A foreign company is urging China to change direction regarding Covid

According to a survey released by the U.S. Chamber of Commerce in China on Monday, more than 50% of U.S. businesses have postponed or reduced investment in China due to the recent outbreak of Covid.

A survey conducted from April 29 to May 5, involving 121 member companies, also detailed the impact of the Shanghai prison on U.S. companies. The city is China’s financial center and has been under prison since the end of March.

As many as 58% of respondents lowered their revenue forecasts in China for 2022, more than 54% just one month ago. Nearly half said the likelihood of foreign workers is significantly lower or they don’t want to move to China because of the zero-covid policy.

“We understand that China has decided to prioritize health and safety above all else, but current action is stifling U.S. business confidence in China,” said Colm Rafferty, president of the chamber in China, in a statement accompanying the survey results.

“Our member companies are urging the government to strike a more optimal balance between pandemic prevention, economic development and opening up the country,” he added.

European companies are warning China

European companies are also concerned.

As many as 23% of European companies are considering shifting investment from China – the highest rate in a decade – compared to flash poll published by the EU Chamber of Commerce in China late last week.

“China needs to change its strategy,” said Jörg Wuttke, president of the European Union’s Chamber of Commerce in China, CNN Business said in a telephone interview.

“We’ve had two good years. But now is the time to act differently. Zero Covid may not be the right tool right now.”

Wuttke said most European companies were positive in January, as Covid’s strict Chinese approach at the time proved successful in curbing the spread of the virus and the economy grew.

But the highly contagious version of Omicron has put Beijing’s zero-covid policy under the greatest test, and mass closures have halted economic activity in major cities. According to the latest CNN calculations, at least 31 cities are in full or partial imprisonment.

In April, China’s huge service sector shrank at its second-fastest rate ever, as Covid’s closures hit small businesses hard. Its manufacturing sector has also shrunk sharply, causing the economy to decline.
China's economy is declining

“We have seen damage to our business,” Wuttke said, adding that companies are stopping investment because of what is happening in China.

A quick survey found that 78% of 372 respondents believe that China is a less attractive investment destination due to its Restrictions of Covid.

“What really harms the economy is the lack of visibility,” Wuttke said. “No one has any idea when this situation will change.”

“Chinese officials are painfully aware of the economic pain [caused by Covid policy]. But in fact, it is difficult to change the narrative, “he added.

Elvira Parkinson

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