Stock Groups

US businesses in China cut revenue forecasts, investment plans

[ad_1]

For truck drivers to be able to transport goods within China, they must usually pass a valid virus test, as shown here in Shanghai, in April. According to the American Chamber of Commerce in China, members reported different implementations of Covid controls depending upon where they live and what provinces they were in.

Getty Images| Visual China Group | Getty Images

BEIJING — More U.S. businesses in China are cutting revenue expectations and plans for future investment as Covid controls drag on, a new survey found.

According to a Monday survey by the American Chamber of Commerce in China, 58% of those surveyed reported an effect from Covid restrictions between late March and April.

Although it’s not much, an increase of 4 to 5 percentage points per month may be significant if Covid controls continue for five more months, Michael Hart (AmCham president) told CNBC via phone interview.

More than 70% of those surveyed said that Covid restrictions could have an impact on the economy if implemented for at least one year. revenue or profit would be cut.

This latest survey, which was conducted between April 29 and May 5, included 121 Chinese-based companies. This time frame included: latest Covid restrictions in the capital city of Beijing.

My prediction is for a significant decline in Chinese investment over the next two to three years.

Michael Hart

AmCham China president

The prior surveyAmCham Shanghai conducted the survey in March. Shanghai’s original plan for a two-part lockdown were starting. These actions have continued for many more weeks than they did the first week.

Beijing City delayed the opening of schools for a few days and then ordered that all businesses not essential in major business districts close temporarily.

A survey respondent stated that “very few aspects” of the economy seem to function. The report did not identify the location and name of the respondents.[While]It is possible to manage COVID-19-restrictions. [will be increasingly difficult to]Manage is the economic slowdown and an apparent increase in economic headwinds.

China investments are being cut by companies

The prolonged Covid controls — as mainland China tackles its worst virus outbreak since early 2020 — have further discouraged U.S. businesses from investing in the country, the AmCham survey found.

Respondents reported 26% less investment due to the recent outbreak, compared with 17% one month prior.

People reporting that they have experienced delays in investing decreased slightly from 29% to 26% in the prior survey. According to the new survey, 44% said it is too soon to determine or decide on the effects on investment plans. That’s an increase of 30% from the previous study.

According to official figures, China has seen a steady rise in direct foreign investment. This was up 31.7% from the previous year and reached $59.01 billion in quarter 1.

China’s Ministry of Commerce had no comment prior to its weekly press conference. The ministry responded to a question in April regarding the challenges faced by foreign companies and said that it will make every effort to resume work and produce.

China has increased border control in China to prevent the entry of Covid into its country by 2020. foreign business organizations have said it is hard to bring in staff. Because there aren’t many international flights to China, and the quarantine time upon arrival is at least 2 weeks.

Hart said that travel is essential to investment. Hart also noted the positive long-term impact of this decision.

He said, “Two to three years, or four years in the future, I expect a major decline in China’s investment because no new projects have been teed up because people aren’t able to go in and see space.”

AmCham’s most recent survey found that 53% would cut investment in China if Covid control continues for at least one year.

CNBC Pro provides more details about China

According to industry, tech and research and technology businesses had the greatest impact on Covid controls in their investment plans. 53% of respondents from the sector expected delays or reductions.

However, only 4% reported plans to increase their investment. The industry reported that 36% of respondents planned to decrease investment and 29% indicated they would delay investing as a consequence.

At 3%, only the consumer sector reported an increase of revenue projections in the upcoming year. However, 69% of respondents said that the majority (69%) of the consumer-sector businesses were lowering revenue forecasts for the current year.

The business has not fully resumed

Based on the experience of our companies in America and Europe, and others markets around the world, we can see that countries are using a different strategy. It’s just that we want a little more balance.

Michael Hart

AmCham China president

Hart explained that China’s “dynamic zero Covid” policy is not being implemented in all provinces and cities. Hart also said this was part of the issue.

Hart stated that local officials look for ways to help companies solve problems and return to work. Hart explained that economic performance is what judges people at the local level. Hart said, “When we speak to the government at [a]High level. It isn’t a concern for the economy. It is a focal point on Covid reduction and health.

Based on what we know from our experience, in Europe and the U.S., other countries may have a different approach,” he stated. We’re asking for more balance.

China’s President was elected last week Xi JinpingLed a meeting which stressed the importance of country should “resolutely fight” against all questioning of virus control policies. The group also discussed the economic implications if China doesn’t follow its current zero-Covid policy.

The November issue of China’s Center for Disease Control and Prevention published a study that warned that shifting to the “coexistence” strategy of other countries would likely result in hundreds of thousands of daily cases — devastating the national medical system.

For Monday, mainland China reported 349 new Covid cases with symptoms and 3,077 without symptoms, mostly in Shanghai — which reported six deaths for the day.

[ad_2]