Shanghai Lockdown Scars US Firms Confidence: Chamber of Commerce

American firms in China are worried about the risks of travel curbs and supply chain disruptions because of the lengthy Covid lock-up in Shanghai.

According to the American Chamber of Commerce in Shanghai, only 30% of companies increased investment this year, down from 38% in the previous year. Almost 20% of the companies said that they had cut investments in China this year due to Covid-related reasons, while a third of the companies said that they had already shifted their investment plans to other countries.

The survey shows how difficult it is for American companies to do business in China. The Covid Zero policy, which has undermined economic growth and prospects for profits, is one of the reasons why the predictability of doing business in the country has been shattered.

Eric Zheng is the president of the American Chamber of Commerce in Shanghai. To restore business confidence, China should shift to a more sensible approach to managing Covid based on a reasonable balance between public health and the economy.

When asked if they were optimistic about China's five-year business outlook, only 45% said they were.

Only 53 firms said they were considering moving operations out of the country in the next three years, with uncertainty about US-China relations being the top reason.

The majority of the city's population was confined to their homes for at least 60 days in the spring. Businesses in the city and the surrounding provinces were forced to close and the national economy was stagnant because of that experience.

Meet the US analyst who was able to visit China.

The chamber surveyed its members earlier this year during the early days of the lock down and found that curbs were affecting their ability to attract or retain skilled foreign staff.

The population is still getting over the trauma of two or three months locked down, according to Scott Kennedy. Foreign executives who have lived and worked in China may have lost confidence in the area because of that experience.

Confidence in China's economic management has deteriorated among American firms. Revenue expansion is expected to be the lowest in over a decade.

China's appeal to foreign venture capital executives and senior multinational company executives was hampered by the fact thatHeadquarters' executives were unwilling to travel to China.

According to the report, large multinational companies are more optimistic about their prospects in China than smaller firms are. A recent study shows that almost 80% of European investment into China over the last three years came from just 10 firms.

The economy of China rebounded in the third quarter, but Shanghai is still feeling the effects of the lock down. The national gross domestic product grew 3% in the first nine months of the year, but the city's economy shrank.

Foreign industrial firms saw their profits fall in the first nine months of the year. The increase for Chinese state-owned companies was 3.8%, but that was an improvement over earlier in the year.

The rise in inbound foreign direct investment in the first nine months of this year is not representative of the flow of money from foreign countries.

According to Sean Stein, the chairman of AmCham Shanghai, the impact of Covid Zero policies on business confidence is "sobering", but they are only partly to blame for the rise in concern about companies' prospects.

There is a lack of transparency in terms of government regulation and intellectual property protection. Foreign firms can and will leave China if it becomes less competitive for investment.

JohnLiu and April Ma assisted.