A man has his swab sample taken for a test for the coronavirus disease (COVID-19) at a testing booth, in Beijing, China Oct 27, 2022. REUTERS/Tingshu Wang/File photo
SHANGHAI – Optimism among U.S. businesses in China has hit record low levels, an annual survey showed on Friday, as competitive, economic, and regulatory challenges compound the stresses already imposed by Beijing’s ongoing zero-COVID policies.
Just 55 percent of 307 companies surveyed by the American Chamber of Commerce in Shanghai and consultancy PwC China described themselves as optimistic about the five-year business outlook. The reading is the lowest in the survey’s 23-year history and worse than in 2020, when COVID-19 first surfaced, and during the trade standoff between Beijing and Washington in 2019.
In addition, about half of the companies said that their headquarters’ confidence in China’s economic management had fallen in the past year and that just 18 percent ranked China as number one in their company’s global investment plans, down from 27 percent last year.
The respondents surveyed between July 14 and Aug. 18 cited domestic competition as their top challenge for the next five years, followed by U.S.-Chinese tensions, economic slowdown and COVID-related travel curbs and lockdowns.
“What keeps a lot of businesses up at night is competition and rising competition from Chinese competitors,” Sean Stein, chairman of the chamber told a news conference.
He added that in the past chief rivals may have been state-backed Chinese rivals, but private digital players were increasingly dominant in the local market.
Beijing is exhorting its key industries to become more self sufficient especially as tensions with the United States grow over China’s policy towards Taiwan, its relationship with Russia and, more recently, U.S. efforts to prevent transfer of semiconductor technology to Chinese companies.
In addition, while many countries have eased coronavirus restrictions, China has continued to fight its spread with lockdowns, mass testing and quarantines, which has hit economic growth and caused significant disruption to businesses.
Stein said relaxing COVID policies would “absolutely” increase optimism, as travel curbs have “thinned the pipeline” of projects that overseas executives could help manage in-person, but warned that alone could not bring sentiment back to the past highs.
Still, the survey found that only 53 firms, or 17 percent, indicated that they were considering leaving in the next one to three years, as the market’s vast size, skilled talent pool, and robust supply chain made most businesses committed to China despite the challenges.