Business confidence in China as a market has fallen to record low levels amongst US companies, primarily driven by disruption from Beijing’s zero-Covid policy.
51 percent of US companies expressed some degree of optimism about their five-year business outlook in China, according to a survey by the US-China Business Council (USSBC), down from 69 percent last year.
Around 96 percent of respondents said their business was negatively impacted by China’s Covid control measures with more than half pausing, delaying or cancelling their investment plans altogether in the country. 17 percent of firms said that investments worth over $50 million had been affected.
While China remains a top-five priority market for 77 percent of respondents, this has also fallen from 96 percent a decade ago. And just 6 percent said China is their top priority market, an all-time low.
Profit Dip
Although nearly 90 percent of companies said their China business was in the black in 2021, profits in the first seven months of 2022 fell 14.5 percent compared to a year ago. In addition to Covid-linked curbs and disruptions, companies also cited worries about geopolitical risks from US-China tensions and limited progress on breaking existing barriers, such as intellectual property protection, while new barriers are emerging.
«It is unclear if this pause in future capacity growth is another temporary blip or one point in a longer trend,» said USCBC president Craig Allen in a statement.
The survey was conducted in June and is based on responses from 117 member companies. USCBC is a private organization with over 270 American member companies.
