The Chinese regime’s zero-Covid policy has hit foreign-invested companies in China hard, prompting many to consider moving their operation out of China. In a May 12 article, Xinhua, a mouthpiece of the Chinese Communist Party, called on foreign-invested companies not to leave, as the epidemic would ultimately end.
Xinhua began the article by stressing that foreign chambers of commerce in China have worried about China’s zero-Covid policy, and some foreign companies might consider “alternative options” in the country.
The article also cited some positive references, claiming the general policy is good and trying to reassure foreign companies of the benefits of the strategy.
The article asked foreign companies to take a long-term view and choose to overcome the difficulties with China.
However, outsiders are highly skeptical of the effectiveness of its strict measures for containing the virus.
Experts have raised questions about its effectiveness and fears that lockdowns will continue in different parts of China, leading to long-term difficulties for companies. European and U.S. companies in China have already expressed concern about the increasingly unstable investment environment.
Tedros Adhanom Ghebreyesus, Director-General of the World Health Organization (WHO), on May 10, said that Beijing’s zero policy is unsustainable.
He said, “We don’t think that it is sustainable considering the behavior of the virus and what we now anticipate in the future.”
The chief added that WHO had discussed the issue with Chinese experts, and they pointed out that China’s approach would not be sustainable. He noted that a change was essential.
In addition, a growing number of Western companies are considering moving their investment out of the world’s second-biggest economy due to its strict Covid approach. They are urging Beijing to adjust the policy.
On May 5, the European Union Chamber of Commerce in China reported that in a recent survey, European companies said China’s strategy on coronavirus had hit their supply chains, forcing them to reduce their headcounts and lower revenue forecasts.
Joerg Wuttke, president of the EU Chamber of Commerce in China, also said, “Zero tolerance doesn’t work because the world has learned to live with Covid and China has to change strategy.” He added, “We are trying to tell the Chinese government that if you don’t change, we will vote with our feet.”
European companies in China are increasingly looking to shift their investments to other markets. According to the survey, 23 percent of the 372 companies that responded consider moving current or planned investments out of mainland China. Some 78 percent of respondents also said mainland China is now less attractive to investors.
U.S. companies in China have also lost their confidence in China. The American Chamber of Commerce in China (AmCham) stated on May 9 that 58 percent of U.S. companies in China had lowered their full-year revenue expectations, and 52 percent will reduce or delay their investments in China. Nearly half said that foreign workers are either significantly less likely or refuse to relocate to China.
AmCham President Colm Rafferty said Beijing’s epidemic measures had undermined the confidence of U.S. companies to invest in China and that companies can’t see any light at the end of the tunnel.