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After Covid, US companies increasingly look beyond China

Parts of Shanghai face intermittent business restrictions due to Covid controls, even after two months of extensive lockdowns ended in June.

VCG | Visual China Group | Getty Images

BEIJING — Nearly double the number of U.S. companies that have cut investments in China this year compared to last year, the latest survey released Friday by the American Chamber of Commerce in Shanghai found.

In 2022, 19% of respondents said they would reduce their investment in China, up from 10% in 2021.

Covid-related shutdowns, travel restrictions and supply chain disruptions were the main reasons for doing so, according to survey respondents.

The American Chamber of Commerce in Shanghai said: “Confidence is shaken.

The Shanghai metropolis suffered one of China’s toughest lockdowns earlier this year, and the Chinese economy slumped with little growth in the second quarter. His 3.9% recovery in the third quarter brings year-to-date GDP growth to his 3%, well below the official target of about 5.5%.

Looking to Southeast Asia

The survey found that a third of respondents had redirected their planned investments in China to other destinations in the past year.

That’s almost double last year, according to the report, with Southeast Asia being the most popular destination, followed by the United States.

The study reveals that Southeast Asia attracts the majority of redirected investments, especially in technology, logistics and retail.

Read more about China on CNBC Pro

The survey had 307 respondents between July 14th and August 18th. This is before the latest export controls on the US semiconductor industry.

In the next one to three years, one retailer said it would move all production out of China, along with one manufacturing company, according to the report. Overall, the survey showed that nine companies have moved more than 30% of their manufacturing capacity out of China.

The majority of companies in the chemical, pharmaceutical, medical device and life sciences industries plan to continue operating in China, according to the report.

still relying on china

Beijing has stressed that it wants the country to focus more on higher-end manufacturing, but factories in more labor-intensive industries are moving to other countries where wages are lower.

But China remains an important supplier of US and EU products, according to a report from Allianz Research this month.

“This means that the US and Europe have more to lose in the extreme scenario of a complete severance of US-China and US-EU-China trade ties,” the report said. “The loss of critical goods costs the United States 1.3% of GDP, the EU 0.5% of GDP, and China 0.3% of GDP.”

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https://www.cnbc.com/2022/10/28/american-companies-increasingly-look-outside-of-china-after-covid.html After Covid, US companies increasingly look beyond China

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