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Chinese and American flags fly near the Bund, before the US trade delegation meets their Chinese counterparts for talks in Shanghai, China, July 30, 2019.
Aly’s song | Reuters
BEIJING – A record proportion of American companies in China are accelerating their plans to relocate manufacturing or sourcing, according to a business survey released Thursday.
About 30% of respondents considered or initiated such diversification in 2024, surpassing the previous high of 24% in 2022, according to annual surveys by the American Chamber of Commerce in China.
That also surpassed the 23% turnout reported for 2017, when U.S. Pr. donald trump He began his first term and began raising tariffs on Chinese goods.
In addition to tensions between the United States and China, “one of the biggest impacts we’ve seen in the last five years was Covid and how China isolated itself from the world because of Covid,” said Michael Hart, president of AmCham China based in Beijing. , he told reporters on Thursday.
“That’s been one of the biggest triggers as people realized they needed to diversify their supply chains,” he said. “I don’t see that trend slowing down.”
China has restricted international travel and locked down parts of the country during the Covid-19 pandemic in a bid to restrict the spread of the disease.
While India and Southeast Asian countries remained the most popular destination for relocating production, the survey showed that 18% of respondents considered moving to the US in 2024, up from 16% the previous year.
Most American companies were not planning to diversify. Just over two-thirds, or 67%, of respondents said they were not considering relocating manufacturing, a drop of 10 percentage points from 2023, the survey showed.
AmCham China’s latest survey covered 368 members from October 21 to November 15. Trump was re-elected president of the United States on November 5.
Trump stated this week plans to increase tariffs on Chinese products by 10%and said the tariffs could go into effect as soon as February 1. This follows an increasingly tough US stance towards China. The Biden administration had emphasized that the United States competes with China and issued broad restrictions on the ability of Chinese companies to access high-end American technology.
More than 60% of respondents said tensions between the United States and China would be the biggest challenge to doing business in China in the coming year. According to the survey, competition from local state-owned enterprises or private Chinese companies was the second biggest challenge for U.S. companies operating in China.
Slower economic growth
Adding to geopolitical pressures, growth in the world’s second-largest economy has slowed, with consumer spending subdued since the pandemic. In late September, Chinese authorities began stepping up efforts to stimulate growth and halt the decline in the real estate sector.
For the third year in a row, more than half of AmCham China respondents said they made no profits in the country, adding that the region had become less competitive in terms of margins against other global markets.
The proportion of companies no longer listing China as a preferred investment destination rose to 21%, doubling from pre-pandemic levels, according to the survey.
Looking ahead, however, technology, industrial and consumer companies said they viewed domestic consumption growth as the top business opportunity for 2025, according to the survey. Service companies said their main opportunity was Chinese companies looking to expand abroad.
Hart noted that many members are still optimistic about Chinese consumers as a “sizable and important market.”
