US Companies Move Investments Away from China Amid Economic Slowdown and Tensions
Washington [US], September 12: US companies are pulling their investments out of China due to slow export growth and rising debt in the world’s second-largest economy. A new survey shows that China is no longer a top choice for US firms, with worsening US-China relations and economic slowdown being major concerns.
Decline in Investment Preference
The 2024 China Business Report by the American Chamber of Commerce (ACC) in Shanghai reveals that only 13% of US companies now see China as their most preferred investment destination, a record low. Four years ago, 53% of companies ranked China among their top three destinations, but this has now dropped to 34%. Additionally, 24% of respondents now consider China a low-priority investment destination.
Impact of US-China Tensions
US-China trade tensions are a significant worry for US companies, with two-thirds of survey respondents citing it as their top challenge for the next three to five years. The recent debate between US presidential candidates Donald Trump and Kamala Harris highlighted ongoing issues, with Harris accusing Trump of enabling semiconductor chip exports to China, and Trump criticizing the Biden administration for allowing Chinese companies to build factories in Mexico.
Economic Slowdown in China
China’s economic slowdown is another major concern, with 60% of survey participants worried about falling real estate prices and job security, which have led to low consumer confidence. Economists are questioning whether China can meet its 5% growth target for 2024.
European Companies Share Concerns
The European Union Chamber of Commerce’s China Position Paper 2024-25 echoes similar concerns. Jens Eskelund, president of the EU chamber, stated that many companies are now scrutinizing their China operations more closely due to the challenges outweighing the returns. The chamber cited China’s economic slowdown, weak domestic consumption, market access issues, and Beijing’s focus on national security over the economy as major challenges.
Decline in Foreign Direct Investment
Foreign direct investment (FDI) in China has significantly declined, with a 29.6% drop in the first seven months of the year, totaling 539.5 billion yuan (USD 75.8 billion). July saw the lowest FDI in a single month since 2008, amounting to USD 5.6 billion.
Doubts Revealed
US Companies -: These are businesses that are based in the United States of America.
Investments -: This means putting money into something, like a business, to make more money later.
China -: China is a large country in Asia, known for its big population and strong economy.
Economic Slowdown -: This means that the economy is not growing as fast as it used to.
Tensions -: This means there are problems or conflicts between two groups, in this case, between the US and China.
American Chamber of Commerce in Shanghai -: This is a group of American businesses in Shanghai, China, that work together to help each other.
Survey -: A survey is when you ask a lot of people questions to find out what they think.
European Union Chamber of Commerce -: This is a group of European businesses that work together to help each other in different countries.
Foreign Direct Investment -: This is when people or companies from one country put money into businesses in another country.
