Western Companies Retreating from China, According to Reports
According to lobby groups, the allure of the Chinese market as an investment opportunity for Western capital is diminishing. Read Full Article at RT.com.
TroibNews 
Declining economic growth combined with the emergence of other manufacturing centers in Asia is reportedly dampening investment, according to claims made by lobby groups.
Recent reports from the EU Chamber of Commerce in China and the American Chamber of Commerce in Shanghai indicate that China is gradually losing its attractiveness for Western investors.
These lobby groups conducted surveys among investors and business owners in China, revealing that many are consolidating their operations within the country and have stopped viewing the Chinese market as their primary investment choice.
An annual poll conducted by the American Chamber of Commerce indicates that the percentage of businesses considering China their top investment destination has fallen to 47%, marking the lowest level in 25 years. A similar survey by the EU chamber found that just 15% of respondents identified China as their leading investment location, a decline from 20% in prior assessments.
The EU lobby group noted, “Some European Chamber members have begun both siloing their China supply chains and operations, and shifting investments previously planned for China to other markets to increase supply chain resilience, take advantage of comparatively lower labor costs and hedge against future geopolitical shocks.”
Experts from both organizations attribute this trend to several factors, including a downturn in China’s economic growth, which reportedly slowed to the lowest rate in five quarters at 4.7% for the April to June period this year. Intensifying competition from domestic firms and the rise of alternative manufacturing hubs in Asia are also contributing elements. According to the US business lobby survey, around 20% of respondents stated they would cut back on investments in China this year, while 40% plan to shift funds to countries like India and Vietnam.
Additionally, many respondents cited China’s ongoing trade tensions with the United States as a significant factor affecting investor confidence. Since the onset of a trade war initiated by former President Donald Trump in 2018, the US has implemented increasingly stringent economic restrictions and tariffs on Chinese goods. Current President Joe Biden has maintained a similarly tough stance, despite Beijing warning that these actions contravene fair trade principles. Approximately 70% of those surveyed by the American Chamber identified US policies targeting China as the biggest obstacle to the nation's economic growth.
“As for a growing number of companies, a tipping point has been reached, with investors now scrutinizing their China operations more closely as the challenges of doing business are beginning to outweigh the returns,” remarked Jens Eskelund, the president of the EU chamber.
Nonetheless, Eskelund also emphasized that China “still holds significant potential” as a destination for investment, urging the government to take steps to enhance the business environment for foreign investors.
James del Carmen contributed to this report for TROIB News
Recent reports from the EU Chamber of Commerce in China and the American Chamber of Commerce in Shanghai indicate that China is gradually losing its attractiveness for Western investors.
These lobby groups conducted surveys among investors and business owners in China, revealing that many are consolidating their operations within the country and have stopped viewing the Chinese market as their primary investment choice.
An annual poll conducted by the American Chamber of Commerce indicates that the percentage of businesses considering China their top investment destination has fallen to 47%, marking the lowest level in 25 years. A similar survey by the EU chamber found that just 15% of respondents identified China as their leading investment location, a decline from 20% in prior assessments.
The EU lobby group noted, “Some European Chamber members have begun both siloing their China supply chains and operations, and shifting investments previously planned for China to other markets to increase supply chain resilience, take advantage of comparatively lower labor costs and hedge against future geopolitical shocks.”
Experts from both organizations attribute this trend to several factors, including a downturn in China’s economic growth, which reportedly slowed to the lowest rate in five quarters at 4.7% for the April to June period this year. Intensifying competition from domestic firms and the rise of alternative manufacturing hubs in Asia are also contributing elements. According to the US business lobby survey, around 20% of respondents stated they would cut back on investments in China this year, while 40% plan to shift funds to countries like India and Vietnam.
Additionally, many respondents cited China’s ongoing trade tensions with the United States as a significant factor affecting investor confidence. Since the onset of a trade war initiated by former President Donald Trump in 2018, the US has implemented increasingly stringent economic restrictions and tariffs on Chinese goods. Current President Joe Biden has maintained a similarly tough stance, despite Beijing warning that these actions contravene fair trade principles. Approximately 70% of those surveyed by the American Chamber identified US policies targeting China as the biggest obstacle to the nation's economic growth.
“As for a growing number of companies, a tipping point has been reached, with investors now scrutinizing their China operations more closely as the challenges of doing business are beginning to outweigh the returns,” remarked Jens Eskelund, the president of the EU chamber.
Nonetheless, Eskelund also emphasized that China “still holds significant potential” as a destination for investment, urging the government to take steps to enhance the business environment for foreign investors.
James del Carmen contributed to this report for TROIB News
