a few elements of the economy appear to be operating,” one survey respondent stated in the study, which did not reveal the respondent’s name or region.
