BEIJING – A record share of U.S. companies are accelerating their plans to move manufacturing or sourcing to China, according to a business survey released Thursday.
According to an annual survey by the American Chamber of Commerce in China, about 30 percent of respondents considered or initiated such diversification in 2024, surpassing the previous high of 24 percent in 2022.
It also exceeded the 23% share reported for 2017, when Pres. Donald Trump began his first term and began raising tariffs on Chinese goods.
In addition to tensions between the US and China, “one of the big impacts we’ve seen in the last five years has been Covid and how China has put itself in a position of isolation because of Covid,” said Michael Hart, MCham’s Beijing-based president. Separated from the world”. China told reporters on Thursday.
“That’s one of the biggest drivers because people realize they need to diversify their supply chain,” he said. “I don’t see this trend slowing down.”
China has banned international travel and closed parts of the country during the CoVID-19 pandemic in an effort to stop the spread of the disease.
While India and Southeast Asian countries remained the most popular destinations for manufacturing relocations, the survey showed that 18% of respondents considered moving to the US in 2024, up from 16% last year.
The majority of American companies do not have a diversification plan. Only two-thirds, or 67 percent, of respondents said they were not considering relocating manufacturing, a decrease of 10 percentage points from 2023, according to the survey.
The latest AmCham China survey covered 368 members from October 21 to November 15. Trump was elected to a second term as US President on November 5.
Trump confirmed this week. Plan to raise 10 percent tariff on Chinese goodsand said the duties could come as soon as February 1. This follows America’s increasingly tough stance on China. The Biden administration has emphasized that the U.S. is competing with China and has imposed major restrictions on Chinese companies’ ability to access advanced U.S. technology.
More than 60 percent of respondents said tensions between the U.S. and China are the biggest challenge to doing business in China in the next year. According to the survey, competition from local state-owned companies or privately owned Chinese companies was the second biggest challenge for American businesses operating in China.
Slow economic growth
Increasing geopolitical pressure, Growth has slowed in the world’s second-largest economy.with consumer spending muted since the pandemic. In late September, Chinese authorities began stepping up efforts to accelerate growth and stem the real estate glut.
For the third year in a row, more than half of respondents to the AmCham China survey said they did not make a profit in the country, adding that the region has become less competitive in terms of margins than other global markets.
The proportion of companies no longer listing China as a preferred investment destination rose to 21 percent, double the pre-pandemic level, the survey said.
However, looking ahead, tech, industrial and consumer businesses said they see growth in household consumption as a business opportunity for 2025, the survey said. Services firms said their biggest opportunity is Chinese companies looking to expand overseas.
Hart noted that many members are still optimistic about Chinese consumers as a “big, important market.”
