A top business group warns China’s zero-COVID policy has made European companies weigh a shift of investment out of China.
The strict COVID lockdown and supply chain disruptions have rattled business confidence, according to a survey by the European Chamber of Commerce in China published on May 5.
“Our members are weathering the storm for now, but if the current situation continues, they will increasingly evaluate alternatives to China,” said Jorg Wuttke, the chamber’s president.
“A more expensive, functioning market is better than one that is relatively cheaper but paralysed,” Wuttke said.
Some 92 percent of businesses responded to the survey saying they had been impacted by recent port closures, a decline in road freight, and rising sea freight costs.
Nearly a quarter of the 372 respondents were considering moving current or planned investments out of China, more than double the number at the beginning of the year and marking the highest proportion in a decade.
About 60 percent of businesses have cut their business revenue projections this year, while nearly a third said they had cut staff levels.
The survey, conducted in late April, is one of the few indicators of business sentiment over Beijing’s heavy-handed COVID control measures.
The Chinese regime’s determination to eliminate the virus through lockdown and mandatory quarantine has brought major manufacturing and tech hubs to a halt. As of May 3, 43 cities are under full or partial lockdowns or have implemented district-based controls, which involve strict mobility restrictions for local residents, according to Nomura.