Beijing According to a business poll published Thursday, a record number of American companies are speeding up their plans to move their production or sourcing operations to China.
Annual polls from the American Chamber of Commerce in China show that about 30% of respondents thought about or began such diversification in 2024, up from a previous high of 24% in 2022.
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Additionally, it was higher than the 23% share recorded in 2017, the year when President Donald Trump started his first term and began to increase tariffs on Chinese goods.
In addition to the tensions between the United States and China, Michael Hart, the president of AmCham China, who is located in Beijing, told reporters Thursday that one of the biggest effects of the past five years has been COVID-19 and how China shut itself off from the outside world as a result.
When people recognized they needed to diversify their supply chains, that was one of the biggest catalysts, he added. That tendency doesn’t seem to be slowing down.
During the Covid-19 pandemic, China tried to stop the disease’s spread by limiting travel abroad and enclosing certain areas of the nation.
According to the study, 18% of respondents in 2024 thought of moving to the United States, up from 16% the year before, even though India and Southeast Asian nations continued to be the most favored locations for production relocation.
Most American businesses had no plans to diversify. According to the study, just over two-thirds (67%) of participants stated they were not thinking of moving their manufacturing, a 10-percentage-point decrease from 2023.
From October 21 to November 15, 368 members participated in the most recent AmCham China survey. On November 5, Trump was elected to a second term as president of the United States.
Trump confirmed plans this week to increase tariffs on Chinese goods by 10%, stating that the taxes might be implemented as early as February 1. That comes after the United States took a more assertive posture toward China. In addition to issuing broad limitations on Chinese enterprises’ access to high-end U.S. technology, the Biden administration had highlighted that the United States and China are competitors.
Tensions between the United States and China were cited by over 60% of respondents as the largest obstacle to conducting business in China in the upcoming year. According to the study, the second-biggest obstacle facing American companies doing business in China was competition from either privately held Chinese enterprises or local state-owned corporations.
Slower economic growth
In addition to geopolitical concerns, the second-largest economy in the world has experienced slower growth due to subdued consumer spending since the outbreak. Chinese officials began stepping up their attempts to boost development and stop the real estate downturn in late September.
More than half of AmCham China survey participants reported not turning a profit in the nation for the third consecutive year. They also noted that the region’s margins were no longer as competitive as those in other international markets.
According to the poll, the percentage of businesses that no longer consider China as a desirable place to invest doubled from pre-pandemic levels, reaching 21%.
But according to the survey, the biggest commercial potential for 2025, according to tech, industrial, and consumer companies, is the rise in domestic consumption. Chinese businesses seeking to grow abroad were cited by services firms as their greatest opportunity.
According to Hart, a lot of participants remain hopeful about Chinese consumers as a significant and substantial market.