Western companies urge China to moderate “Covid-zero” policy

Groups representing Western companies in China are calling on Beijing to relax its Covid-zero policy, saying severe lockdowns are hurting earnings and investment and forcing a growing number of companies to consider changing operations in the world’s second-largest economy.

More than 50% of US companies have delayed or reduced investment in China as a result of the recent Covid-19 outbreak, according to a survey published Monday by the American Chamber of Commerce in China.

The survey — which was conducted from April 29 to May 5 with the participation of 121 member companies — also detailed the impact of the Shanghai lockdown on US companies. The city is China’s financial hub and has been on lockdown since late March.

Up to 58% of respondents cut their 2022 revenue projections in China, up from 54% just a month ago.

Nearly half said foreign workers are significantly less likely or refuse to move to China because of the Covid-zero policy.

“We understand that China has chosen to prioritize health and safety above all else, but the current measures are strangling American business confidence in China,” Colm Rafferty, chairman of the China chamber, said in a statement accompanying the survey results. .

“Our member companies urge the government to strike a more optimal balance between pandemic prevention, economic development and opening up the country,” he added.

European companies warn China

European companies are also concerned.

Some 23% of European companies are considering moving investment out of China — the highest proportion in a decade — according to a quick survey released by the EU Chamber of Commerce in China late last week.

“China needs to change strategy,” Jörg Wuttke, president of the European Union Chamber of Commerce in China, told CNN Business international in a telephone interview.

“We had two good years. But now it’s time to act differently. Covid-zero may not be the right tool right now.”

Wuttke said most European businesses were positive in January as China’s strict Covid approach proved successful in containing the spread of the virus at the time, and the economy continued to grow.

But the highly contagious Omicron variant has put Beijing’s Covid-zero policy under its greatest test, and massive lockdowns have crippled economic activity in major cities.

At least 31 cities are under total or partial lockdown, according to the latest calculations by the CNN .

In April, China’s gigantic service sector contracted at the second-fastest pace on record, with Covid lockdowns hitting small businesses hard. The manufacturing sector also shrank dramatically, pushing the economy back.

“We have seen damage to our business,” Wuttke said, adding that companies are suspending investment because of what is happening in China.

The quick poll showed that 78% of 372 respondents think China is a less attractive investment destination because of its stricter Covid restrictions.

“What’s really hurting the economy is the lack of visibility,” Wuttke said. “No one has any idea when this situation will change.”

“Chinese officials are painfully aware of the economic pain caused by Covid policy. But they are basically having a hard time changing the narrative,” he added.