US business sentiment in China hits record high as zero-COVID persists

By Josh Horwitz

SHANGHAI, Oct 28 (Reuters) – U.S. business optimism in China has reached record highs, an annual survey showed on Friday, as competitive, economic and regulatory challenges add to strains already imposed by ongoing zero-COVID policies. from Beijing.

Only 55% 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 emerged, and during the trade standoff between Beijing and Washington in 2019.

In addition, around half of companies said their headquarters’ confidence in China’s economic management had fallen over the past year and only 18% ranked China as the top global investment plan. of their business, up from 27% last year.

Respondents between July 14 and August 18 cited domestic competition as their top challenge for the next five years, followed by US-China tensions, the economic downturn, and COVID-related travel restrictions and lockdowns.

“What keeps many companies awake at night is competition and growing competition from Chinese competitors,” chamber chairman Sean Stein said at a press conference.

He added that in the past, the main rivals may have been state-backed Chinese rivals, but private digital players were increasingly dominant in the local market.

Beijing is urging its key industries to become more self-sufficient, especially as tensions with the United States rise over China’s policy towards Taiwan, its relationship with Russia and, more recently, US efforts to prevent the transfer of semiconductor technology to Chinese companies.

Additionally, while many countries eased coronavirus restrictions, China continued to fight its spread with lockdowns, mass testing and quarantines, which hurt economic growth and caused significant disruption. for companies.

Stein said easing COVID policies would “absolutely” increase optimism as travel restrictions have “narrowed the pipeline” of projects that foreign leaders could help manage in person, but warned that alone could not. not bring sentiment back to past highs.

Yet the survey found that only 53 companies, or 17%, said they planned to leave in the next one to three years because the vast size of the market, the pool of skilled talent and the chain of robust supply has prompted most companies to engage in China despite the challenges. (Reporting by Josh Horwitz Editing by Tomasz Janowski)

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