U.S. companies’ optimism about business conditions in China is at a record low level, even though 89% say their operations in the country are profitable, according to the annual survey of the U.S.-China Business Council. The survey also found Covid-19 control measures to be the biggest challenge American businesses faced when operating in the country last year. Of the 117 respondents, 96% said they saw negative effects on their businesses, including halted investment, lost profit and disrupted supply chains. “The looming possibility that companies will again be forced to partially or fully halt operations due to lockdowns and the impact of local controls on consumer demand undermine business confidence in the overall business environment in China,” said USCBC President Craig Allen at the launch of the survey results. Allen also voiced skepticism that China’s CNY1 trillion stimulus package focused on infrastructure could prop up the country’s economy. “There is concern about consumer sentiment in China, particularly associated with the zero-Covid policies,” he said. “The Chinese consumer is saving more and spending less. Until Chinese consumer sentiment picks up, I think that we’re going to remain somewhat skeptical.”
The country has experienced much slower growth than in past years, as its economy expanded by just 0.4% in the second quarter of 2022 compared with a year earlier. A months-long lockdown of Shanghai, home to many major multinational companies, brought the city to an unprecedented standstill in the spring. Compared to 10 years ago, confidence among American firms regarding their five-year outlook had dropped from nearly 90% to just over 50% this year, the survey found.
Business optimism dived 18 percentage points compared to last year, and the number of companies that were “pessimistic” had increased from 5% to more than 20% over the past decade. The USCBC has more than 270 members, including some of America’s most influential companies. The survey was carried out in June after the citywide lockdown in Shanghai. While 89% of surveyed firms were able to stay profitable, this figure marked the lowest percentage of profitable respondents tallied in seven years, the report stated. Respondents this year ranked “Covid-19 shutdowns” first and “Covid-19 travel” third among a list of challenges they faced in China, the South China Morning Post reports.
