An annual survey by the American Chamber of Commerce in Shanghai shows that more U.S. companies have lost their interest in China this year.

The business group, also known as AmCham Shanghai, released the results on October 28. The study was conducted based on 207 companies between July 14 and August 18. 

19% of the companies confirmed that they were withdrawing investment from China. This was a 10% increase from last year. There is also a 27% fall compared to last year in companies ranking China as their top investment option worldwide, which is 18%

According to the South China Morning Post, Chairman Sean Stein told reporters, “China is becoming less competitive for foreign investments. It needs to act soon to rebuild confidence from companies. Otherwise, investment can and will go elsewhere.”

American businesses operating in China have lost confidence after the spring months-long Covid lockdown in Shanghai. They cite continuous threats of closures, travel curbs, and supply chain interruptions as reasons to shift investments. 

The Chinese metropolis has only imposed more lockdowns and restrictions after the 20th National Congress ended on October 23. According to the Associated Press, the city plans to erect a permanent isolation site on an island in the Huangpu 黄浦 River, secluded from itself.

Bloomberg reported that most analysts believe China would not abandon the pandemic policy until after the National People’s Congress, scheduled between March and April next year.

The least pessimistic was American-German investor Mark Mobius, who anticipates an easing by the end of this year. 

Mobius argues that China is in a severe shortage of money and “has no choice but to open up to ensure the economy can function.”

When AmCham Shanghai inquired about the five-year business outlook, only 55% of the surveyed firms were optimistic. The reading is the lowest in the survey’s 23-year history. Rising competition with local companies has emerged as the top concern, followed by U.S.-China tensions, the economic fallout, and COVID-related travel curbs, and lockdowns.

As Asia Financial reports, Chairman Stein says, “What keeps a lot of businesses up at night is competition and rising competition from Chinese competitors.”

Stein was certain that loosening COVID measures would revive confidence. However, he cautioned that this would not be enough to restore sentiment to its previous highs.

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