China Market
Confidence in the China market falters amid COVID-19 restrictions, geopolitical tensions: Survey
Washington/Beijing: Optimism about the future business outlook in China has dropped to a record low according to an annual membership survey from the US-China Business Council, an organization representing more than 270 US companies that do business in China.
That said, companies continued to report strong performance metrics for the last year, with 89 percent saying their China operations are profitable.
China’s COVID-19 containment strategy now poses the top challenge to businesses.
Ninety-six percent of companies were negatively impacted by China’s COVID-19 control measures and more than 50 percent say their investment plans were paused, delayed, or canceled as a result.
US-China relations continue to rank among companies’ top challenges, along with Chinese policies on issues ranging from data, personal information, and cybersecurity to government procurement and intellectual property.
As a result, the pace of planned new investment by American companies in China is expected to slow next year.
However, this may be similar to what occurred in 2020, when companies paused investment temporarily before bouncing back quickly in 2021 once life in China returned to normal after its initial COVID-19 outbreak.
“It is unclear if this pause in future capacity growth is another temporary blip or one point in a longer trend. We certainly see the Chinese government taking steps to prevent a repeat of the Shanghai lockdowns, but the current strategy still leaves a significant amount of uncertainty,” said USCBC President Craig Allen.
“Longstanding challenges with Chinese industrial policy continue, while relatively newer concerns are cropping up and intensifying, such as those related to US-China geopolitical tensions and data security policy, both of which contribute to technological decoupling fears,” he said. “That would not be in anyone’s interest.”
“We worry that the economic relationship, which helps stabilize the overall relationship, isn’t being properly prioritized. At tense times like these, we should capitalize on any opportunity for stability, and USCBC urges both countries to build upon the hard-earned commercial progress achieved over the last several decades and address outstanding barriers to doing business in China.”
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